Intrinsic value of Southwestern Energy - SWN

Previous Close

$5.41

  Intrinsic Value

$0.43

stock screener

  Rating & Target

str. sell

-92%

Previous close

$5.41

 
Intrinsic value

$0.43

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of SWN 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -22.25
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
  5.43
  5.39
Revenue, $m
  2,436
  2,758
  3,099
  3,460
  3,840
  4,238
  4,655
  5,091
  5,545
  6,018
  6,510
  7,022
  7,553
  8,106
  8,680
  9,277
  9,898
  10,543
  11,214
  11,913
  12,641
  13,399
  14,189
  15,013
  15,873
  16,770
  17,707
  18,686
  19,710
  20,780
  21,899
Variable operating expenses, $m
 
  8,499
  9,551
  10,663
  11,833
  13,062
  14,347
  15,690
  17,090
  18,547
  20,064
  21,641
  23,280
  24,983
  26,753
  28,592
  30,505
  32,493
  34,562
  36,716
  38,958
  41,295
  43,730
  46,270
  48,919
  51,685
  54,574
  57,592
  60,746
  64,044
  67,493
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
  4,682
  8,499
  9,551
  10,663
  11,833
  13,062
  14,347
  15,690
  17,090
  18,547
  20,064
  21,641
  23,280
  24,983
  26,753
  28,592
  30,505
  32,493
  34,562
  36,716
  38,958
  41,295
  43,730
  46,270
  48,919
  51,685
  54,574
  57,592
  60,746
  64,044
  67,493
Operating income, $m
  -2,246
  -5,741
  -6,452
  -7,203
  -7,994
  -8,824
  -9,692
  -10,599
  -11,545
  -12,529
  -13,554
  -14,619
  -15,726
  -16,877
  -18,072
  -19,315
  -20,607
  -21,950
  -23,348
  -24,803
  -26,318
  -27,896
  -29,541
  -31,257
  -33,047
  -34,915
  -36,866
  -38,905
  -41,036
  -43,264
  -45,594
EBITDA, $m
  -1,810
  -5,247
  -5,896
  -6,583
  -7,305
  -8,063
  -8,857
  -9,686
  -10,550
  -11,450
  -12,386
  -13,360
  -14,371
  -15,423
  -16,515
  -17,651
  -18,832
  -20,059
  -21,337
  -22,666
  -24,050
  -25,493
  -26,996
  -28,564
  -30,200
  -31,907
  -33,690
  -35,553
  -37,501
  -39,536
  -41,666
Interest expense (income), $m
  75
  161
  149
  174
  200
  228
  257
  288
  319
  353
  387
  423
  460
  499
  540
  582
  625
  671
  718
  767
  818
  871
  927
  984
  1,045
  1,107
  1,173
  1,241
  1,313
  1,388
  1,466
Earnings before tax, $m
  -2,672
  -5,903
  -6,601
  -7,377
  -8,194
  -9,052
  -9,949
  -10,887
  -11,864
  -12,882
  -13,941
  -15,042
  -16,187
  -17,376
  -18,612
  -19,897
  -21,232
  -22,621
  -24,066
  -25,570
  -27,136
  -28,767
  -30,468
  -32,241
  -34,091
  -36,023
  -38,039
  -40,147
  -42,349
  -44,652
  -47,060
Tax expense, $m
  -29
  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
  -2,643
  -5,903
  -6,601
  -7,377
  -8,194
  -9,052
  -9,949
  -10,887
  -11,864
  -12,882
  -13,941
  -15,042
  -16,187
  -17,376
  -18,612
  -19,897
  -21,232
  -22,621
  -24,066
  -25,570
  -27,136
  -28,767
  -30,468
  -32,241
  -34,091
  -36,023
  -38,039
  -40,147
  -42,349
  -44,652
  -47,060

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,423
  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
  7,076
  6,398
  7,190
  8,027
  8,908
  9,833
  10,801
  11,812
  12,865
  13,963
  15,105
  16,292
  17,525
  18,808
  20,140
  21,525
  22,964
  24,462
  26,019
  27,640
  29,329
  31,087
  32,921
  34,833
  36,827
  38,910
  41,084
  43,356
  45,730
  48,213
  50,810
Adjusted assets (=assets-cash), $m
  5,653
  6,398
  7,190
  8,027
  8,908
  9,833
  10,801
  11,812
  12,865
  13,963
  15,105
  16,292
  17,525
  18,808
  20,140
  21,525
  22,964
  24,462
  26,019
  27,640
  29,329
  31,087
  32,921
  34,833
  36,827
  38,910
  41,084
  43,356
  45,730
  48,213
  50,810
Revenue / Adjusted assets
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
Average production assets, $m
  6,249
  7,073
  7,949
  8,874
  9,848
  10,871
  11,941
  13,058
  14,223
  15,436
  16,698
  18,011
  19,375
  20,792
  22,265
  23,796
  25,387
  27,043
  28,765
  30,557
  32,423
  34,368
  36,394
  38,508
  40,713
  43,015
  45,419
  47,931
  50,556
  53,300
  56,171
Working capital, $m
  808
  -651
  -731
  -816
  -906
  -1,000
  -1,099
  -1,201
  -1,309
  -1,420
  -1,536
  -1,657
  -1,783
  -1,913
  -2,049
  -2,189
  -2,336
  -2,488
  -2,647
  -2,811
  -2,983
  -3,162
  -3,349
  -3,543
  -3,746
  -3,958
  -4,179
  -4,410
  -4,652
  -4,904
  -5,168
Total debt, $m
  4,653
  4,252
  4,965
  5,718
  6,512
  7,344
  8,215
  9,124
  10,073
  11,061
  12,088
  13,156
  14,267
  15,421
  16,620
  17,866
  19,162
  20,509
  21,911
  23,370
  24,890
  26,473
  28,123
  29,843
  31,639
  33,513
  35,470
  37,514
  39,651
  41,886
  44,223
Total liabilities, $m
  6,159
  5,758
  6,471
  7,224
  8,018
  8,850
  9,721
  10,630
  11,579
  12,567
  13,594
  14,662
  15,773
  16,927
  18,126
  19,372
  20,668
  22,015
  23,417
  24,876
  26,396
  27,979
  29,629
  31,349
  33,145
  35,019
  36,976
  39,020
  41,157
  43,392
  45,729
Total equity, $m
  917
  640
  719
  803
  891
  983
  1,080
  1,181
  1,287
  1,396
  1,510
  1,629
  1,753
  1,881
  2,014
  2,152
  2,296
  2,446
  2,602
  2,764
  2,933
  3,109
  3,292
  3,483
  3,683
  3,891
  4,108
  4,336
  4,573
  4,821
  5,081
Total liabilities and equity, $m
  7,076
  6,398
  7,190
  8,027
  8,909
  9,833
  10,801
  11,811
  12,866
  13,963
  15,104
  16,291
  17,526
  18,808
  20,140
  21,524
  22,964
  24,461
  26,019
  27,640
  29,329
  31,088
  32,921
  34,832
  36,828
  38,910
  41,084
  43,356
  45,730
  48,213
  50,810
Debt-to-equity ratio
  5.074
  6.650
  6.910
  7.120
  7.310
  7.470
  7.610
  7.720
  7.830
  7.920
  8.000
  8.080
  8.140
  8.200
  8.250
  8.300
  8.340
  8.380
  8.420
  8.460
  8.490
  8.520
  8.540
  8.570
  8.590
  8.610
  8.630
  8.650
  8.670
  8.690
  8.700
Adjusted equity ratio
  -0.090
  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
  -2,643
  -5,903
  -6,601
  -7,377
  -8,194
  -9,052
  -9,949
  -10,887
  -11,864
  -12,882
  -13,941
  -15,042
  -16,187
  -17,376
  -18,612
  -19,897
  -21,232
  -22,621
  -24,066
  -25,570
  -27,136
  -28,767
  -30,468
  -32,241
  -34,091
  -36,023
  -38,039
  -40,147
  -42,349
  -44,652
  -47,060
Depreciation, amort., depletion, $m
  436
  495
  556
  621
  689
  760
  835
  913
  995
  1,079
  1,168
  1,259
  1,355
  1,454
  1,557
  1,664
  1,775
  1,891
  2,012
  2,137
  2,267
  2,403
  2,545
  2,693
  2,847
  3,008
  3,176
  3,352
  3,535
  3,727
  3,928
Funds from operations, $m
  399
  -5,408
  -6,045
  -6,756
  -7,505
  -8,291
  -9,114
  -9,973
  -10,869
  -11,803
  -12,773
  -13,783
  -14,832
  -15,922
  -17,055
  -18,233
  -19,457
  -20,730
  -22,054
  -23,433
  -24,868
  -26,364
  -27,923
  -29,548
  -31,244
  -33,014
  -34,863
  -36,795
  -38,814
  -40,924
  -43,132
Change in working capital, $m
  -99
  -76
  -81
  -85
  -90
  -94
  -98
  -103
  -107
  -112
  -116
  -121
  -125
  -130
  -136
  -141
  -146
  -152
  -158
  -165
  -172
  -179
  -186
  -194
  -203
  -212
  -221
  -231
  -242
  -253
  -264
Cash from operations, $m
  498
  -5,332
  -5,964
  -6,671
  -7,416
  -8,197
  -9,016
  -9,871
  -10,762
  -11,691
  -12,657
  -13,662
  -14,706
  -15,792
  -16,920
  -18,092
  -19,310
  -20,578
  -21,896
  -23,268
  -24,697
  -26,185
  -27,736
  -29,354
  -31,041
  -32,803
  -34,642
  -36,564
  -38,572
  -40,672
  -42,868
Maintenance CAPEX, $m
  0
  -437
  -495
  -556
  -621
  -689
  -760
  -835
  -913
  -995
  -1,079
  -1,168
  -1,259
  -1,355
  -1,454
  -1,557
  -1,664
  -1,775
  -1,891
  -2,012
  -2,137
  -2,267
  -2,403
  -2,545
  -2,693
  -2,847
  -3,008
  -3,176
  -3,352
  -3,535
  -3,727
New CAPEX, $m
  -593
  -824
  -876
  -925
  -974
  -1,022
  -1,070
  -1,117
  -1,165
  -1,213
  -1,262
  -1,312
  -1,364
  -1,417
  -1,473
  -1,531
  -1,592
  -1,655
  -1,722
  -1,792
  -1,866
  -1,944
  -2,027
  -2,114
  -2,205
  -2,302
  -2,404
  -2,512
  -2,625
  -2,745
  -2,871
Cash from investing activities, $m
  -162
  -1,261
  -1,371
  -1,481
  -1,595
  -1,711
  -1,830
  -1,952
  -2,078
  -2,208
  -2,341
  -2,480
  -2,623
  -2,772
  -2,927
  -3,088
  -3,256
  -3,430
  -3,613
  -3,804
  -4,003
  -4,211
  -4,430
  -4,659
  -4,898
  -5,149
  -5,412
  -5,688
  -5,977
  -6,280
  -6,598
Free cash flow, $m
  336
  -6,593
  -7,335
  -8,152
  -9,010
  -9,908
  -10,846
  -11,823
  -12,840
  -13,899
  -14,999
  -16,142
  -17,330
  -18,564
  -19,847
  -21,180
  -22,566
  -24,008
  -25,509
  -27,072
  -28,700
  -30,397
  -32,166
  -34,012
  -35,939
  -37,952
  -40,054
  -42,251
  -44,549
  -46,952
  -49,466
Issuance/(repayment) of debt, $m
  -121
  -360
  713
  753
  793
  832
  871
  910
  948
  988
  1,028
  1,068
  1,110
  1,154
  1,199
  1,246
  1,296
  1,347
  1,402
  1,459
  1,519
  1,583
  1,650
  1,721
  1,795
  1,874
  1,957
  2,045
  2,137
  2,234
  2,337
Issuance/(repurchase) of shares, $m
  1,247
  7,007
  6,680
  7,461
  8,282
  9,144
  10,046
  10,988
  11,969
  12,992
  14,055
  15,161
  16,310
  17,504
  18,745
  20,035
  21,376
  22,771
  24,222
  25,732
  27,305
  28,943
  30,651
  32,432
  34,291
  36,231
  38,257
  40,374
  42,586
  44,900
  47,320
Cash from financing (excl. dividends), $m  
  1,099
  6,647
  7,393
  8,214
  9,075
  9,976
  10,917
  11,898
  12,917
  13,980
  15,083
  16,229
  17,420
  18,658
  19,944
  21,281
  22,672
  24,118
  25,624
  27,191
  28,824
  30,526
  32,301
  34,153
  36,086
  38,105
  40,214
  42,419
  44,723
  47,134
  49,657
Total cash flow (excl. dividends), $m
  1,435
  54
  58
  62
  65
  68
  71
  74
  77
  81
  84
  87
  91
  94
  98
  102
  106
  110
  114
  119
  124
  129
  135
  141
  147
  153
  160
  167
  175
  183
  191
Retained Cash Flow (-), $m
  1,365
  -7,007
  -6,680
  -7,461
  -8,282
  -9,144
  -10,046
  -10,988
  -11,969
  -12,992
  -14,055
  -15,161
  -16,310
  -17,504
  -18,745
  -20,035
  -21,376
  -22,771
  -24,222
  -25,732
  -27,305
  -28,943
  -30,651
  -32,432
  -34,291
  -36,231
  -38,257
  -40,374
  -42,586
  -44,900
  -47,320
Prev. year cash balance distribution, $m
 
  1,382
  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
 
  -5,571
  -6,622
  -7,399
  -8,217
  -9,076
  -9,975
  -10,913
  -11,892
  -12,911
  -13,971
  -15,074
  -16,219
  -17,410
  -18,647
  -19,933
  -21,270
  -22,661
  -24,107
  -25,613
  -27,180
  -28,814
  -30,516
  -32,292
  -34,144
  -36,078
  -38,097
  -40,207
  -42,412
  -44,717
  -47,129
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  -5,120
  -5,549
  -5,604
  -5,575
  -5,460
  -5,267
  -5,001
  -4,674
  -4,297
  -3,886
  -3,454
  -3,015
  -2,585
  -2,174
  -1,792
  -1,447
  -1,143
  -883
  -666
  -490
  -351
  -245
  -166
  -110
  -70
  -43
  -26
  -15
  -8
  -4
Current shareholders' claim on cash, %
  100
  50.0
  11.5
  2.7
  0.6
  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
  0.0
  0.0
  0.0
  0.0

Southwestern Energy Company is an energy company engaged in natural gas and oil exploration, development and production. The Company operates through two segments: Exploration and Production (E&P) and Midstream Services. Its operations in northeast Pennsylvania are primarily focused on the unconventional natural gas reservoir known as the Marcellus Shale. Through its affiliated midstream subsidiaries, it is engaged in natural gas gathering activities in Arkansas and Louisiana. Its operations are principally focused on the development of unconventional natural gas reservoirs located in Pennsylvania, West Virginia and Arkansas. As of December 31, 2016, its estimated proved natural gas and oil reserves were 5,253 billions of cubic feet equivalent (Bcfe). During the fiscal year ended December 31, 2016, it gathered approximately 600 billion cubic feet (Bcf) of natural gas in the Fayetteville Shale area, including 42 Bcf of natural gas from third-party operated wells.

FINANCIAL RATIOS  of  Southwestern Energy (SWN)

Valuation Ratios
P/E Ratio -1
Price to Sales 1.1
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 5.4
Price to Free Cash Flow -28.2
Growth Rates
Sales Growth Rate -22.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -67%
Cap. Spend. - 3 Yr. Gr. Rate -23.4%
Financial Strength
Quick Ratio 35
Current Ratio 0
LT Debt to Equity 502.9%
Total Debt to Equity 507.4%
Interest Coverage -35
Management Effectiveness
Return On Assets -33.9%
Ret/ On Assets - 3 Yr. Avg. -21.7%
Return On Total Capital -42.1%
Ret/ On T. Cap. - 3 Yr. Avg. -26.8%
Return On Equity -165.2%
Return On Equity - 3 Yr. Avg. -91.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 64.5%
Gross Margin - 3 Yr. Avg. 71%
EBITDA Margin -88.7%
EBITDA Margin - 3 Yr. Avg. -67.5%
Operating Margin -92.2%
Oper. Margin - 3 Yr. Avg. -88.8%
Pre-Tax Margin -109.7%
Pre-Tax Margin - 3 Yr. Avg. -94.4%
Net Profit Margin -108.5%
Net Profit Margin - 3 Yr. Avg. -77%
Effective Tax Rate 1.1%
Eff/ Tax Rate - 3 Yr. Avg. 22.6%
Payout Ratio -1%

SWN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SWN stock intrinsic value calculation we used $2436 million for the last fiscal year's total revenue generated by Southwestern Energy. The default revenue input number comes from 2016 income statement of Southwestern 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 SWN stock valuation model: a) initial revenue growth rate of 13.2% 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 8.8%, whose default value for SWN is calculated based on our internal credit rating of Southwestern 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 Southwestern 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 SWN stock the variable cost ratio is equal to 308.2%.

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 SWN 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 Southwestern Energy.

Corporate tax rate of 27% is the nominal tax rate for Southwestern 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 SWN 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 SWN are equal to 256.5%.

Life of production assets of 14.3 years is the average useful life of capital assets used in Southwestern 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 SWN is equal to -23.6%. 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 - $917 million for Southwestern 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 528.674 million for Southwestern 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 Southwestern Energy at the current share price and the inputted number of shares is $2.9 billion.

RELATED COMPANIES Price Int.Val. Rating
COG Cabot Oil&Gas 27.98 1.39  str.sell
QEP QEP Resources 10.97 3.54  str.sell
KMI Kinder Morgan 19.57 5.99  str.sell
ETP Energy Transfe 20.25 12.97  sell
RRC Range Resource 16.78 3.66  str.sell
BWP Boardwalk Pipe 13.49 6.50  sell

COMPANY NEWS

▶ Which Energy Stocks Missed Higher Oil Prices Last Week?   [Jan-17-18 10:31AM  Market Realist]
▶ Is Oil Limiting Natural GasWeighted Stocks Fall?   [Jan-11-18 01:35PM  Market Realist]
▶ Has Natural Gas Outperformed Natural GasWeighted Stocks?   [Jan-04-18 11:35AM  Market Realist]
▶ Natural Gas Inventories Could Boost Natural Gas Prices   [Jan-03-18 02:05PM  Market Realist]
▶ Wall Street: Where Southwestern Energy Could Trade in 2018   [Jan-02-18 02:50PM  Market Realist]
▶ How Has SWN Performed?   [09:02AM  Market Realist]
▶ 3 Stocks That Have Been Cut in Half in 2017   [Dec-23-17 11:15AM  Motley Fool]
▶ These Stocks Could Suffer from Weakness in Natural Gas   [Dec-21-17 11:40AM  Market Realist]
▶ A Look at the Rig Count and Natural Gas   [07:33AM  Market Realist]
▶ Southwestern Energy Stock: Will Its Downtrend Reverse?   [Dec-20-17 07:33AM  Market Realist]
▶ Southwestern Energys Possible Trading Range Forecast   [Dec-19-17 04:10PM  Market Realist]
▶ What Wall Street Projects for Southwestern Energy   [Dec-14-17 12:58PM  Market Realist]
▶ Oil Rig Count Could Push Natural Gas Prices Lower   [Dec-13-17 08:04AM  Market Realist]
▶ Whats WPX Energys Price Forecast for This Week?   [Dec-12-17 10:32AM  Market Realist]
▶ Natural Gas Prices Rose: How That Could Affect Coal   [Dec-06-17 03:05PM  Market Realist]
▶ Are Gas-Weighted Stocks Deviating from Natural Gas Prices?   [Dec-05-17 01:05PM  Market Realist]
▶ Southwestern Energy names new COO   [Dec-04-17 06:20PM  American City Business Journals]
▶ Natural Gas Prices Falls despite Strong Demand   [Nov-29-17 01:41PM  Market Realist]
▶ Will the Oil Rig Count Increase Natural Gas Downside Risk?   [Nov-23-17 04:11PM  Market Realist]
▶ Natural Gas Prices Fall despite Higher Demand   [Nov-22-17 10:41AM  Market Realist]
▶ Gas-Weighted Stocks Could Fall with Natural Gas Prices   [Nov-21-17 09:44AM  Market Realist]
▶ Which Natural-Gas-Weighted Stocks Are Following Oil?   [Nov-14-17 04:15PM  Market Realist]
▶ Should You Buy Southwestern Energy Company (SWN) Now?   [Nov-07-17 04:53PM  Simply Wall St.]
▶ Devon Energy Reported Increased Profits in 3Q17   [Nov-03-17 03:06PM  Market Realist]
▶ Why Oil Could Determine Fate of Natural GasWeighted Stocks   [Oct-31-17 12:45PM  Market Realist]
▶ How Weather Influences Natural Gas Prices   [11:35AM  Market Realist]
▶ Will Marathon Oils Losses Increase in 3Q17?   [07:35AM  Market Realist]
▶ Southwestern Energy misses Street 3Q forecasts   [Oct-26-17 04:39PM  Associated Press]
▶ Which Gas-Weighted Stocks Are Outperforming Their Peers?   [Oct-24-17 01:29PM  Market Realist]
▶ Where ConocoPhillips Stock Could Settle This Week   [Oct-23-17 03:06PM  Market Realist]
▶ Where Natural Gas Prices Stand next to Oil Prices   [Oct-19-17 11:57AM  Market Realist]
▶ How Weather Affects Natural Gas Prices   [09:14AM  Market Realist]
Financial statements of SWN
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.