Intrinsic value of Rex Energy - REXX

Previous Close

$2.27

  Intrinsic Value

$0.03

stock screener

  Rating & Target

str. sell

-99%

  Value-price divergence*

-14%

Previous close

$2.27

 
Intrinsic value

$0.03

 
Up/down potential

-99%

 
Rating

str. sell

 
Value-price divergence*

-14%

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

We calculate the intrinsic value of REXX 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, %
  0.00
  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
  139
  222
  344
  514
  746
  1,052
  1,446
  1,941
  2,549
  3,280
  4,143
  5,144
  6,289
  7,581
  9,020
  10,605
  12,337
  14,211
  16,225
  18,375
  20,659
  23,074
  25,616
  28,284
  31,077
  33,994
  37,036
  40,204
  43,500
  46,928
  50,490
Variable operating expenses, $m
 
  795
  1,229
  1,838
  2,666
  3,762
  5,171
  6,942
  9,115
  11,728
  14,814
  18,396
  22,490
  27,109
  32,254
  37,925
  44,116
  50,817
  58,020
  65,710
  73,878
  82,512
  91,603
  101,144
  111,132
  121,564
  132,442
  143,771
  155,557
  167,813
  180,551
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
  247
  795
  1,229
  1,838
  2,666
  3,762
  5,171
  6,942
  9,115
  11,728
  14,814
  18,396
  22,490
  27,109
  32,254
  37,925
  44,116
  50,817
  58,020
  65,710
  73,878
  82,512
  91,603
  101,144
  111,132
  121,564
  132,442
  143,771
  155,557
  167,813
  180,551
Operating income, $m
  -108
  -573
  -885
  -1,324
  -1,921
  -2,710
  -3,725
  -5,000
  -6,566
  -8,449
  -10,671
  -13,251
  -16,201
  -19,528
  -23,234
  -27,319
  -31,779
  -36,607
  -41,795
  -47,335
  -53,218
  -59,438
  -65,987
  -72,860
  -80,055
  -87,570
  -95,406
  -103,566
  -112,057
  -120,885
  -130,061
EBITDA, $m
  -40
  -464
  -717
  -1,072
  -1,555
  -2,194
  -3,016
  -4,048
  -5,316
  -6,840
  -8,639
  -10,728
  -13,116
  -15,809
  -18,810
  -22,117
  -25,728
  -29,636
  -33,836
  -38,321
  -43,084
  -48,120
  -53,421
  -58,986
  -64,810
  -70,894
  -77,238
  -83,845
  -90,719
  -97,866
  -105,294
Interest expense (income), $m
  31
  30
  47
  75
  114
  168
  239
  331
  446
  587
  757
  957
  1,190
  1,456
  1,756
  2,090
  2,458
  2,860
  3,295
  3,763
  4,263
  4,793
  5,354
  5,944
  6,564
  7,213
  7,890
  8,597
  9,333
  10,098
  10,894
Earnings before tax, $m
  -195
  -603
  -932
  -1,398
  -2,035
  -2,878
  -3,964
  -5,331
  -7,012
  -9,036
  -11,428
  -14,208
  -17,391
  -20,983
  -24,990
  -29,409
  -34,237
  -39,467
  -45,090
  -51,098
  -57,481
  -64,231
  -71,341
  -78,804
  -86,619
  -94,782
  -103,296
  -112,163
  -121,390
  -130,983
  -140,955
Tax expense, $m
  3
  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
  -177
  -603
  -932
  -1,398
  -2,035
  -2,878
  -3,964
  -5,331
  -7,012
  -9,036
  -11,428
  -14,208
  -17,391
  -20,983
  -24,990
  -29,409
  -34,237
  -39,467
  -45,090
  -51,098
  -57,481
  -64,231
  -71,341
  -78,804
  -86,619
  -94,782
  -103,296
  -112,163
  -121,390
  -130,983
  -140,955

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  894
  1,435
  2,217
  3,315
  4,810
  6,787
  9,330
  12,524
  16,444
  21,160
  26,727
  33,188
  40,576
  48,908
  58,190
  68,422
  79,591
  91,682
  104,675
  118,550
  133,286
  148,863
  165,264
  182,479
  200,498
  219,319
  238,944
  259,383
  280,648
  302,758
  325,739
Adjusted assets (=assets-cash), $m
  890
  1,435
  2,217
  3,315
  4,810
  6,787
  9,330
  12,524
  16,444
  21,160
  26,727
  33,188
  40,576
  48,908
  58,190
  68,422
  79,591
  91,682
  104,675
  118,550
  133,286
  148,863
  165,264
  182,479
  200,498
  219,319
  238,944
  259,383
  280,648
  302,758
  325,739
Revenue / Adjusted assets
  0.156
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
Average production assets, $m
  900
  1,440
  2,225
  3,327
  4,828
  6,811
  9,364
  12,569
  16,504
  21,237
  26,823
  33,309
  40,723
  49,085
  58,401
  68,670
  79,879
  92,014
  105,055
  118,980
  133,769
  149,402
  165,863
  183,140
  201,225
  220,114
  239,811
  260,323
  281,665
  303,856
  326,920
Working capital, $m
  -70
  -22
  -34
  -51
  -75
  -105
  -145
  -194
  -255
  -328
  -414
  -514
  -629
  -758
  -902
  -1,061
  -1,234
  -1,421
  -1,622
  -1,838
  -2,066
  -2,307
  -2,562
  -2,828
  -3,108
  -3,399
  -3,704
  -4,020
  -4,350
  -4,693
  -5,049
Total debt, $m
  756
  1,163
  1,867
  2,856
  4,201
  5,980
  8,269
  11,143
  14,672
  18,916
  23,926
  29,742
  36,390
  43,889
  52,243
  61,451
  71,504
  82,386
  94,080
  106,567
  119,829
  133,848
  148,610
  164,103
  180,320
  197,259
  214,922
  233,316
  252,455
  272,354
  293,037
Total liabilities, $m
  884
  1,291
  1,995
  2,984
  4,329
  6,108
  8,397
  11,271
  14,800
  19,044
  24,054
  29,870
  36,518
  44,017
  52,371
  61,579
  71,632
  82,514
  94,208
  106,695
  119,957
  133,976
  148,738
  164,231
  180,448
  197,387
  215,050
  233,444
  252,583
  272,482
  293,165
Total equity, $m
  10
  143
  222
  332
  481
  679
  933
  1,252
  1,644
  2,116
  2,673
  3,319
  4,058
  4,891
  5,819
  6,842
  7,959
  9,168
  10,468
  11,855
  13,329
  14,886
  16,526
  18,248
  20,050
  21,932
  23,894
  25,938
  28,065
  30,276
  32,574
Total liabilities and equity, $m
  894
  1,434
  2,217
  3,316
  4,810
  6,787
  9,330
  12,523
  16,444
  21,160
  26,727
  33,189
  40,576
  48,908
  58,190
  68,421
  79,591
  91,682
  104,676
  118,550
  133,286
  148,862
  165,264
  182,479
  200,498
  219,319
  238,944
  259,382
  280,648
  302,758
  325,739
Debt-to-equity ratio
  75.600
  8.110
  8.420
  8.610
  8.730
  8.810
  8.860
  8.900
  8.920
  8.940
  8.950
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
  9.000
  9.000
  9.000
Adjusted equity ratio
  0.007
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -177
  -603
  -932
  -1,398
  -2,035
  -2,878
  -3,964
  -5,331
  -7,012
  -9,036
  -11,428
  -14,208
  -17,391
  -20,983
  -24,990
  -29,409
  -34,237
  -39,467
  -45,090
  -51,098
  -57,481
  -64,231
  -71,341
  -78,804
  -86,619
  -94,782
  -103,296
  -112,163
  -121,390
  -130,983
  -140,955
Depreciation, amort., depletion, $m
  68
  109
  169
  252
  366
  516
  709
  952
  1,250
  1,609
  2,032
  2,523
  3,085
  3,719
  4,424
  5,202
  6,051
  6,971
  7,959
  9,014
  10,134
  11,318
  12,565
  13,874
  15,244
  16,675
  18,167
  19,721
  21,338
  23,019
  24,767
Funds from operations, $m
  -9
  -494
  -763
  -1,146
  -1,669
  -2,362
  -3,255
  -4,379
  -5,761
  -7,427
  -9,396
  -11,685
  -14,306
  -17,265
  -20,565
  -24,207
  -28,186
  -32,496
  -37,132
  -42,084
  -47,347
  -52,913
  -58,775
  -64,930
  -71,375
  -78,107
  -85,129
  -92,442
  -100,051
  -107,964
  -116,189
Change in working capital, $m
  -5
  -8
  -12
  -17
  -23
  -31
  -39
  -50
  -61
  -73
  -86
  -100
  -115
  -129
  -144
  -159
  -173
  -187
  -201
  -215
  -228
  -241
  -254
  -267
  -279
  -292
  -304
  -317
  -330
  -343
  -356
Cash from operations, $m
  -4
  -486
  -751
  -1,129
  -1,646
  -2,331
  -3,216
  -4,329
  -5,701
  -7,354
  -9,310
  -11,585
  -14,191
  -17,136
  -20,422
  -24,048
  -28,012
  -32,309
  -36,930
  -41,869
  -47,119
  -52,671
  -58,521
  -64,663
  -71,095
  -77,815
  -84,824
  -92,125
  -99,722
  -107,621
  -115,832
Maintenance CAPEX, $m
  0
  -68
  -109
  -169
  -252
  -366
  -516
  -709
  -952
  -1,250
  -1,609
  -2,032
  -2,523
  -3,085
  -3,719
  -4,424
  -5,202
  -6,051
  -6,971
  -7,959
  -9,014
  -10,134
  -11,318
  -12,565
  -13,874
  -15,244
  -16,675
  -18,167
  -19,721
  -21,338
  -23,019
New CAPEX, $m
  -49
  -540
  -785
  -1,102
  -1,500
  -1,983
  -2,553
  -3,205
  -3,935
  -4,733
  -5,587
  -6,485
  -7,414
  -8,362
  -9,316
  -10,268
  -11,210
  -12,135
  -13,041
  -13,925
  -14,789
  -15,633
  -16,461
  -17,277
  -18,084
  -18,889
  -19,697
  -20,512
  -21,342
  -22,191
  -23,064
Cash from investing activities, $m
  5
  -608
  -894
  -1,271
  -1,752
  -2,349
  -3,069
  -3,914
  -4,887
  -5,983
  -7,196
  -8,517
  -9,937
  -11,447
  -13,035
  -14,692
  -16,412
  -18,186
  -20,012
  -21,884
  -23,803
  -25,767
  -27,779
  -29,842
  -31,958
  -34,133
  -36,372
  -38,679
  -41,063
  -43,529
  -46,083
Free cash flow, $m
  1
  -1,094
  -1,645
  -2,400
  -3,398
  -4,680
  -6,284
  -8,244
  -10,588
  -13,337
  -16,505
  -20,102
  -24,129
  -28,583
  -33,457
  -38,741
  -44,424
  -50,495
  -56,942
  -63,753
  -70,921
  -78,438
  -86,301
  -94,506
  -103,054
  -111,949
  -121,196
  -130,805
  -140,785
  -151,150
  -161,916
Issuance/(repayment) of debt, $m
  5
  407
  704
  989
  1,346
  1,779
  2,289
  2,874
  3,529
  4,244
  5,010
  5,816
  6,649
  7,499
  8,355
  9,208
  10,052
  10,882
  11,694
  12,487
  13,262
  14,019
  14,762
  15,493
  16,217
  16,939
  17,663
  18,395
  19,138
  19,900
  20,683
Issuance/(repurchase) of shares, $m
  0
  737
  1,010
  1,508
  2,184
  3,075
  4,219
  5,651
  7,404
  9,507
  11,985
  14,855
  18,130
  21,817
  25,918
  30,432
  35,354
  40,676
  46,390
  52,486
  58,955
  65,789
  72,981
  80,526
  88,421
  96,665
  105,259
  114,207
  123,516
  133,195
  143,253
Cash from financing (excl. dividends), $m  
  2
  1,144
  1,714
  2,497
  3,530
  4,854
  6,508
  8,525
  10,933
  13,751
  16,995
  20,671
  24,779
  29,316
  34,273
  39,640
  45,406
  51,558
  58,084
  64,973
  72,217
  79,808
  87,743
  96,019
  104,638
  113,604
  122,922
  132,602
  142,654
  153,095
  163,936
Total cash flow (excl. dividends), $m
  3
  50
  69
  97
  131
  174
  224
  281
  345
  415
  489
  568
  649
  732
  816
  899
  982
  1,063
  1,142
  1,220
  1,295
  1,369
  1,442
  1,513
  1,584
  1,655
  1,725
  1,797
  1,869
  1,944
  2,020
Retained Cash Flow (-), $m
  150
  -737
  -1,010
  -1,508
  -2,184
  -3,075
  -4,219
  -5,651
  -7,404
  -9,507
  -11,985
  -14,855
  -18,130
  -21,817
  -25,918
  -30,432
  -35,354
  -40,676
  -46,390
  -52,486
  -58,955
  -65,789
  -72,981
  -80,526
  -88,421
  -96,665
  -105,259
  -114,207
  -123,516
  -133,195
  -143,253
Prev. year cash balance distribution, $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 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
 
  -687
  -941
  -1,412
  -2,053
  -2,902
  -3,995
  -5,370
  -7,059
  -9,093
  -11,495
  -14,287
  -17,480
  -21,084
  -25,102
  -29,533
  -34,372
  -39,613
  -45,247
  -51,266
  -57,659
  -64,419
  -71,539
  -79,013
  -86,837
  -95,010
  -103,533
  -112,410
  -121,647
  -131,251
  -141,233
Discount rate, %
 
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
  32.85
  34.49
  36.21
  38.02
  39.93
  41.92
  44.02
  46.22
  48.53
  50.96
  53.50
  56.18
  58.99
  61.94
  65.03
PV of cash for distribution, $m
 
  -593
  -692
  -872
  -1,049
  -1,206
  -1,327
  -1,400
  -1,417
  -1,376
  -1,284
  -1,150
  -991
  -820
  -652
  -498
  -365
  -257
  -174
  -112
  -70
  -41
  -23
  -13
  -7
  -3
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  12.0
  7.0
  4.2
  2.5
  1.5
  0.9
  0.6
  0.4
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Rex Energy Corporation operates as an independent oil, natural gas liquid, and natural gas company in the Appalachian and Illinois basins in the United States. The company focuses on the Marcellus Shale, Utica Shale, and Burkett Shale drilling and exploration activities in the Appalachian Basin, as well as on developmental oil drilling on its properties in the Illinois Basins. As of December 31, 2015, it had estimated proved reserves of 680.4 billion cubic feet equivalent; and owned interests in approximately 1,819 oil and natural gas wells. Rex Energy Corporation was founded in 2007 and is headquartered in State College, Pennsylvania.

FINANCIAL RATIOS  of  Rex Energy (REXX)

Valuation Ratios
P/E Ratio -0.1
Price to Sales 0.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow -5.6
Price to Free Cash Flow -0.4
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -80.3%
Cap. Spend. - 3 Yr. Gr. Rate -31.4%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 7550%
Total Debt to Equity 7560%
Interest Coverage -5
Management Effectiveness
Return On Assets -14.8%
Ret/ On Assets - 3 Yr. Avg. -14.3%
Return On Total Capital -20.8%
Ret/ On T. Cap. - 3 Yr. Avg. -19.8%
Return On Equity -208.2%
Return On Equity - 3 Yr. Avg. -108%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 24.5%
Gross Margin - 3 Yr. Avg. 42%
EBITDA Margin -69.1%
EBITDA Margin - 3 Yr. Avg. -46.4%
Operating Margin -77.7%
Oper. Margin - 3 Yr. Avg. -107.2%
Pre-Tax Margin -140.3%
Pre-Tax Margin - 3 Yr. Avg. -125.3%
Net Profit Margin -127.3%
Net Profit Margin - 3 Yr. Avg. -136.4%
Effective Tax Rate -1.5%
Eff/ Tax Rate - 3 Yr. Avg. 14.5%
Payout Ratio 0%

REXX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the REXX stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by Rex Energy. The default revenue input number comes from 2016 income statement of Rex Energy. 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 REXX 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 15.8%, whose default value for REXX is calculated based on our internal credit rating of Rex Energy, 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 Rex Energy.
    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 REXX stock the variable cost ratio is equal to 357.6%.

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 REXX 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 4% for Rex Energy.

Corporate tax rate of 27% is the nominal tax rate for Rex Energy. 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 REXX 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 REXX are equal to 647.5%.

Life of production assets of 13.2 years is the average useful life of capital assets used in Rex Energy 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 REXX is equal to -10%. 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 - $10 million for Rex Energy - 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 94.773 million for Rex Energy 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 Rex Energy at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Rex Energy reports 2Q loss   [Aug-08-17 04:44PM  Associated Press]
▶ US Natural Gas Inventories Are Slowing   [Jul-28-17 02:35PM  Market Realist]
▶ US Weather Could Drive Natural Gas Demand   [01:05PM  Market Realist]
▶ Monthly US Natural Gas Consumption Is near a 2-Year Low   [Jul-21-17 12:36PM  Market Realist]
▶ Slowing Natural Gas Inventories Could Drive Prices   [Jul-14-17 02:05PM  Market Realist]
▶ ETFs with exposure to Rex Energy Corp. : July 6, 2017   [Jul-06-17 02:07PM  Capital Cube]
▶ Natural Gas Futures Could Maintain Bullish Momentum   [Jun-30-17 08:15AM  Market Realist]
▶ Will US Natural Gas Inventories Support Prices?   [Jun-23-17 02:35PM  Market Realist]
▶ Will Weather Forecasts Surprise Natural Gas Bulls This Week?   [Jun-16-17 01:05PM  Market Realist]
▶ ETFs with exposure to Rex Energy Corp. : June 5, 2017   [Jun-05-17 02:42PM  Capital Cube]
▶ ETFs with exposure to Rex Energy Corp. : May 26, 2017   [May-26-17 01:24PM  Capital Cube]
▶ ETFs with exposure to Rex Energy Corp. : May 15, 2017   [May-15-17 04:28PM  Capital Cube]
▶ Rex Energy tops Street 1Q forecasts   [May-09-17 05:22PM  Associated Press]
▶ Why Weekly US Natural Gas Consumption Rose in Early May 2017   [May-08-17 07:36AM  Market Realist]
▶ Rex Energy Announces One-For-Ten Reverse Stock Split   [May-05-17 04:01PM  GlobeNewswire]
▶ ETFs with exposure to Rex Energy Corp. : May 2, 2017   [May-02-17 04:32PM  Capital Cube]
▶ ETFs with exposure to Rex Energy Corp. : April 19, 2017   [Apr-19-17 02:33PM  Capital Cube]
▶ Analyzing US Natural Gas Inventories: Week Ending April 7   [Apr-17-17 10:24AM  Market Realist]
▶ US Natural Gas Production Near August 2016 High   [Apr-10-17 07:36AM  Market Realist]
▶ ETFs with exposure to Rex Energy Corp. : April 7, 2017   [Apr-07-17 05:22PM  Capital Cube]
▶ ETFs with exposure to Rex Energy Corp. : March 27, 2017   [Mar-27-17 04:04PM  Capital Cube]
▶ Analyzing US Natural Gas Inventories: Week Ending March 10   [Mar-17-17 11:06AM  Market Realist]
▶ Decoding US Natural Gas Inventories: Week Ending March 3   [Mar-14-17 07:36AM  Market Realist]
▶ Rex Energy reports 4Q loss   [Mar-07-17 04:28PM  Associated Press]
▶ Nokia, Teva Plunge into Tuesdays 52-Week Low Club   [Nov-15-16 04:04PM  at 24/7 Wall St.]
▶ Rex Energy Options Narrow as Debt Talks Fail (REXX)   [Nov-14-16 03:50PM  at Investopedia]
Stock chart of REXX Financial statements of REXX
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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