Intrinsic value of Unit - UNT

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$21.49

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$21.49

 
Intrinsic value

$5.26

 
Up/down potential

-76%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of UNT 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 1.2

 

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, %
  -29.51
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  602
  614
  628
  644
  662
  683
  705
  729
  755
  782
  813
  845
  879
  915
  954
  995
  1,039
  1,085
  1,134
  1,186
  1,240
  1,298
  1,358
  1,422
  1,489
  1,560
  1,635
  1,714
  1,796
  1,883
  1,975
Variable operating expenses, $m
 
  1,806
  1,848
  1,895
  1,948
  2,007
  2,072
  2,142
  2,218
  2,300
  2,388
  2,476
  2,577
  2,684
  2,797
  2,918
  3,046
  3,181
  3,324
  3,476
  3,635
  3,804
  3,982
  4,169
  4,366
  4,574
  4,793
  5,023
  5,266
  5,521
  5,789
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
  747
  1,806
  1,848
  1,895
  1,948
  2,007
  2,072
  2,142
  2,218
  2,300
  2,388
  2,476
  2,577
  2,684
  2,797
  2,918
  3,046
  3,181
  3,324
  3,476
  3,635
  3,804
  3,982
  4,169
  4,366
  4,574
  4,793
  5,023
  5,266
  5,521
  5,789
Operating income, $m
  -144
  -1,192
  -1,220
  -1,251
  -1,286
  -1,325
  -1,367
  -1,414
  -1,464
  -1,518
  -1,576
  -1,631
  -1,698
  -1,768
  -1,843
  -1,923
  -2,007
  -2,096
  -2,190
  -2,290
  -2,395
  -2,506
  -2,623
  -2,747
  -2,877
  -3,014
  -3,158
  -3,310
  -3,469
  -3,638
  -3,814
EBITDA, $m
  64
  -979
  -1,002
  -1,028
  -1,057
  -1,089
  -1,124
  -1,162
  -1,203
  -1,248
  -1,296
  -1,347
  -1,402
  -1,460
  -1,522
  -1,588
  -1,657
  -1,731
  -1,809
  -1,891
  -1,978
  -2,070
  -2,166
  -2,268
  -2,376
  -2,489
  -2,608
  -2,733
  -2,865
  -3,004
  -3,150
Interest expense (income), $m
  36
  34
  35
  36
  37
  39
  41
  43
  45
  47
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  85
  90
  95
  100
  105
  111
  118
  124
  131
  138
  146
Earnings before tax, $m
  -207
  -1,226
  -1,254
  -1,287
  -1,323
  -1,364
  -1,408
  -1,456
  -1,508
  -1,565
  -1,625
  -1,684
  -1,753
  -1,826
  -1,904
  -1,987
  -2,075
  -2,168
  -2,266
  -2,370
  -2,480
  -2,596
  -2,718
  -2,847
  -2,982
  -3,125
  -3,276
  -3,434
  -3,600
  -3,776
  -3,960
Tax expense, $m
  -71
  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
  -136
  -1,226
  -1,254
  -1,287
  -1,323
  -1,364
  -1,408
  -1,456
  -1,508
  -1,565
  -1,625
  -1,684
  -1,753
  -1,826
  -1,904
  -1,987
  -2,075
  -2,168
  -2,266
  -2,370
  -2,480
  -2,596
  -2,718
  -2,847
  -2,982
  -3,125
  -3,276
  -3,434
  -3,600
  -3,776
  -3,960

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
Total assets, $m
  2,479
  2,527
  2,585
  2,651
  2,726
  2,809
  2,899
  2,998
  3,105
  3,220
  3,344
  3,476
  3,617
  3,767
  3,927
  4,096
  4,276
  4,466
  4,667
  4,879
  5,103
  5,340
  5,589
  5,852
  6,129
  6,421
  6,728
  7,052
  7,392
  7,750
  8,126
Adjusted assets (=assets-cash), $m
  2,478
  2,527
  2,585
  2,651
  2,726
  2,809
  2,899
  2,998
  3,105
  3,220
  3,344
  3,476
  3,617
  3,767
  3,927
  4,096
  4,276
  4,466
  4,667
  4,879
  5,103
  5,340
  5,589
  5,852
  6,129
  6,421
  6,728
  7,052
  7,392
  7,750
  8,126
Revenue / Adjusted assets
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
Average production assets, $m
  2,431
  2,479
  2,537
  2,602
  2,675
  2,756
  2,845
  2,942
  3,047
  3,160
  3,281
  3,411
  3,549
  3,697
  3,853
  4,019
  4,196
  4,382
  4,579
  4,787
  5,007
  5,240
  5,484
  5,742
  6,014
  6,301
  6,602
  6,919
  7,253
  7,604
  7,974
Working capital, $m
  -44
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -59
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -141
  -148
Total debt, $m
  820
  846
  877
  911
  950
  993
  1,040
  1,091
  1,146
  1,206
  1,270
  1,339
  1,412
  1,490
  1,573
  1,661
  1,754
  1,853
  1,957
  2,067
  2,184
  2,306
  2,436
  2,572
  2,716
  2,868
  3,027
  3,195
  3,371
  3,557
  3,753
Total liabilities, $m
  1,285
  1,311
  1,342
  1,376
  1,415
  1,458
  1,505
  1,556
  1,611
  1,671
  1,735
  1,804
  1,877
  1,955
  2,038
  2,126
  2,219
  2,318
  2,422
  2,532
  2,649
  2,771
  2,901
  3,037
  3,181
  3,333
  3,492
  3,660
  3,836
  4,022
  4,218
Total equity, $m
  1,194
  1,215
  1,243
  1,275
  1,311
  1,351
  1,395
  1,442
  1,494
  1,549
  1,608
  1,672
  1,740
  1,812
  1,889
  1,970
  2,057
  2,148
  2,245
  2,347
  2,455
  2,568
  2,688
  2,815
  2,948
  3,089
  3,236
  3,392
  3,556
  3,728
  3,909
Total liabilities and equity, $m
  2,479
  2,526
  2,585
  2,651
  2,726
  2,809
  2,900
  2,998
  3,105
  3,220
  3,343
  3,476
  3,617
  3,767
  3,927
  4,096
  4,276
  4,466
  4,667
  4,879
  5,104
  5,339
  5,589
  5,852
  6,129
  6,422
  6,728
  7,052
  7,392
  7,750
  8,127
Debt-to-equity ratio
  0.687
  0.700
  0.710
  0.710
  0.720
  0.730
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.910
  0.910
  0.920
  0.930
  0.940
  0.940
  0.950
  0.950
  0.960
Adjusted equity ratio
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -136
  -1,226
  -1,254
  -1,287
  -1,323
  -1,364
  -1,408
  -1,456
  -1,508
  -1,565
  -1,625
  -1,684
  -1,753
  -1,826
  -1,904
  -1,987
  -2,075
  -2,168
  -2,266
  -2,370
  -2,480
  -2,596
  -2,718
  -2,847
  -2,982
  -3,125
  -3,276
  -3,434
  -3,600
  -3,776
  -3,960
Depreciation, amort., depletion, $m
  208
  213
  218
  223
  229
  236
  243
  251
  260
  270
  280
  284
  296
  308
  321
  335
  350
  365
  382
  399
  417
  437
  457
  479
  501
  525
  550
  577
  604
  634
  664
Funds from operations, $m
  274
  -1,013
  -1,037
  -1,064
  -1,094
  -1,128
  -1,164
  -1,205
  -1,248
  -1,295
  -1,345
  -1,399
  -1,457
  -1,518
  -1,583
  -1,652
  -1,725
  -1,803
  -1,885
  -1,971
  -2,063
  -2,159
  -2,261
  -2,368
  -2,481
  -2,600
  -2,725
  -2,857
  -2,996
  -3,142
  -3,296
Change in working capital, $m
  34
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  240
  -1,162
  -1,036
  -1,062
  -1,093
  -1,126
  -1,163
  -1,203
  -1,246
  -1,293
  -1,343
  -1,397
  -1,454
  -1,515
  -1,580
  -1,649
  -1,722
  -1,799
  -1,881
  -1,967
  -2,059
  -2,155
  -2,256
  -2,363
  -2,476
  -2,595
  -2,720
  -2,851
  -2,990
  -3,136
  -3,289
Maintenance CAPEX, $m
  0
  -203
  -207
  -211
  -217
  -223
  -230
  -237
  -245
  -254
  -263
  -273
  -284
  -296
  -308
  -321
  -335
  -350
  -365
  -382
  -399
  -417
  -437
  -457
  -479
  -501
  -525
  -550
  -577
  -604
  -634
New CAPEX, $m
  -187
  -48
  -57
  -65
  -73
  -81
  -89
  -97
  -105
  -113
  -121
  -130
  -138
  -147
  -157
  -166
  -176
  -186
  -197
  -208
  -220
  -232
  -245
  -258
  -272
  -286
  -301
  -317
  -334
  -351
  -369
Cash from investing activities, $m
  -111
  -251
  -264
  -276
  -290
  -304
  -319
  -334
  -350
  -367
  -384
  -403
  -422
  -443
  -465
  -487
  -511
  -536
  -562
  -590
  -619
  -649
  -682
  -715
  -751
  -787
  -826
  -867
  -911
  -955
  -1,003
Free cash flow, $m
  129
  -1,413
  -1,299
  -1,339
  -1,383
  -1,430
  -1,481
  -1,537
  -1,596
  -1,660
  -1,728
  -1,800
  -1,877
  -1,958
  -2,045
  -2,136
  -2,233
  -2,335
  -2,443
  -2,557
  -2,678
  -2,804
  -2,938
  -3,078
  -3,226
  -3,382
  -3,546
  -3,719
  -3,900
  -4,091
  -4,292
Issuance/(repayment) of debt, $m
  -129
  26
  30
  34
  39
  43
  47
  51
  55
  60
  64
  69
  73
  78
  83
  88
  93
  99
  104
  110
  116
  123
  129
  136
  144
  151
  159
  168
  177
  186
  195
Issuance/(repurchase) of shares, $m
  0
  1,408
  1,297
  1,336
  1,380
  1,427
  1,478
  1,533
  1,592
  1,656
  1,723
  1,795
  1,872
  1,953
  2,039
  2,130
  2,226
  2,328
  2,436
  2,549
  2,669
  2,795
  2,928
  3,068
  3,216
  3,371
  3,535
  3,707
  3,887
  4,078
  4,278
Cash from financing (excl. dividends), $m  
  -129
  1,434
  1,327
  1,370
  1,419
  1,470
  1,525
  1,584
  1,647
  1,716
  1,787
  1,864
  1,945
  2,031
  2,122
  2,218
  2,319
  2,427
  2,540
  2,659
  2,785
  2,918
  3,057
  3,204
  3,360
  3,522
  3,694
  3,875
  4,064
  4,264
  4,473
Total cash flow (excl. dividends), $m
  0
  -1,387
  -1,269
  -1,305
  -1,344
  -1,387
  -1,434
  -1,486
  -1,541
  -1,600
  -1,664
  -1,731
  -1,804
  -1,881
  -1,962
  -2,048
  -2,140
  -2,237
  -2,339
  -2,447
  -2,561
  -2,682
  -2,808
  -2,942
  -3,083
  -3,231
  -3,387
  -3,551
  -3,724
  -3,905
  -4,097
Retained Cash Flow (-), $m
  120
  -22
  -28
  -32
  -36
  -40
  -44
  -47
  -51
  -55
  -59
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
  -148
  -156
  -164
  -172
  -181
Prev. year cash balance distribution, $m
 
  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
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
 
  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
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for 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
Current shareholders' claim on cash, %
  100
  45.1
  21.4
  10.2
  4.8
  2.3
  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

Unit Corporation, together with its subsidiaries, operates as an oil and natural gas contract drilling company primarily in the United States. The company operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment acquires, explores, develops, and produces oil and natural gas properties primarily located in Oklahoma and Texas, as well as in Arkansas, Colorado, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, and Wyoming. As of December 31, 2015, this segment had approximately 65 gross proved undeveloped wells. The Contract Drilling segment is involved in the land contract drilling of onshore oil and natural gas wells for its own account, as well as for a range of other oil and natural gas companies primarily in Oklahoma, Texas, Wyoming, and North Dakota, as well as in Louisiana and Kansas. As of December 31, 2015, this segment had 26 operating rigs. The Mid-Stream segment buys, sells, gathers, transports, processes, and treats natural gas for third parties and for its own account. This segment operates 3 natural gas treatment plants, 13 processing plants, and 25 gathering systems, as well as approximately 1,464 miles of pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was founded in 1963 and is based in Tulsa, Oklahoma.

FINANCIAL RATIOS  of  Unit (UNT)

Valuation Ratios
P/E Ratio -8.1
Price to Sales 1.8
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 4.6
Price to Free Cash Flow 20.9
Growth Rates
Sales Growth Rate -29.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate -23.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 68.7%
Total Debt to Equity 68.7%
Interest Coverage -5
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -9.6%
Return On Total Capital -6.4%
Ret/ On T. Cap. - 3 Yr. Avg. -13.4%
Return On Equity -10.8%
Return On Equity - 3 Yr. Avg. -20.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 8%
Gross Margin - 3 Yr. Avg. 10.1%
EBITDA Margin 6.1%
EBITDA Margin - 3 Yr. Avg. -34.2%
Operating Margin -24.1%
Oper. Margin - 3 Yr. Avg. -68.3%
Pre-Tax Margin -34.4%
Pre-Tax Margin - 3 Yr. Avg. -71.7%
Net Profit Margin -22.6%
Net Profit Margin - 3 Yr. Avg. -45.1%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 37%
Payout Ratio 0%

UNT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UNT stock intrinsic value calculation we used $602 million for the last fiscal year's total revenue generated by Unit. The default revenue input number comes from 2016 income statement of Unit. 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 UNT stock valuation model: a) initial revenue growth rate of 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 6.9%, whose default value for UNT is calculated based on our internal credit rating of Unit, 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 Unit.
    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 UNT stock the variable cost ratio is equal to 294.2%.

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 UNT 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 4.1% for Unit.

Corporate tax rate of 27% is the nominal tax rate for Unit. 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 UNT 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 UNT are equal to 403.8%.

Life of production assets of 12 years is the average useful life of capital assets used in Unit 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 UNT is equal to -7.5%. 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 - $1194 million for Unit - 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 53.808 million for Unit 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 Unit at the current share price and the inputted number of shares is $1.2 billion.


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COMPANY NEWS

▶ 2 Stocks to Avoid (and 1 to Buy)   [Apr-25-17 12:00PM  Motley Fool]
▶ Conference-OGIS New York for Unit Corp.   [Mar-08-17 05:56PM  at Company Spotlight]
▶ Unit Corporation to Participate in Upcoming Conferences   [Feb-22-17 02:52PM  Business Wire]
▶ Do Hedge Funds Love Unit Corporation (UNT)?   [Dec-04-16 02:38PM  at Insider Monkey]
▶ Unit Corporation to Participate in Upcoming Conferences   [Nov-21-16 03:36PM  Business Wire]
▶ Oil patch is starting to heat up for investors   [Oct-04-16 12:57PM  at MarketWatch]
▶ How Risky Is Helmerich & Payne, Inc.?   [Sep-14-16 12:44PM  at Motley Fool]
▶ Here's Why Unit Corp. Shares Leapt 44% in April   [May-11-16 02:18PM  at Motley Fool]
▶ An Upgrade Sends Unit Corporation's Stock Soaring Today   [May-06-16 03:54PM  at Motley Fool]
▶ Energy Stocks Slump This Week (RIG, CRC, TSO, UNT, CRR)   [Apr-02-16 10:22AM  at Motley Fool]
▶ Why Humana and other insurers are dropping sales commissions   [Apr-01-16 01:40PM  at bizjournals.com]
▶ 3 Companies With Low Working Capital (AREX, NDLS)   [Mar-02-16 12:36PM  at Investopedia]
▶ Unit (UNT) Stock Plummets on Q4 Loss   [11:49AM  at TheStreet]
▶ These Energy Stocks Got Annihilated This Week   [Feb-12-16 04:05PM  at Motley Fool]
Stock chart of UNT Financial statements of UNT
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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