Intrinsic value of Pioneer Energy Services - PES

Previous Close

$2.50

  Intrinsic Value

$0.90

stock screener

  Rating & Target

str. sell

-64%

  Value-price divergence*

+30%

Previous close

$2.50

 
Intrinsic value

$0.90

 
Up/down potential

-64%

 
Rating

str. sell

 
Value-price divergence*

+30%

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

We calculate the intrinsic value of PES 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 0.2

 

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, %
  -48.80
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  277
  443
  685
  1,024
  1,486
  2,096
  2,882
  3,868
  5,079
  6,536
  8,255
  10,251
  12,533
  15,107
  17,974
  21,134
  24,584
  28,319
  32,333
  36,618
  41,170
  45,981
  51,048
  56,365
  61,931
  67,744
  73,806
  80,119
  86,688
  93,517
  100,616
Variable operating expenses, $m
 
  536
  828
  1,238
  1,796
  2,534
  3,484
  4,677
  6,141
  7,902
  9,981
  12,394
  15,153
  18,264
  21,731
  25,551
  29,723
  34,238
  39,090
  44,272
  49,775
  55,592
  61,717
  68,145
  74,874
  81,903
  89,232
  96,864
  104,806
  113,063
  121,645
Fixed operating expenses, $m
 
  58
  60
  61
  63
  64
  66
  68
  69
  71
  73
  75
  77
  79
  81
  83
  85
  87
  89
  91
  93
  96
  98
  101
  103
  106
  108
  111
  114
  117
  120
Total operating expenses, $m
  391
  594
  888
  1,299
  1,859
  2,598
  3,550
  4,745
  6,210
  7,973
  10,054
  12,469
  15,230
  18,343
  21,812
  25,634
  29,808
  34,325
  39,179
  44,363
  49,868
  55,688
  61,815
  68,246
  74,977
  82,009
  89,340
  96,975
  104,920
  113,180
  121,765
Operating income, $m
  -114
  -151
  -203
  -275
  -373
  -503
  -668
  -876
  -1,131
  -1,437
  -1,798
  -2,217
  -2,696
  -3,236
  -3,837
  -4,500
  -5,223
  -6,005
  -6,846
  -7,744
  -8,698
  -9,706
  -10,767
  -11,881
  -13,047
  -14,264
  -15,534
  -16,856
  -18,232
  -19,662
  -21,148
EBITDA, $m
  0
  30
  77
  143
  233
  353
  508
  703
  943
  1,231
  1,572
  1,968
  2,421
  2,931
  3,501
  4,128
  4,814
  5,556
  6,353
  7,205
  8,110
  9,066
  10,073
  11,130
  12,236
  13,392
  14,597
  15,852
  17,158
  18,516
  19,928
Interest expense (income), $m
  25
  23
  41
  66
  101
  150
  213
  295
  399
  525
  677
  857
  1,065
  1,304
  1,572
  1,872
  2,202
  2,562
  2,952
  3,372
  3,819
  4,295
  4,797
  5,326
  5,882
  6,463
  7,070
  7,703
  8,363
  9,049
  9,762
Earnings before tax, $m
  -139
  -174
  -244
  -341
  -475
  -652
  -882
  -1,172
  -1,530
  -1,962
  -2,475
  -3,074
  -3,761
  -4,539
  -5,409
  -6,371
  -7,425
  -8,568
  -9,799
  -11,116
  -12,517
  -14,000
  -15,564
  -17,207
  -18,928
  -20,727
  -22,604
  -24,559
  -26,594
  -28,710
  -30,910
Tax expense, $m
  -11
  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
  -128
  -174
  -244
  -341
  -475
  -652
  -882
  -1,172
  -1,530
  -1,962
  -2,475
  -3,074
  -3,761
  -4,539
  -5,409
  -6,371
  -7,425
  -8,568
  -9,799
  -11,116
  -12,517
  -14,000
  -15,564
  -17,207
  -18,928
  -20,727
  -22,604
  -24,559
  -26,594
  -28,710
  -30,910

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  700
  1,105
  1,708
  2,554
  3,705
  5,228
  7,187
  9,647
  12,667
  16,299
  20,587
  25,565
  31,255
  37,673
  44,823
  52,704
  61,308
  70,621
  80,630
  91,318
  102,668
  114,667
  127,301
  140,561
  154,441
  168,938
  184,056
  199,799
  216,179
  233,210
  250,912
Adjusted assets (=assets-cash), $m
  690
  1,105
  1,708
  2,554
  3,705
  5,228
  7,187
  9,647
  12,667
  16,299
  20,587
  25,565
  31,255
  37,673
  44,823
  52,704
  61,308
  70,621
  80,630
  91,318
  102,668
  114,667
  127,301
  140,561
  154,441
  168,938
  184,056
  199,799
  216,179
  233,210
  250,912
Revenue / Adjusted assets
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
  0.401
Average production assets, $m
  645
  1,031
  1,593
  2,383
  3,458
  4,878
  6,706
  9,002
  11,820
  15,209
  19,210
  23,855
  29,165
  35,154
  41,826
  49,180
  57,208
  65,899
  75,238
  85,211
  95,803
  106,999
  118,788
  131,161
  144,113
  157,641
  171,747
  186,438
  201,722
  217,615
  234,133
Working capital, $m
  48
  61
  94
  140
  204
  287
  395
  530
  696
  895
  1,131
  1,404
  1,717
  2,070
  2,462
  2,895
  3,368
  3,880
  4,430
  5,017
  5,640
  6,299
  6,994
  7,722
  8,485
  9,281
  10,111
  10,976
  11,876
  12,812
  13,784
Total debt, $m
  339
  591
  957
  1,470
  2,169
  3,093
  4,282
  5,776
  7,609
  9,814
  12,416
  15,438
  18,892
  22,787
  27,128
  31,911
  37,134
  42,787
  48,862
  55,350
  62,240
  69,523
  77,192
  85,240
  93,666
  102,466
  111,642
  121,198
  131,141
  141,479
  152,224
Total liabilities, $m
  419
  671
  1,037
  1,550
  2,249
  3,173
  4,362
  5,856
  7,689
  9,894
  12,496
  15,518
  18,972
  22,867
  27,208
  31,991
  37,214
  42,867
  48,942
  55,430
  62,320
  69,603
  77,272
  85,320
  93,746
  102,546
  111,722
  121,278
  131,221
  141,559
  152,304
Total equity, $m
  281
  434
  671
  1,004
  1,456
  2,054
  2,824
  3,791
  4,978
  6,406
  8,091
  10,047
  12,283
  14,805
  17,616
  20,713
  24,094
  27,754
  31,688
  35,888
  40,349
  45,064
  50,029
  55,240
  60,695
  66,393
  72,334
  78,521
  84,958
  91,652
  98,609
Total liabilities and equity, $m
  700
  1,105
  1,708
  2,554
  3,705
  5,227
  7,186
  9,647
  12,667
  16,300
  20,587
  25,565
  31,255
  37,672
  44,824
  52,704
  61,308
  70,621
  80,630
  91,318
  102,669
  114,667
  127,301
  140,560
  154,441
  168,939
  184,056
  199,799
  216,179
  233,211
  250,913
Debt-to-equity ratio
  1.206
  1.360
  1.430
  1.460
  1.490
  1.510
  1.520
  1.520
  1.530
  1.530
  1.530
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
Adjusted equity ratio
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -128
  -174
  -244
  -341
  -475
  -652
  -882
  -1,172
  -1,530
  -1,962
  -2,475
  -3,074
  -3,761
  -4,539
  -5,409
  -6,371
  -7,425
  -8,568
  -9,799
  -11,116
  -12,517
  -14,000
  -15,564
  -17,207
  -18,928
  -20,727
  -22,604
  -24,559
  -26,594
  -28,710
  -30,910
Depreciation, amort., depletion, $m
  114
  181
  280
  418
  607
  856
  1,177
  1,579
  2,074
  2,668
  3,370
  4,185
  5,117
  6,167
  7,338
  8,628
  10,036
  11,561
  13,200
  14,949
  16,807
  18,772
  20,840
  23,011
  25,283
  27,656
  30,131
  32,708
  35,390
  38,178
  41,076
Funds from operations, $m
  19
  6
  36
  77
  132
  204
  295
  408
  544
  706
  895
  1,111
  1,355
  1,628
  1,928
  2,257
  2,612
  2,994
  3,401
  3,833
  4,290
  4,771
  5,276
  5,804
  6,355
  6,929
  7,527
  8,149
  8,796
  9,468
  10,166
Change in working capital, $m
  14
  23
  33
  46
  63
  84
  108
  135
  166
  200
  236
  273
  313
  353
  393
  433
  473
  512
  550
  587
  624
  659
  694
  728
  763
  796
  831
  865
  900
  936
  972
Cash from operations, $m
  5
  -16
  3
  30
  68
  120
  187
  272
  378
  507
  659
  838
  1,043
  1,275
  1,536
  1,824
  2,139
  2,482
  2,851
  3,246
  3,667
  4,112
  4,582
  5,075
  5,592
  6,133
  6,697
  7,284
  7,896
  8,532
  9,193
Maintenance CAPEX, $m
  0
  -113
  -181
  -280
  -418
  -607
  -856
  -1,177
  -1,579
  -2,074
  -2,668
  -3,370
  -4,185
  -5,117
  -6,167
  -7,338
  -8,628
  -10,036
  -11,561
  -13,200
  -14,949
  -16,807
  -18,772
  -20,840
  -23,011
  -25,283
  -27,656
  -30,131
  -32,708
  -35,390
  -38,178
New CAPEX, $m
  -32
  -387
  -562
  -790
  -1,075
  -1,421
  -1,828
  -2,295
  -2,818
  -3,389
  -4,001
  -4,645
  -5,310
  -5,989
  -6,672
  -7,354
  -8,028
  -8,691
  -9,339
  -9,973
  -10,591
  -11,196
  -11,789
  -12,373
  -12,952
  -13,528
  -14,106
  -14,691
  -15,285
  -15,893
  -16,518
Cash from investing activities, $m
  -25
  -500
  -743
  -1,070
  -1,493
  -2,028
  -2,684
  -3,472
  -4,397
  -5,463
  -6,669
  -8,015
  -9,495
  -11,106
  -12,839
  -14,692
  -16,656
  -18,727
  -20,900
  -23,173
  -25,540
  -28,003
  -30,561
  -33,213
  -35,963
  -38,811
  -41,762
  -44,822
  -47,993
  -51,283
  -54,696
Free cash flow, $m
  -20
  -516
  -740
  -1,039
  -1,424
  -1,907
  -2,497
  -3,200
  -4,019
  -4,957
  -6,010
  -7,177
  -8,452
  -9,830
  -11,304
  -12,868
  -14,517
  -16,245
  -18,050
  -19,926
  -21,874
  -23,891
  -25,979
  -28,138
  -30,370
  -32,678
  -35,066
  -37,537
  -40,097
  -42,751
  -45,503
Issuance/(repayment) of debt, $m
  -49
  252
  366
  514
  699
  924
  1,189
  1,493
  1,833
  2,205
  2,603
  3,021
  3,454
  3,896
  4,340
  4,784
  5,222
  5,653
  6,075
  6,487
  6,890
  7,283
  7,669
  8,049
  8,425
  8,800
  9,176
  9,556
  9,943
  10,338
  10,745
Issuance/(repurchase) of shares, $m
  65
  338
  480
  674
  927
  1,251
  1,652
  2,139
  2,716
  3,390
  4,161
  5,030
  5,998
  7,062
  8,220
  9,469
  10,806
  12,228
  13,732
  15,316
  16,978
  18,716
  20,529
  22,418
  24,383
  26,425
  28,545
  30,746
  33,032
  35,404
  37,867
Cash from financing (excl. dividends), $m  
  16
  590
  846
  1,188
  1,626
  2,175
  2,841
  3,632
  4,549
  5,595
  6,764
  8,051
  9,452
  10,958
  12,560
  14,253
  16,028
  17,881
  19,807
  21,803
  23,868
  25,999
  28,198
  30,467
  32,808
  35,225
  37,721
  40,302
  42,975
  45,742
  48,612
Total cash flow (excl. dividends), $m
  -4
  74
  106
  149
  202
  267
  344
  432
  530
  638
  753
  874
  1,000
  1,127
  1,256
  1,384
  1,511
  1,636
  1,758
  1,877
  1,994
  2,107
  2,219
  2,329
  2,438
  2,546
  2,655
  2,765
  2,877
  2,991
  3,109
Retained Cash Flow (-), $m
  62
  -338
  -480
  -674
  -927
  -1,251
  -1,652
  -2,139
  -2,716
  -3,390
  -4,161
  -5,030
  -5,998
  -7,062
  -8,220
  -9,469
  -10,806
  -12,228
  -13,732
  -15,316
  -16,978
  -18,716
  -20,529
  -22,418
  -24,383
  -26,425
  -28,545
  -30,746
  -33,032
  -35,404
  -37,867
Prev. year cash balance distribution, $m
 
  10
  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
 
  -254
  -375
  -525
  -725
  -983
  -1,308
  -1,706
  -2,186
  -2,752
  -3,408
  -4,156
  -4,998
  -5,934
  -6,964
  -8,084
  -9,295
  -10,592
  -11,974
  -13,439
  -14,984
  -16,608
  -18,310
  -20,089
  -21,945
  -23,878
  -25,890
  -27,981
  -30,155
  -32,412
  -34,758
Discount rate, %
 
  10.10
  10.61
  11.14
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.05
  20.00
  21.00
  22.05
  23.15
  24.31
  25.52
  26.80
  28.14
  29.55
  31.02
  32.57
  34.20
  35.91
  37.71
  39.59
  41.57
PV of cash for distribution, $m
 
  -231
  -306
  -383
  -466
  -551
  -632
  -702
  -755
  -787
  -795
  -778
  -739
  -680
  -607
  -525
  -440
  -358
  -282
  -215
  -159
  -113
  -78
  -52
  -34
  -21
  -12
  -7
  -4
  -2
  -1
Current shareholders' claim on cash, %
  100
  36.0
  13.9
  5.7
  2.5
  1.1
  0.5
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Pioneer Energy Services Corp. provides land-based drilling services and production services to a group of independent oil and gas exploration and production companies in the United States and internationally in Colombia. The Company operates through two segments, which include drilling services segment and production services segment. It also provides two of its services (coiled tubing and wireline services) offshore in the Gulf of Mexico. Its drilling services segment provides contract land drilling services to a group of exploration and production companies through the Company's four drilling divisions in the United States, and internationally in Colombia. Its production services segment provides a range of services to a group of exploration and production companies, with its operations concentrated in the various United States onshore oil and gas producing regions in the Mid-Continent and Rocky Mountain states and in the Gulf Coast.

FINANCIAL RATIOS  of  Pioneer Energy Services (PES)

Valuation Ratios
P/E Ratio -1.5
Price to Sales 0.7
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 38.6
Price to Free Cash Flow -7.1
Growth Rates
Sales Growth Rate -48.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -80%
Cap. Spend. - 3 Yr. Gr. Rate -28%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 120.6%
Total Debt to Equity 120.6%
Interest Coverage -5
Management Effectiveness
Return On Assets -13.8%
Ret/ On Assets - 3 Yr. Avg. -9.3%
Return On Total Capital -19%
Ret/ On T. Cap. - 3 Yr. Avg. -13.8%
Return On Equity -41%
Return On Equity - 3 Yr. Avg. -28.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 26.4%
Gross Margin - 3 Yr. Avg. 31.7%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin -41.2%
Oper. Margin - 3 Yr. Avg. -24.4%
Pre-Tax Margin -50.2%
Pre-Tax Margin - 3 Yr. Avg. -30.2%
Net Profit Margin -46.2%
Net Profit Margin - 3 Yr. Avg. -26.2%
Effective Tax Rate 7.9%
Eff/ Tax Rate - 3 Yr. Avg. 16.7%
Payout Ratio 0%

PES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PES stock intrinsic value calculation we used $277 million for the last fiscal year's total revenue generated by Pioneer Energy Services. The default revenue input number comes from 2016 income statement of Pioneer Energy Services. 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 PES stock valuation model: a) initial revenue growth rate of 60% 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 10.1%, whose default value for PES is calculated based on our internal credit rating of Pioneer Energy Services, 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 Pioneer Energy Services.
    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 PES stock the variable cost ratio is equal to 120.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $57 million in the base year in the intrinsic value calculation for PES 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 6.9% for Pioneer Energy Services.

Corporate tax rate of 27% is the nominal tax rate for Pioneer Energy Services. 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 PES 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 PES are equal to 232.7%.

Life of production assets of 5.7 years is the average useful life of capital assets used in Pioneer Energy Services 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 PES is equal to 13.7%. 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 - $281 million for Pioneer Energy Services - 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 77.717 million for Pioneer Energy Services 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 Pioneer Energy Services at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Van Den Berg Buys Dollar Tree, Schlumberger, CVS   [Aug-21-17 05:05PM  GuruFocus.com]
▶ Pioneer Energy reports 2Q loss   [Aug-01-17 09:32PM  Associated Press]
▶ Pioneer Energy Services approaching three years of losses   [02:50PM  American City Business Journals]
▶ 5 Energy Stocks to Turn It Around in Q3   [Jul-06-17 02:11PM  Zacks]
▶ 8 Stocks Van Den Berg Continues to Buy   [May-03-17 05:32PM  GuruFocus.com]
▶ Pioneer Energy reports higher revenue, 10 quarters of losses   [01:25PM  American City Business Journals]
▶ Pioneer Energy reports 1Q loss   [06:21AM  Associated Press]
▶ Article 50 Submitted, Triggering Brexit   [10:13AM  Investopedia]
▶ Pioneer Energy reports 4Q loss   [06:16AM  Associated Press]
▶ Why Pioneer Energy Services Corp.'s Stock Is Sinking Today   [Dec-07-16 12:10PM  at Motley Fool]
▶ OPEC's Production Cut Has These Stocks Rallying Again Today   [Dec-01-16 12:30PM  at Motley Fool]
▶ Energy Stocks Analysts Want You to Buy Now   [Sep-04-16 10:25AM  at 24/7 Wall St.]
Financial statements of PES
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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