Intrinsic value of Precision Drilling - PDS

Previous Close

$2.59

  Intrinsic Value

$1.10

stock screener

  Rating & Target

str. sell

-57%

  Value-price divergence*

-33%

Previous close

$2.59

 
Intrinsic value

$1.10

 
Up/down potential

-57%

 
Rating

str. sell

 
Value-price divergence*

-33%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PDS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -38.84
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  704
  808
  920
  1,039
  1,165
  1,298
  1,438
  1,585
  1,739
  1,899
  2,066
  2,240
  2,421
  2,609
  2,804
  3,007
  3,218
  3,438
  3,666
  3,903
  4,150
  4,407
  4,674
  4,953
  5,244
  5,547
  5,863
  6,194
  6,539
  6,899
  7,276
Variable operating expenses, $m
 
  1,055
  1,198
  1,352
  1,514
  1,685
  1,865
  2,054
  2,252
  2,458
  2,672
  2,881
  3,113
  3,355
  3,607
  3,868
  4,139
  4,421
  4,715
  5,020
  5,337
  5,668
  6,012
  6,370
  6,744
  7,134
  7,541
  7,966
  8,409
  8,873
  9,358
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  820
  1,055
  1,198
  1,352
  1,514
  1,685
  1,865
  2,054
  2,252
  2,458
  2,672
  2,881
  3,113
  3,355
  3,607
  3,868
  4,139
  4,421
  4,715
  5,020
  5,337
  5,668
  6,012
  6,370
  6,744
  7,134
  7,541
  7,966
  8,409
  8,873
  9,358
Operating income, $m
  -115
  -247
  -279
  -313
  -349
  -387
  -427
  -469
  -513
  -559
  -607
  -641
  -693
  -746
  -802
  -860
  -921
  -984
  -1,049
  -1,117
  -1,187
  -1,261
  -1,337
  -1,417
  -1,500
  -1,587
  -1,678
  -1,772
  -1,871
  -1,974
  -2,082
EBITDA, $m
  175
  85
  97
  110
  123
  137
  152
  168
  184
  201
  218
  237
  256
  276
  297
  318
  340
  364
  388
  413
  439
  466
  494
  524
  555
  587
  620
  655
  691
  730
  769
Interest expense (income), $m
  103
  96
  113
  132
  152
  174
  196
  220
  245
  270
  298
  326
  355
  386
  417
  450
  485
  520
  557
  596
  636
  677
  721
  766
  813
  862
  913
  967
  1,022
  1,081
  1,142
Earnings before tax, $m
  -228
  -343
  -392
  -445
  -501
  -561
  -623
  -689
  -757
  -829
  -904
  -967
  -1,048
  -1,132
  -1,220
  -1,311
  -1,405
  -1,504
  -1,606
  -1,713
  -1,823
  -1,938
  -2,058
  -2,183
  -2,313
  -2,449
  -2,591
  -2,739
  -2,893
  -3,055
  -3,223
Tax expense, $m
  -113
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -115
  -343
  -392
  -445
  -501
  -561
  -623
  -689
  -757
  -829
  -904
  -967
  -1,048
  -1,132
  -1,220
  -1,311
  -1,405
  -1,504
  -1,606
  -1,713
  -1,823
  -1,938
  -2,058
  -2,183
  -2,313
  -2,449
  -2,591
  -2,739
  -2,893
  -3,055
  -3,223

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  86
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,201
  3,576
  4,070
  4,597
  5,155
  5,744
  6,364
  7,014
  7,693
  8,402
  9,141
  9,911
  10,711
  11,543
  12,408
  13,306
  14,240
  15,211
  16,220
  17,270
  18,362
  19,499
  20,683
  21,916
  23,203
  24,544
  25,944
  27,405
  28,932
  30,527
  32,194
Adjusted assets (=assets-cash), $m
  3,115
  3,576
  4,070
  4,597
  5,155
  5,744
  6,364
  7,014
  7,693
  8,402
  9,141
  9,911
  10,711
  11,543
  12,408
  13,306
  14,240
  15,211
  16,220
  17,270
  18,362
  19,499
  20,683
  21,916
  23,203
  24,544
  25,944
  27,405
  28,932
  30,527
  32,194
Revenue / Adjusted assets
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
  0.226
Average production assets, $m
  2,787
  3,199
  3,641
  4,112
  4,611
  5,138
  5,693
  6,274
  6,882
  7,516
  8,177
  8,865
  9,581
  10,325
  11,099
  11,903
  12,738
  13,606
  14,509
  15,448
  16,425
  17,442
  18,501
  19,604
  20,755
  21,955
  23,207
  24,514
  25,880
  27,306
  28,798
Working capital, $m
  171
  98
  111
  126
  141
  157
  174
  192
  210
  230
  250
  271
  293
  316
  339
  364
  389
  416
  444
  472
  502
  533
  566
  599
  634
  671
  709
  749
  791
  835
  880
Total debt, $m
  1,411
  1,668
  1,945
  2,241
  2,554
  2,885
  3,232
  3,597
  3,978
  4,376
  4,790
  5,222
  5,671
  6,138
  6,623
  7,127
  7,651
  8,195
  8,761
  9,350
  9,963
  10,601
  11,265
  11,957
  12,679
  13,431
  14,217
  15,036
  15,893
  16,788
  17,723
Total liabilities, $m
  1,748
  2,006
  2,283
  2,579
  2,892
  3,223
  3,570
  3,935
  4,316
  4,714
  5,128
  5,560
  6,009
  6,476
  6,961
  7,465
  7,989
  8,533
  9,099
  9,688
  10,301
  10,939
  11,603
  12,295
  13,017
  13,769
  14,555
  15,374
  16,231
  17,126
  18,061
Total equity, $m
  1,452
  1,570
  1,787
  2,018
  2,263
  2,522
  2,794
  3,079
  3,377
  3,689
  4,013
  4,351
  4,702
  5,067
  5,447
  5,842
  6,251
  6,678
  7,121
  7,581
  8,061
  8,560
  9,080
  9,621
  10,186
  10,775
  11,389
  12,031
  12,701
  13,401
  14,133
Total liabilities and equity, $m
  3,200
  3,576
  4,070
  4,597
  5,155
  5,745
  6,364
  7,014
  7,693
  8,403
  9,141
  9,911
  10,711
  11,543
  12,408
  13,307
  14,240
  15,211
  16,220
  17,269
  18,362
  19,499
  20,683
  21,916
  23,203
  24,544
  25,944
  27,405
  28,932
  30,527
  32,194
Debt-to-equity ratio
  0.972
  1.060
  1.090
  1.110
  1.130
  1.140
  1.160
  1.170
  1.180
  1.190
  1.190
  1.200
  1.210
  1.210
  1.220
  1.220
  1.220
  1.230
  1.230
  1.230
  1.240
  1.240
  1.240
  1.240
  1.240
  1.250
  1.250
  1.250
  1.250
  1.250
  1.250
Adjusted equity ratio
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -115
  -343
  -392
  -445
  -501
  -561
  -623
  -689
  -757
  -829
  -904
  -967
  -1,048
  -1,132
  -1,220
  -1,311
  -1,405
  -1,504
  -1,606
  -1,713
  -1,823
  -1,938
  -2,058
  -2,183
  -2,313
  -2,449
  -2,591
  -2,739
  -2,893
  -3,055
  -3,223
Depreciation, amort., depletion, $m
  290
  332
  376
  423
  472
  524
  579
  637
  697
  760
  825
  878
  949
  1,022
  1,099
  1,178
  1,261
  1,347
  1,437
  1,529
  1,626
  1,727
  1,832
  1,941
  2,055
  2,174
  2,298
  2,427
  2,562
  2,704
  2,851
Funds from operations, $m
  -7
  -10
  -16
  -22
  -29
  -36
  -44
  -52
  -61
  -70
  -79
  -89
  -99
  -110
  -121
  -132
  -144
  -157
  -170
  -183
  -197
  -211
  -227
  -242
  -259
  -276
  -293
  -312
  -331
  -351
  -372
Change in working capital, $m
  -98
  13
  14
  14
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
Cash from operations, $m
  91
  -23
  -30
  -37
  -44
  -52
  -61
  -70
  -79
  -89
  -99
  -110
  -121
  -132
  -144
  -157
  -170
  -183
  -197
  -212
  -227
  -243
  -259
  -276
  -294
  -312
  -332
  -352
  -373
  -395
  -418
Maintenance CAPEX, $m
  0
  -276
  -317
  -360
  -407
  -457
  -509
  -564
  -621
  -681
  -744
  -810
  -878
  -949
  -1,022
  -1,099
  -1,178
  -1,261
  -1,347
  -1,437
  -1,529
  -1,626
  -1,727
  -1,832
  -1,941
  -2,055
  -2,174
  -2,298
  -2,427
  -2,562
  -2,704
New CAPEX, $m
  -151
  -412
  -442
  -471
  -499
  -527
  -554
  -581
  -608
  -634
  -661
  -688
  -716
  -744
  -773
  -804
  -835
  -868
  -903
  -939
  -977
  -1,017
  -1,059
  -1,104
  -1,150
  -1,200
  -1,252
  -1,307
  -1,365
  -1,427
  -1,491
Cash from investing activities, $m
  -158
  -688
  -759
  -831
  -906
  -984
  -1,063
  -1,145
  -1,229
  -1,315
  -1,405
  -1,498
  -1,594
  -1,693
  -1,795
  -1,903
  -2,013
  -2,129
  -2,250
  -2,376
  -2,506
  -2,643
  -2,786
  -2,936
  -3,091
  -3,255
  -3,426
  -3,605
  -3,792
  -3,989
  -4,195
Free cash flow, $m
  -67
  -711
  -788
  -868
  -951
  -1,036
  -1,124
  -1,215
  -1,308
  -1,405
  -1,505
  -1,608
  -1,715
  -1,825
  -1,940
  -2,060
  -2,184
  -2,313
  -2,447
  -2,587
  -2,733
  -2,886
  -3,045
  -3,211
  -3,385
  -3,567
  -3,757
  -3,957
  -4,165
  -4,384
  -4,613
Issuance/(repayment) of debt, $m
  -154
  257
  277
  295
  313
  331
  348
  364
  381
  398
  415
  432
  449
  467
  485
  504
  524
  545
  566
  589
  613
  638
  664
  692
  722
  753
  785
  820
  856
  895
  935
Issuance/(repurchase) of shares, $m
  1
  546
  609
  676
  746
  819
  895
  974
  1,056
  1,141
  1,229
  1,304
  1,399
  1,497
  1,599
  1,705
  1,815
  1,930
  2,049
  2,173
  2,303
  2,437
  2,578
  2,725
  2,878
  3,038
  3,206
  3,380
  3,563
  3,755
  3,955
Cash from financing (excl. dividends), $m  
  -162
  803
  886
  971
  1,059
  1,150
  1,243
  1,338
  1,437
  1,539
  1,644
  1,736
  1,848
  1,964
  2,084
  2,209
  2,339
  2,475
  2,615
  2,762
  2,916
  3,075
  3,242
  3,417
  3,600
  3,791
  3,991
  4,200
  4,419
  4,650
  4,890
Total cash flow (excl. dividends), $m
  -244
  92
  98
  103
  108
  114
  119
  124
  129
  134
  139
  128
  133
  139
  144
  150
  156
  162
  168
  175
  182
  190
  197
  206
  214
  224
  233
  244
  254
  266
  278
Retained Cash Flow (-), $m
  118
  -546
  -609
  -676
  -746
  -819
  -895
  -974
  -1,056
  -1,141
  -1,229
  -1,304
  -1,399
  -1,497
  -1,599
  -1,705
  -1,815
  -1,930
  -2,049
  -2,173
  -2,303
  -2,437
  -2,578
  -2,725
  -2,878
  -3,038
  -3,206
  -3,380
  -3,563
  -3,755
  -3,955
Prev. year cash balance distribution, $m
 
  86
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -368
  -511
  -573
  -638
  -706
  -776
  -850
  -927
  -1,007
  -1,090
  -1,176
  -1,266
  -1,359
  -1,455
  -1,555
  -1,660
  -1,768
  -1,881
  -1,998
  -2,121
  -2,248
  -2,381
  -2,519
  -2,664
  -2,815
  -2,972
  -3,137
  -3,309
  -3,489
  -3,677
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  -340
  -433
  -442
  -444
  -439
  -427
  -410
  -387
  -360
  -329
  -296
  -262
  -228
  -194
  -163
  -134
  -108
  -85
  -65
  -49
  -36
  -26
  -18
  -12
  -8
  -5
  -3
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  63.6
  40.9
  26.6
  17.4
  11.5
  7.6
  5.1
  3.4
  2.3
  1.6
  1.1
  0.7
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Precision Drilling Corporation provides oil and natural gas drilling and related services and products. The company operates in two segments, Contract Drilling Services; and Completion and Production Services. The Contract Drilling Services segment offers onshore well drilling services to exploration and production companies in the oil and natural gas industry. This segmentÂ’s services include land drilling, directional drilling, and turnkey drilling; and procurement and distribution of oilfield supplies, as well as manufacture, refurbishment, and sale of drilling and service rig equipment. As of December 31, 2015, this segment operated 251 land drilling rigs, including 134 in Canada; 102 in the United States; 5 in Mexico; 4 in Saudi Arabia; 3 in Kuwait; 2 in the Kurdistan region of Iraq; and 1 in the country of Georgia. The Completion and Production Services segment offers completion and workover services, and ancillary services to oil and natural gas exploration and production companies. It provides service rigs for well completion, workover, abandonment, maintenance, and re-entry preparation services; snubbing units and coil tubing units for pressure control services; camp and catering services; and water system services, as well as engages in the rental of oilfield surface equipment, and wellsite accommodations. This segment operated 148 well completion and workover service rigs, 11 snubbing units, and 4 coil tubing units in Canada and the United States; approximately 2,400 oilfield rental items, including surface storage, small-flow wastewater treatment, and power generation, and solids control equipment; and 180 wellsite accommodation units in Canada. It also had 46 drilling camps and 4 base camps in Canada; and 10 large-flow wastewater treatment units, 24 pump houses, and 8 potable water production units in Canada. Precision Drilling Corporation was founded in 1951 and is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Precision Drilling (PDS)

Valuation Ratios
P/E Ratio -6.6
Price to Sales 1.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow -12.7
Growth Rates
Sales Growth Rate -38.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55.6%
Cap. Spend. - 3 Yr. Gr. Rate -17.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 97.2%
Total Debt to Equity 97.2%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. -1.1%
Return On Total Capital -3.8%
Ret/ On T. Cap. - 3 Yr. Avg. -3.8%
Return On Equity -7.6%
Return On Equity - 3 Yr. Avg. -7.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 36.2%
Gross Margin - 3 Yr. Avg. 39%
EBITDA Margin 23.4%
EBITDA Margin - 3 Yr. Avg. 17%
Operating Margin -16.5%
Oper. Margin - 3 Yr. Avg. -13.9%
Pre-Tax Margin -32.4%
Pre-Tax Margin - 3 Yr. Avg. -22.6%
Net Profit Margin -16.3%
Net Profit Margin - 3 Yr. Avg. -12.8%
Effective Tax Rate 49.6%
Eff/ Tax Rate - 3 Yr. Avg. 9.7%
Payout Ratio 0%

PDS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PDS stock intrinsic value calculation we used $704 million for the last fiscal year's total revenue generated by Precision Drilling. The default revenue input number comes from 2016 income statement of Precision Drilling. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PDS stock valuation model: a) initial revenue growth rate of 14.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.2%, whose default value for PDS is calculated based on our internal credit rating of Precision Drilling, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Precision Drilling.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PDS stock the variable cost ratio is equal to 130.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PDS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.8% for Precision Drilling.

Corporate tax rate of 27% is the nominal tax rate for Precision Drilling. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PDS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PDS are equal to 395.8%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Precision Drilling operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PDS is equal to 12.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1452 million for Precision Drilling - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 293.893 million for Precision Drilling is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Precision Drilling at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Behind Baker Hughess Correlation with Crude in Mid-August   [Aug-22-17 09:07AM  Market Realist]
▶ How Schlumberger Correlates with Crude Oil   [Aug-08-17 08:10AM  Market Realist]
▶ Precision Drilling reports 2Q loss   [Jul-31-17 11:02PM  Associated Press]
▶ Correlation between Weatherford and Crude Oil on July 21   [Jul-25-17 07:39AM  Market Realist]
▶ Halliburtons Correlation with Crude Oil on July 14   [Jul-17-17 03:06PM  Market Realist]
▶ Schlumbergers 7-Day Stock Forecast as of June 16   [Jun-20-17 07:37AM  Market Realist]
▶ Whats NOVs Correlation with Crude Oil in June 2017?   [Jun-13-17 07:36AM  Market Realist]
▶ Schlumbergers 7-Day Stock Price Forecast on May 26   [May-30-17 12:06PM  Market Realist]
▶ What Was Schlumbergers Correlation with Crude Oil on May 22?   [May-23-17 02:36PM  Market Realist]
▶ Schlumbergers Correlation with Crude Oil on May 12   [May-15-17 04:35PM  Market Realist]
▶ Inside Halliburtons Correlation with Crude Oil on April 28   [May-02-17 07:40AM  Market Realist]
▶ Schlumbergers Correlation with Crude Oil on April 21   [Apr-25-17 09:09AM  Market Realist]
▶ Precision Drilling reports 1Q loss   [06:12AM  Associated Press]
▶ Whats NOVs Correlation with Crude Oil as of April 17?   [Apr-20-17 09:06AM  Market Realist]
▶ Whats NOVs 7-Day Stock Price Forecast as of April 17?   [Apr-19-17 10:37AM  Market Realist]
▶ Whats Weatherfords Correlation with Crude Oil?   [Mar-20-17 01:35PM  Market Realist]
▶ NOW Inc.'s Results Continue to Bounce Back   [Feb-15-17 01:21PM  at Motley Fool]
▶ How Risky Is Helmerich & Payne, Inc.?   [Feb-01-17 10:30AM  at Motley Fool]
▶ 3 Terrible Reasons to Sell Helmerich & Payne, Inc.   [Jan-25-17 09:57AM  at Motley Fool]
▶ Precision Drilling Announces Management Changes   [Jan-10-17 06:00AM  Marketwired]
▶ Is Precision Drilling Corp (USA) (PDS) A Good Stock To Buy?   [Dec-18-16 09:32PM  at Insider Monkey]
Financial statements of PDS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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