Intrinsic value of RPC - RES

Previous Close

$18.64

  Intrinsic Value

$0.88

stock screener

  Rating & Target

str. sell

-95%

  Value-price divergence*

-125%

Previous close

$18.64

 
Intrinsic value

$0.88

 
Up/down potential

-95%

 
Rating

str. sell

 
Value-price divergence*

-125%

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

We calculate the intrinsic value of RES 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 4.1

 

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, %
  -42.33
  57.70
  52.43
  47.69
  43.42
  39.58
  36.12
  33.01
  30.21
  27.69
  25.42
  23.38
  21.54
  19.88
  18.40
  17.06
  15.85
  14.77
  13.79
  12.91
  12.12
  11.41
  10.77
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
Revenue, $m
  729
  1,150
  1,752
  2,588
  3,712
  5,181
  7,052
  9,380
  12,213
  15,594
  19,557
  24,129
  29,326
  35,157
  41,624
  48,724
  56,447
  64,782
  73,714
  83,231
  93,317
  103,962
  115,155
  126,889
  139,160
  151,968
  165,316
  179,211
  193,663
  208,688
  224,302
Variable operating expenses, $m
 
  970
  1,476
  2,179
  3,123
  4,358
  5,931
  7,888
  10,269
  13,112
  16,443
  20,283
  24,652
  29,553
  34,990
  40,958
  47,450
  54,456
  61,965
  69,965
  78,444
  87,392
  96,801
  106,664
  116,980
  127,746
  138,966
  150,647
  162,795
  175,425
  188,551
Fixed operating expenses, $m
 
  370
  379
  389
  398
  408
  419
  429
  440
  451
  462
  474
  486
  498
  510
  523
  536
  549
  563
  577
  592
  606
  621
  637
  653
  669
  686
  703
  721
  739
  757
Total operating expenses, $m
  968
  1,340
  1,855
  2,568
  3,521
  4,766
  6,350
  8,317
  10,709
  13,563
  16,905
  20,757
  25,138
  30,051
  35,500
  41,481
  47,986
  55,005
  62,528
  70,542
  79,036
  87,998
  97,422
  107,301
  117,633
  128,415
  139,652
  151,350
  163,516
  176,164
  189,308
Operating income, $m
  -239
  -190
  -103
  21
  190
  414
  702
  1,063
  1,504
  2,031
  2,652
  3,372
  4,189
  5,106
  6,124
  7,243
  8,461
  9,776
  11,186
  12,689
  14,282
  15,964
  17,733
  19,588
  21,528
  23,553
  25,664
  27,861
  30,147
  32,524
  34,994
EBITDA, $m
  -18
  -93
  43
  234
  495
  839
  1,279
  1,828
  2,500
  3,302
  4,245
  5,334
  6,573
  7,964
  9,508
  11,205
  13,050
  15,043
  17,179
  19,456
  21,869
  24,416
  27,095
  29,904
  32,841
  35,908
  39,104
  42,431
  45,892
  49,490
  53,230
Interest expense (income), $m
  0
  0
  5
  11
  20
  33
  49
  69
  95
  125
  162
  206
  256
  313
  376
  447
  525
  609
  700
  798
  902
  1,012
  1,128
  1,251
  1,379
  1,513
  1,653
  1,799
  1,951
  2,109
  2,273
Earnings before tax, $m
  -239
  -190
  -108
  9
  170
  382
  654
  994
  1,409
  1,906
  2,489
  3,166
  3,933
  4,793
  5,748
  6,796
  7,937
  9,167
  10,486
  11,891
  13,381
  14,952
  16,605
  18,337
  20,149
  22,040
  24,011
  26,062
  28,196
  30,415
  32,721
Tax expense, $m
  -98
  0
  0
  3
  46
  103
  176
  268
  380
  515
  672
  855
  1,062
  1,294
  1,552
  1,835
  2,143
  2,475
  2,831
  3,211
  3,613
  4,037
  4,483
  4,951
  5,440
  5,951
  6,483
  7,037
  7,613
  8,212
  8,835
Net income, $m
  -141
  -190
  -108
  7
  124
  279
  477
  725
  1,029
  1,391
  1,817
  2,312
  2,871
  3,499
  4,196
  4,961
  5,794
  6,692
  7,655
  8,681
  9,768
  10,915
  12,121
  13,386
  14,709
  16,089
  17,528
  19,026
  20,583
  22,203
  23,887

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  132
  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
  1,035
  1,425
  2,171
  3,207
  4,599
  6,420
  8,738
  11,623
  15,134
  19,323
  24,235
  29,900
  36,339
  43,565
  51,579
  60,377
  69,947
  80,275
  91,343
  103,136
  115,635
  128,826
  142,695
  157,236
  172,442
  188,313
  204,853
  222,070
  239,979
  258,597
  277,946
Adjusted assets (=assets-cash), $m
  903
  1,425
  2,171
  3,207
  4,599
  6,420
  8,738
  11,623
  15,134
  19,323
  24,235
  29,900
  36,339
  43,565
  51,579
  60,377
  69,947
  80,275
  91,343
  103,136
  115,635
  128,826
  142,695
  157,236
  172,442
  188,313
  204,853
  222,070
  239,979
  258,597
  277,946
Revenue / Adjusted assets
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
  0.807
Average production assets, $m
  593
  935
  1,425
  2,104
  3,018
  4,212
  5,733
  7,626
  9,929
  12,678
  15,900
  19,617
  23,842
  28,583
  33,841
  39,613
  45,891
  52,667
  59,930
  67,667
  75,867
  84,521
  93,621
  103,161
  113,137
  123,550
  134,402
  145,698
  157,448
  169,663
  182,358
Working capital, $m
  378
  387
  591
  872
  1,251
  1,746
  2,376
  3,161
  4,116
  5,255
  6,591
  8,131
  9,883
  11,848
  14,027
  16,420
  19,023
  21,831
  24,842
  28,049
  31,448
  35,035
  38,807
  42,762
  46,897
  51,213
  55,712
  60,394
  65,265
  70,328
  75,590
Total debt, $m
  0
  131
  319
  580
  931
  1,390
  1,974
  2,701
  3,586
  4,641
  5,879
  7,307
  8,930
  10,750
  12,770
  14,987
  17,399
  20,001
  22,791
  25,762
  28,912
  32,236
  35,731
  39,395
  43,227
  47,227
  51,395
  55,734
  60,247
  64,938
  69,814
Total liabilities, $m
  229
  359
  547
  808
  1,159
  1,618
  2,202
  2,929
  3,814
  4,869
  6,107
  7,535
  9,158
  10,978
  12,998
  15,215
  17,627
  20,229
  23,019
  25,990
  29,140
  32,464
  35,959
  39,623
  43,455
  47,455
  51,623
  55,962
  60,475
  65,166
  70,042
Total equity, $m
  807
  1,066
  1,624
  2,399
  3,440
  4,802
  6,536
  8,694
  11,320
  14,454
  18,128
  22,365
  27,182
  32,587
  38,581
  45,162
  52,320
  60,045
  68,325
  77,146
  86,495
  96,361
  106,736
  117,612
  128,986
  140,858
  153,230
  166,109
  179,505
  193,431
  207,904
Total liabilities and equity, $m
  1,036
  1,425
  2,171
  3,207
  4,599
  6,420
  8,738
  11,623
  15,134
  19,323
  24,235
  29,900
  36,340
  43,565
  51,579
  60,377
  69,947
  80,274
  91,344
  103,136
  115,635
  128,825
  142,695
  157,235
  172,441
  188,313
  204,853
  222,071
  239,980
  258,597
  277,946
Debt-to-equity ratio
  0.000
  0.120
  0.200
  0.240
  0.270
  0.290
  0.300
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
Adjusted equity ratio
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -141
  -190
  -108
  7
  124
  279
  477
  725
  1,029
  1,391
  1,817
  2,312
  2,871
  3,499
  4,196
  4,961
  5,794
  6,692
  7,655
  8,681
  9,768
  10,915
  12,121
  13,386
  14,709
  16,089
  17,528
  19,026
  20,583
  22,203
  23,887
Depreciation, amort., depletion, $m
  221
  97
  146
  214
  305
  424
  577
  766
  996
  1,271
  1,593
  1,962
  2,384
  2,858
  3,384
  3,961
  4,589
  5,267
  5,993
  6,767
  7,587
  8,452
  9,362
  10,316
  11,314
  12,355
  13,440
  14,570
  15,745
  16,966
  18,236
Funds from operations, $m
  156
  -93
  38
  220
  429
  703
  1,054
  1,491
  2,025
  2,662
  3,411
  4,273
  5,255
  6,358
  7,580
  8,923
  10,383
  11,959
  13,648
  15,447
  17,355
  19,367
  21,484
  23,702
  26,022
  28,444
  30,968
  33,595
  36,328
  39,169
  42,122
Change in working capital, $m
  54
  142
  203
  282
  379
  495
  631
  784
  955
  1,139
  1,336
  1,541
  1,751
  1,965
  2,180
  2,393
  2,603
  2,809
  3,010
  3,207
  3,399
  3,587
  3,772
  3,954
  4,135
  4,316
  4,498
  4,683
  4,870
  5,063
  5,262
Cash from operations, $m
  102
  -235
  -165
  -61
  50
  208
  423
  707
  1,070
  1,523
  2,075
  2,733
  3,504
  4,392
  5,401
  6,530
  7,780
  9,150
  10,638
  12,240
  13,955
  15,780
  17,712
  19,748
  21,887
  24,128
  26,470
  28,913
  31,458
  34,106
  36,860
Maintenance CAPEX, $m
  0
  -59
  -93
  -142
  -210
  -302
  -421
  -573
  -763
  -993
  -1,268
  -1,590
  -1,962
  -2,384
  -2,858
  -3,384
  -3,961
  -4,589
  -5,267
  -5,993
  -6,767
  -7,587
  -8,452
  -9,362
  -10,316
  -11,314
  -12,355
  -13,440
  -14,570
  -15,745
  -16,966
New CAPEX, $m
  -34
  -342
  -490
  -679
  -914
  -1,194
  -1,521
  -1,892
  -2,303
  -2,749
  -3,222
  -3,717
  -4,225
  -4,741
  -5,258
  -5,772
  -6,279
  -6,776
  -7,262
  -7,737
  -8,201
  -8,654
  -9,100
  -9,540
  -9,976
  -10,413
  -10,852
  -11,296
  -11,750
  -12,215
  -12,695
Cash from investing activities, $m
  -21
  -401
  -583
  -821
  -1,124
  -1,496
  -1,942
  -2,465
  -3,066
  -3,742
  -4,490
  -5,307
  -6,187
  -7,125
  -8,116
  -9,156
  -10,240
  -11,365
  -12,529
  -13,730
  -14,968
  -16,241
  -17,552
  -18,902
  -20,292
  -21,727
  -23,207
  -24,736
  -26,320
  -27,960
  -29,661
Free cash flow, $m
  81
  -636
  -749
  -883
  -1,074
  -1,288
  -1,519
  -1,759
  -1,996
  -2,219
  -2,415
  -2,574
  -2,683
  -2,733
  -2,716
  -2,626
  -2,460
  -2,215
  -1,891
  -1,490
  -1,012
  -461
  160
  846
  1,595
  2,401
  3,263
  4,176
  5,138
  6,146
  7,199
Issuance/(repayment) of debt, $m
  0
  131
  188
  261
  351
  459
  584
  727
  885
  1,056
  1,238
  1,428
  1,623
  1,821
  2,020
  2,217
  2,412
  2,603
  2,789
  2,972
  3,150
  3,324
  3,495
  3,664
  3,832
  3,999
  4,168
  4,339
  4,513
  4,692
  4,876
Issuance/(repurchase) of shares, $m
  -3
  581
  666
  768
  918
  1,083
  1,257
  1,432
  1,597
  1,743
  1,856
  1,926
  1,946
  1,906
  1,798
  1,619
  1,365
  1,033
  625
  140
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -3
  712
  854
  1,029
  1,269
  1,542
  1,841
  2,159
  2,482
  2,799
  3,094
  3,354
  3,569
  3,727
  3,818
  3,836
  3,777
  3,636
  3,414
  3,112
  3,150
  3,324
  3,495
  3,664
  3,832
  3,999
  4,168
  4,339
  4,513
  4,692
  4,876
Total cash flow (excl. dividends), $m
  78
  75
  106
  146
  195
  254
  322
  400
  486
  580
  679
  779
  886
  994
  1,102
  1,210
  1,316
  1,421
  1,523
  1,622
  2,138
  2,863
  3,655
  4,510
  5,426
  6,401
  7,431
  8,515
  9,651
  10,838
  12,075
Retained Cash Flow (-), $m
  145
  -581
  -666
  -775
  -1,042
  -1,362
  -1,734
  -2,157
  -2,626
  -3,134
  -3,674
  -4,237
  -4,817
  -5,405
  -5,995
  -6,580
  -7,158
  -7,725
  -8,280
  -8,821
  -9,349
  -9,867
  -10,375
  -10,876
  -11,374
  -11,871
  -12,372
  -12,879
  -13,396
  -13,926
  -14,473
Prev. year cash balance distribution, $m
 
  132
  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
 
  -373
  -560
  -629
  -847
  -1,108
  -1,412
  -1,757
  -2,140
  -2,554
  -2,995
  -3,458
  -3,931
  -4,411
  -4,892
  -5,370
  -5,842
  -6,305
  -6,757
  -7,199
  -7,211
  -7,003
  -6,720
  -6,366
  -5,948
  -5,471
  -4,941
  -4,364
  -3,745
  -3,088
  -2,398
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -358
  -513
  -547
  -697
  -859
  -1,025
  -1,187
  -1,338
  -1,467
  -1,570
  -1,642
  -1,678
  -1,677
  -1,642
  -1,577
  -1,485
  -1,372
  -1,244
  -1,108
  -916
  -724
  -558
  -417
  -303
  -213
  -144
  -94
  -58
  -34
  -18
Current shareholders' claim on cash, %
  100
  85.6
  76.2
  69.7
  64.9
  61.1
  58.1
  55.7
  53.8
  52.2
  50.9
  49.9
  49.0
  48.4
  47.8
  47.4
  47.2
  47.0
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9
  46.9

RPC, Inc. provides a range of oilfield services and equipment for oil and gas companies involved in the exploration, production, and development of oil and gas properties in the United States, Africa, Canada, Argentina, China, Mexico, Eastern Europe, Latin America, the Middle East, and New Zealand. The company operates in two segments, Technical Services and Support Services. The Technical Services segment offers pressure pumping, coiled tubing, snubbing, nitrogen pumping, well control consulting and firefighting, downhole tools, wireline, fishing, and fluid pumping services that are used in the completion, production, and maintenance of oil and gas wells. The Support Services segment provides a range of rental tools, including blowout preventors, high pressure manifolds and valves, Hevi-wate drill pipes, tubing products, production related rental tools, pumps, diverters, drill pipes, drill collars, handling tools, Coflexip hoses, and Wear Knot drill pipes that are used for onshore and offshore oil and gas well drilling, completion, and workover activities. It also offers oilfield pipe inspection, and pipe management and storage services; and oilfield training services. RPC, Inc. was founded in 1984 and is headquartered in Atlanta, Georgia.

FINANCIAL RATIOS  of  RPC (RES)

Valuation Ratios
P/E Ratio -28.8
Price to Sales 5.6
Price to Book 5
Price to Tangible Book
Price to Cash Flow 39.7
Price to Free Cash Flow 59.6
Growth Rates
Sales Growth Rate -42.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -79.6%
Cap. Spend. - 3 Yr. Gr. Rate -30%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -12.4%
Ret/ On Assets - 3 Yr. Avg. -1.1%
Return On Total Capital -16%
Ret/ On T. Cap. - 3 Yr. Avg. -1.3%
Return On Equity -16%
Return On Equity - 3 Yr. Avg. -0.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 16.6%
Gross Margin - 3 Yr. Avg. 24.9%
EBITDA Margin -2.5%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin -32.8%
Oper. Margin - 3 Yr. Avg. -9.3%
Pre-Tax Margin -32.8%
Pre-Tax Margin - 3 Yr. Avg. -9.3%
Net Profit Margin -19.3%
Net Profit Margin - 3 Yr. Avg. -5.6%
Effective Tax Rate 41%
Eff/ Tax Rate - 3 Yr. Avg. 38.1%
Payout Ratio -7.8%

RES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RES stock intrinsic value calculation we used $729 million for the last fiscal year's total revenue generated by RPC. The default revenue input number comes from 2016 income statement of RPC. 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 RES stock valuation model: a) initial revenue growth rate of 57.7% 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 4.3%, whose default value for RES is calculated based on our internal credit rating of RPC, 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 RPC.
    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 RES stock the variable cost ratio is equal to 84.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $361 million in the base year in the intrinsic value calculation for RES 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 3.5% for RPC.

Corporate tax rate of 27% is the nominal tax rate for RPC. 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 RES 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 RES are equal to 81.3%.

Life of production assets of 10 years is the average useful life of capital assets used in RPC 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 RES is equal to 33.7%. 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 - $807 million for RPC - 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 220.51 million for RPC 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 RPC at the current share price and the inputted number of shares is $4.1 billion.

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COMPANY NEWS

▶ ETFs with exposure to RPC, Inc. : August 15, 2017   [Aug-15-17 04:56PM  Capital Cube]
▶ Oilfield Services: 'Stuck In A Rut'   [Aug-03-17 10:30AM  Barrons.com]
▶ ETFs with exposure to RPC, Inc. : August 1, 2017   [Aug-01-17 05:13PM  Capital Cube]
▶ RPC tops 2Q profit forecasts   [Jul-26-17 09:27PM  Associated Press]
▶ RPC, Inc. Announces Cash Dividend   [06:45AM  PR Newswire]
▶ RPC, Inc. Value Analysis (NYSE:RES) : June 26, 2017   [Jun-26-17 06:01PM  Capital Cube]
▶ ETFs with exposure to RPC, Inc. : May 15, 2017   [May-15-17 04:27PM  Capital Cube]
▶ ETFs with exposure to RPC, Inc. : May 4, 2017   [May-04-17 04:16PM  Capital Cube]
▶ RPC tops Street 1Q forecasts   [Apr-26-17 07:30AM  Associated Press]
▶ RPC, Inc. Value Analysis (NYSE:RES) : April 12, 2017   [Apr-12-17 01:29PM  Capital Cube]
▶ Should You Buy RPC, Inc. (RES)?   [Dec-08-16 12:32PM  at Insider Monkey]
▶ How Akorn, Inc. (AKRX) Stacks Up Against Its Peers   [Nov-26-16 05:49PM  at Insider Monkey]
Stock chart of RES Financial statements of RES
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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