Intrinsic value of Cimarex Energy - XEC

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$93.00

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of XEC 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 8.8

 

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, %
  -13.49
  22.80
  21.02
  19.42
  17.98
  16.68
  15.51
  14.46
  13.51
  12.66
  11.90
  11.21
  10.59
  10.03
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
Revenue, $m
  1,257
  1,544
  1,868
  2,231
  2,632
  3,071
  3,547
  4,060
  4,609
  5,192
  5,810
  6,461
  7,145
  7,861
  8,610
  9,391
  10,205
  11,052
  11,932
  12,848
  13,799
  14,788
  15,815
  16,883
  17,994
  19,149
  20,351
  21,602
  22,906
  24,265
  25,681
Variable operating expenses, $m
 
  5,503
  6,646
  7,925
  9,338
  10,885
  12,564
  14,372
  16,306
  18,363
  20,540
  22,773
  25,183
  27,708
  30,348
  33,101
  35,969
  38,954
  42,058
  45,284
  48,637
  52,122
  55,743
  59,507
  63,421
  67,493
  71,730
  76,141
  80,737
  85,525
  90,519
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
  1,829
  5,503
  6,646
  7,925
  9,338
  10,885
  12,564
  14,372
  16,306
  18,363
  20,540
  22,773
  25,183
  27,708
  30,348
  33,101
  35,969
  38,954
  42,058
  45,284
  48,637
  52,122
  55,743
  59,507
  63,421
  67,493
  71,730
  76,141
  80,737
  85,525
  90,519
Operating income, $m
  -572
  -3,959
  -4,778
  -5,694
  -6,706
  -7,815
  -9,017
  -10,312
  -11,697
  -13,171
  -14,730
  -16,312
  -18,038
  -19,847
  -21,737
  -23,710
  -25,764
  -27,902
  -30,125
  -32,436
  -34,838
  -37,334
  -39,928
  -42,624
  -45,428
  -48,344
  -51,379
  -54,539
  -57,830
  -61,261
  -64,837
EBITDA, $m
  -180
  -3,417
  -4,135
  -4,938
  -5,826
  -6,797
  -7,852
  -8,987
  -10,201
  -11,493
  -12,860
  -14,302
  -15,816
  -17,401
  -19,059
  -20,788
  -22,589
  -24,464
  -26,413
  -28,439
  -30,545
  -32,733
  -35,008
  -37,372
  -39,830
  -42,387
  -45,048
  -47,818
  -50,704
  -53,712
  -56,848
Interest expense (income), $m
  80
  53
  71
  92
  115
  141
  170
  200
  234
  269
  307
  347
  389
  433
  479
  528
  578
  631
  685
  742
  801
  863
  927
  993
  1,062
  1,134
  1,209
  1,286
  1,367
  1,451
  1,539
Earnings before tax, $m
  -623
  -4,012
  -4,849
  -5,786
  -6,822
  -7,956
  -9,187
  -10,512
  -11,931
  -13,440
  -15,037
  -16,658
  -18,427
  -20,280
  -22,217
  -24,237
  -26,342
  -28,533
  -30,811
  -33,179
  -35,640
  -38,197
  -40,855
  -43,617
  -46,490
  -49,478
  -52,588
  -55,825
  -59,198
  -62,712
  -66,376
Tax expense, $m
  -214
  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
  -409
  -4,012
  -4,849
  -5,786
  -6,822
  -7,956
  -9,187
  -10,512
  -11,931
  -13,440
  -15,037
  -16,658
  -18,427
  -20,280
  -22,217
  -24,237
  -26,342
  -28,533
  -30,811
  -33,179
  -35,640
  -38,197
  -40,855
  -43,617
  -46,490
  -49,478
  -52,588
  -55,825
  -59,198
  -62,712
  -66,376

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  653
  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
  4,238
  4,947
  5,987
  7,150
  8,435
  9,842
  11,369
  13,013
  14,771
  16,642
  18,621
  20,708
  22,900
  25,196
  27,596
  30,100
  32,708
  35,422
  38,245
  41,179
  44,228
  47,396
  50,689
  54,112
  57,671
  61,374
  65,227
  69,238
  73,417
  77,772
  82,312
Adjusted assets (=assets-cash), $m
  3,585
  4,947
  5,987
  7,150
  8,435
  9,842
  11,369
  13,013
  14,771
  16,642
  18,621
  20,708
  22,900
  25,196
  27,596
  30,100
  32,708
  35,422
  38,245
  41,179
  44,228
  47,396
  50,689
  54,112
  57,671
  61,374
  65,227
  69,238
  73,417
  77,772
  82,312
Revenue / Adjusted assets
  0.351
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
Average production assets, $m
  2,663
  3,890
  4,708
  5,622
  6,632
  7,738
  8,939
  10,231
  11,614
  13,084
  14,641
  16,281
  18,005
  19,810
  21,697
  23,666
  25,716
  27,850
  30,069
  32,376
  34,774
  37,265
  39,854
  42,545
  45,344
  48,255
  51,284
  54,438
  57,723
  61,147
  64,717
Working capital, $m
  447
  -253
  -306
  -366
  -432
  -504
  -582
  -666
  -756
  -852
  -953
  -1,060
  -1,172
  -1,289
  -1,412
  -1,540
  -1,674
  -1,812
  -1,957
  -2,107
  -2,263
  -2,425
  -2,594
  -2,769
  -2,951
  -3,140
  -3,338
  -3,543
  -3,757
  -3,979
  -4,212
Total debt, $m
  1,500
  2,028
  2,627
  3,296
  4,037
  4,847
  5,726
  6,673
  7,686
  8,764
  9,904
  11,106
  12,368
  13,691
  15,073
  16,515
  18,018
  19,581
  21,207
  22,897
  24,653
  26,478
  28,375
  30,347
  32,397
  34,529
  36,749
  39,059
  41,466
  43,975
  46,590
Total liabilities, $m
  2,195
  2,850
  3,449
  4,118
  4,859
  5,669
  6,548
  7,495
  8,508
  9,586
  10,726
  11,928
  13,190
  14,513
  15,895
  17,337
  18,840
  20,403
  22,029
  23,719
  25,475
  27,300
  29,197
  31,169
  33,219
  35,351
  37,571
  39,881
  42,288
  44,797
  47,412
Total equity, $m
  2,043
  2,098
  2,539
  3,032
  3,577
  4,173
  4,820
  5,517
  6,263
  7,056
  7,895
  8,780
  9,710
  10,683
  11,701
  12,762
  13,868
  15,019
  16,216
  17,460
  18,753
  20,096
  21,492
  22,944
  24,453
  26,023
  27,656
  29,357
  31,129
  32,975
  34,900
Total liabilities and equity, $m
  4,238
  4,948
  5,988
  7,150
  8,436
  9,842
  11,368
  13,012
  14,771
  16,642
  18,621
  20,708
  22,900
  25,196
  27,596
  30,099
  32,708
  35,422
  38,245
  41,179
  44,228
  47,396
  50,689
  54,113
  57,672
  61,374
  65,227
  69,238
  73,417
  77,772
  82,312
Debt-to-equity ratio
  0.734
  0.970
  1.030
  1.090
  1.130
  1.160
  1.190
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
  1.320
  1.330
  1.330
  1.330
  1.330
  1.330
  1.330
Adjusted equity ratio
  0.388
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -409
  -4,012
  -4,849
  -5,786
  -6,822
  -7,956
  -9,187
  -10,512
  -11,931
  -13,440
  -15,037
  -16,658
  -18,427
  -20,280
  -22,217
  -24,237
  -26,342
  -28,533
  -30,811
  -33,179
  -35,640
  -38,197
  -40,855
  -43,617
  -46,490
  -49,478
  -52,588
  -55,825
  -59,198
  -62,712
  -66,376
Depreciation, amort., depletion, $m
  392
  542
  643
  756
  881
  1,017
  1,166
  1,325
  1,496
  1,677
  1,869
  2,010
  2,223
  2,446
  2,679
  2,922
  3,175
  3,438
  3,712
  3,997
  4,293
  4,601
  4,920
  5,252
  5,598
  5,957
  6,331
  6,721
  7,126
  7,549
  7,990
Funds from operations, $m
  573
  -3,469
  -4,206
  -5,030
  -5,941
  -6,939
  -8,021
  -9,187
  -10,435
  -11,762
  -13,167
  -14,648
  -16,204
  -17,834
  -19,538
  -21,315
  -23,167
  -25,094
  -27,098
  -29,182
  -31,347
  -33,596
  -35,934
  -38,365
  -40,892
  -43,521
  -46,256
  -49,104
  -52,071
  -55,163
  -58,387
Change in working capital, $m
  -26
  -47
  -53
  -59
  -66
  -72
  -78
  -84
  -90
  -96
  -101
  -107
  -112
  -117
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -162
  -168
  -175
  -182
  -189
  -197
  -205
  -214
  -223
  -232
Cash from operations, $m
  599
  -3,531
  -4,153
  -4,970
  -5,875
  -6,867
  -7,943
  -9,103
  -10,345
  -11,666
  -13,066
  -14,541
  -16,092
  -17,717
  -19,415
  -21,187
  -23,034
  -24,955
  -26,954
  -29,031
  -31,191
  -33,434
  -35,766
  -38,190
  -40,710
  -43,331
  -46,059
  -48,899
  -51,857
  -54,940
  -58,154
Maintenance CAPEX, $m
  0
  -391
  -480
  -581
  -694
  -819
  -955
  -1,104
  -1,263
  -1,434
  -1,615
  -1,807
  -2,010
  -2,223
  -2,446
  -2,679
  -2,922
  -3,175
  -3,438
  -3,712
  -3,997
  -4,293
  -4,601
  -4,920
  -5,252
  -5,598
  -5,957
  -6,331
  -6,721
  -7,126
  -7,549
New CAPEX, $m
  -700
  -722
  -818
  -914
  -1,011
  -1,106
  -1,200
  -1,292
  -1,383
  -1,471
  -1,557
  -1,641
  -1,724
  -1,805
  -1,887
  -1,968
  -2,051
  -2,134
  -2,219
  -2,307
  -2,397
  -2,491
  -2,589
  -2,691
  -2,798
  -2,911
  -3,029
  -3,154
  -3,285
  -3,424
  -3,570
Cash from investing activities, $m
  -692
  -1,113
  -1,298
  -1,495
  -1,705
  -1,925
  -2,155
  -2,396
  -2,646
  -2,905
  -3,172
  -3,448
  -3,734
  -4,028
  -4,333
  -4,647
  -4,973
  -5,309
  -5,657
  -6,019
  -6,394
  -6,784
  -7,190
  -7,611
  -8,050
  -8,509
  -8,986
  -9,485
  -10,006
  -10,550
  -11,119
Free cash flow, $m
  -93
  -4,644
  -5,451
  -6,466
  -7,580
  -8,792
  -10,099
  -11,499
  -12,991
  -14,571
  -16,238
  -17,990
  -19,826
  -21,745
  -23,748
  -25,834
  -28,006
  -30,264
  -32,611
  -35,051
  -37,585
  -40,218
  -42,955
  -45,801
  -48,761
  -51,840
  -55,046
  -58,385
  -61,863
  -65,490
  -69,273
Issuance/(repayment) of debt, $m
  0
  528
  599
  670
  740
  810
  879
  947
  1,013
  1,077
  1,140
  1,202
  1,263
  1,323
  1,382
  1,442
  1,502
  1,563
  1,626
  1,690
  1,756
  1,825
  1,897
  1,972
  2,050
  2,133
  2,219
  2,311
  2,407
  2,508
  2,615
Issuance/(repurchase) of shares, $m
  5
  3,854
  5,293
  6,289
  7,385
  8,578
  9,867
  11,249
  12,723
  14,287
  15,937
  17,672
  19,492
  21,396
  23,383
  25,454
  27,610
  29,852
  32,182
  34,605
  37,121
  39,737
  42,455
  45,281
  48,220
  51,277
  54,460
  57,775
  61,228
  64,828
  68,583
Cash from financing (excl. dividends), $m  
  5
  4,382
  5,892
  6,959
  8,125
  9,388
  10,746
  12,196
  13,736
  15,364
  17,077
  18,874
  20,755
  22,719
  24,765
  26,896
  29,112
  31,415
  33,808
  36,295
  38,877
  41,562
  44,352
  47,253
  50,270
  53,410
  56,679
  60,086
  63,635
  67,336
  71,198
Total cash flow (excl. dividends), $m
  -89
  -4,117
  -4,852
  -5,796
  -6,840
  -7,981
  -9,219
  -10,552
  -11,978
  -13,494
  -15,097
  -16,788
  -18,563
  -20,422
  -22,365
  -24,392
  -26,504
  -28,701
  -30,986
  -33,361
  -35,829
  -38,393
  -41,059
  -43,829
  -46,711
  -49,708
  -52,827
  -56,074
  -59,457
  -62,982
  -66,658
Retained Cash Flow (-), $m
  415
  -391
  -441
  -493
  -545
  -597
  -647
  -697
  -746
  -793
  -839
  -885
  -929
  -974
  -1,018
  -1,062
  -1,106
  -1,151
  -1,197
  -1,244
  -1,293
  -1,343
  -1,396
  -1,451
  -1,509
  -1,570
  -1,634
  -1,701
  -1,772
  -1,846
  -1,925
Prev. year cash balance distribution, $m
 
  653
  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, %
 
  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
 
  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
  62.4
  37.2
  22.4
  13.6
  8.3
  5.1
  3.1
  1.9
  1.2
  0.7
  0.5
  0.3
  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

Cimarex Energy Co. operates as an independent oil and gas exploration and production company primarily in Oklahoma, Texas, and New Mexico. As of December 31, 2016, it had a total proved oil and gas reserves of 2.89 trillion cubic feet equivalent (Tcfe) consisting of 1.47 trillion cubic feet of natural gas, 0.64 Tcfe of oil, and 0.78 Tcfe of natural gas liquids primarily located in the Mid-Continent and Permian Basin regions. The company also owned interests in 3,094 net productive oil and gas wells. Cimarex Energy Co. was founded in 2002 and is headquartered in Denver, Colorado.

FINANCIAL RATIOS  of  Cimarex Energy (XEC)

Valuation Ratios
P/E Ratio -21.6
Price to Sales 7
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 14.8
Price to Free Cash Flow -87.6
Growth Rates
Sales Growth Rate -13.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.5%
Cap. Spend. - 3 Yr. Gr. Rate -14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 73.4%
Total Debt to Equity 73.4%
Interest Coverage -7
Management Effectiveness
Return On Assets -8%
Ret/ On Assets - 3 Yr. Avg. -12.8%
Return On Total Capital -10.9%
Ret/ On T. Cap. - 3 Yr. Avg. -17.7%
Return On Equity -18.2%
Return On Equity - 3 Yr. Avg. -26.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 63.9%
Gross Margin - 3 Yr. Avg. 68.2%
EBITDA Margin -12%
EBITDA Margin - 3 Yr. Avg. -55.2%
Operating Margin -45.5%
Oper. Margin - 3 Yr. Avg. -95.5%
Pre-Tax Margin -49.6%
Pre-Tax Margin - 3 Yr. Avg. -98%
Net Profit Margin -32.5%
Net Profit Margin - 3 Yr. Avg. -62.8%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.9%
Payout Ratio -9.3%

XEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XEC stock intrinsic value calculation we used $1257 million for the last fiscal year's total revenue generated by Cimarex Energy. The default revenue input number comes from 2016 income statement of Cimarex 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 XEC stock valuation model: a) initial revenue growth rate of 22.8% 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 XEC is calculated based on our internal credit rating of Cimarex 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 Cimarex 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 XEC stock the variable cost ratio is equal to 357.4%.

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 XEC 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 Cimarex Energy.

Corporate tax rate of 27% is the nominal tax rate for Cimarex 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 XEC 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 XEC are equal to 252%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Cimarex 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 XEC is equal to -16.4%. 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 - $2360 million for Cimarex 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 94.901 million for Cimarex 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 Cimarex Energy at the current share price and the inputted number of shares is $8.8 billion.


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COMPANY NEWS

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▶ Cimarex Announces Pricing of Senior Unsecured Notes   [Apr-03-17 06:12PM  PR Newswire]
▶ Weekly US Natural Gas Consumption Rose, Impacted Prices   [Mar-20-17 07:36AM  Market Realist]
Stock chart of XEC Financial statements of XEC Annual reports of XEC
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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