Intrinsic value of Basic Energy Services - BAS

Previous Close

$8.83

  Intrinsic Value

$1,922

stock screener

  Rating & Target

str. buy

+999%

Previous close

$8.83

 
Intrinsic value

$1,922

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of BAS 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 2017), $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
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  57.80
  52.52
  47.77
  43.49
  39.64
  36.18
  33.06
  30.25
  27.73
  25.46
  23.41
  21.57
  19.91
  18.42
  17.08
  15.87
  14.78
  13.81
  12.92
  12.13
  11.42
  10.78
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
Revenue, $m
  1,363
  2,079
  3,073
  4,409
  6,157
  8,384
  11,156
  14,532
  18,561
  23,286
  28,737
  34,936
  41,892
  49,609
  58,082
  67,300
  77,250
  87,914
  99,277
  111,322
  124,034
  137,402
  151,416
  166,073
  181,371
  197,314
  213,911
  231,175
  249,121
  267,773
Variable operating expenses, $m
  420
  640
  946
  1,357
  1,895
  2,580
  3,433
  4,471
  5,711
  7,164
  8,841
  10,748
  12,888
  15,262
  17,869
  20,705
  23,766
  27,047
  30,543
  34,249
  38,159
  42,272
  46,584
  51,093
  55,799
  60,704
  65,810
  71,122
  76,643
  82,381
Fixed operating expenses, $m
  705
  721
  737
  753
  769
  786
  804
  821
  839
  858
  877
  896
  916
  936
  956
  977
  999
  1,021
  1,043
  1,066
  1,090
  1,114
  1,138
  1,163
  1,189
  1,215
  1,242
  1,269
  1,297
  1,325
Total operating expenses, $m
  1,125
  1,361
  1,683
  2,110
  2,664
  3,366
  4,237
  5,292
  6,550
  8,022
  9,718
  11,644
  13,804
  16,198
  18,825
  21,682
  24,765
  28,068
  31,586
  35,315
  39,249
  43,386
  47,722
  52,256
  56,988
  61,919
  67,052
  72,391
  77,940
  83,706
Operating income, $m
  238
  719
  1,391
  2,300
  3,493
  5,018
  6,920
  9,239
  12,011
  15,264
  19,020
  23,292
  28,088
  33,411
  39,256
  45,618
  52,485
  59,846
  67,691
  76,007
  84,785
  94,016
  103,694
  113,817
  124,383
  135,395
  146,859
  158,784
  171,181
  184,066
EBITDA, $m
  318
  839
  1,568
  2,555
  3,849
  5,503
  7,565
  10,080
  13,084
  16,610
  20,681
  25,311
  30,510
  36,278
  42,614
  49,508
  56,950
  64,928
  73,429
  82,442
  91,954
  101,958
  112,446
  123,416
  134,866
  146,800
  159,223
  172,146
  185,581
  199,544
Interest expense (income), $m
  0
  44
  83
  138
  215
  319
  454
  627
  841
  1,103
  1,415
  1,781
  2,204
  2,684
  3,223
  3,821
  4,477
  5,192
  5,963
  6,789
  7,670
  8,603
  9,588
  10,624
  11,710
  12,845
  14,031
  15,266
  16,552
  17,890
  19,280
Earnings before tax, $m
  195
  636
  1,253
  2,085
  3,175
  4,564
  6,294
  8,398
  10,908
  13,849
  17,238
  21,088
  25,404
  30,188
  35,436
  41,140
  47,293
  53,884
  60,902
  68,338
  76,182
  84,428
  93,071
  102,107
  111,538
  121,364
  131,593
  142,232
  153,292
  164,786
Tax expense, $m
  53
  172
  338
  563
  857
  1,232
  1,699
  2,267
  2,945
  3,739
  4,654
  5,694
  6,859
  8,151
  9,568
  11,108
  12,769
  14,549
  16,444
  18,451
  20,569
  22,796
  25,129
  27,569
  30,115
  32,768
  35,530
  38,403
  41,389
  44,492
Net income, $m
  142
  464
  914
  1,522
  2,317
  3,332
  4,594
  6,131
  7,963
  10,110
  12,584
  15,394
  18,545
  22,037
  25,868
  30,032
  34,524
  39,335
  44,458
  49,887
  55,613
  61,633
  67,942
  74,538
  81,422
  88,596
  96,063
  103,829
  111,903
  120,294

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,295
  1,975
  2,918
  4,187
  5,847
  7,962
  10,595
  13,800
  17,627
  22,114
  27,291
  33,177
  39,784
  47,112
  55,158
  63,913
  73,361
  83,489
  94,280
  105,719
  117,791
  130,486
  143,795
  157,714
  172,242
  187,383
  203,145
  219,539
  236,582
  254,295
Adjusted assets (=assets-cash), $m
  1,295
  1,975
  2,918
  4,187
  5,847
  7,962
  10,595
  13,800
  17,627
  22,114
  27,291
  33,177
  39,784
  47,112
  55,158
  63,913
  73,361
  83,489
  94,280
  105,719
  117,791
  130,486
  143,795
  157,714
  172,242
  187,383
  203,145
  219,539
  236,582
  254,295
Revenue / Adjusted assets
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
Average production assets, $m
  788
  1,202
  1,776
  2,548
  3,559
  4,846
  6,448
  8,399
  10,728
  13,459
  16,610
  20,193
  24,214
  28,674
  33,571
  38,899
  44,650
  50,815
  57,382
  64,344
  71,692
  79,418
  87,519
  95,990
  104,832
  114,048
  123,641
  133,619
  143,992
  154,773
Working capital, $m
  -70
  -106
  -157
  -225
  -314
  -428
  -569
  -741
  -947
  -1,188
  -1,466
  -1,782
  -2,136
  -2,530
  -2,962
  -3,432
  -3,940
  -4,484
  -5,063
  -5,677
  -6,326
  -7,007
  -7,722
  -8,470
  -9,250
  -10,063
  -10,909
  -11,790
  -12,705
  -13,656
Total debt, $m
  594
  993
  1,547
  2,292
  3,266
  4,508
  6,053
  7,935
  10,181
  12,815
  15,853
  19,309
  23,187
  27,489
  32,212
  37,350
  42,897
  48,842
  55,176
  61,891
  68,977
  76,429
  84,242
  92,412
  100,940
  109,828
  119,080
  128,703
  138,708
  149,105
Total liabilities, $m
  760
  1,159
  1,713
  2,458
  3,432
  4,674
  6,219
  8,101
  10,347
  12,981
  16,020
  19,475
  23,353
  27,655
  32,378
  37,517
  43,063
  49,008
  55,343
  62,057
  69,144
  76,595
  84,408
  92,578
  101,106
  109,994
  119,246
  128,869
  138,874
  149,271
Total equity, $m
  535
  816
  1,205
  1,729
  2,415
  3,288
  4,376
  5,700
  7,280
  9,133
  11,271
  13,702
  16,431
  19,457
  22,780
  26,396
  30,298
  34,481
  38,938
  43,662
  48,648
  53,891
  59,387
  65,136
  71,136
  77,389
  83,899
  90,670
  97,709
  105,024
Total liabilities and equity, $m
  1,295
  1,975
  2,918
  4,187
  5,847
  7,962
  10,595
  13,801
  17,627
  22,114
  27,291
  33,177
  39,784
  47,112
  55,158
  63,913
  73,361
  83,489
  94,281
  105,719
  117,792
  130,486
  143,795
  157,714
  172,242
  187,383
  203,145
  219,539
  236,583
  254,295
Debt-to-equity ratio
  1.110
  1.220
  1.280
  1.330
  1.350
  1.370
  1.380
  1.390
  1.400
  1.400
  1.410
  1.410
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
Adjusted equity ratio
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  142
  464
  914
  1,522
  2,317
  3,332
  4,594
  6,131
  7,963
  10,110
  12,584
  15,394
  18,545
  22,037
  25,868
  30,032
  34,524
  39,335
  44,458
  49,887
  55,613
  61,633
  67,942
  74,538
  81,422
  88,596
  96,063
  103,829
  111,903
  120,294
Depreciation, amort., depletion, $m
  79
  120
  178
  255
  356
  485
  645
  840
  1,073
  1,346
  1,661
  2,019
  2,421
  2,867
  3,357
  3,890
  4,465
  5,081
  5,738
  6,434
  7,169
  7,942
  8,752
  9,599
  10,483
  11,405
  12,364
  13,362
  14,399
  15,477
Funds from operations, $m
  221
  585
  1,092
  1,777
  2,674
  3,817
  5,240
  6,971
  9,036
  11,456
  14,245
  17,414
  20,967
  24,905
  29,225
  33,922
  38,989
  44,417
  50,197
  56,321
  62,782
  69,574
  76,694
  84,137
  91,906
  100,001
  108,427
  117,191
  126,302
  135,771
Change in working capital, $m
  -25
  -37
  -51
  -68
  -89
  -114
  -141
  -172
  -206
  -241
  -278
  -316
  -355
  -394
  -432
  -470
  -507
  -544
  -580
  -614
  -648
  -682
  -715
  -747
  -780
  -813
  -846
  -880
  -915
  -951
Cash from operations, $m
  247
  621
  1,143
  1,845
  2,763
  3,931
  5,381
  7,143
  9,242
  11,697
  14,523
  17,730
  21,321
  25,298
  29,657
  34,392
  39,496
  44,960
  50,776
  56,935
  63,431
  70,256
  77,408
  84,885
  92,686
  100,814
  109,274
  118,072
  127,217
  136,722
Maintenance CAPEX, $m
  -50
  -79
  -120
  -178
  -255
  -356
  -485
  -645
  -840
  -1,073
  -1,346
  -1,661
  -2,019
  -2,421
  -2,867
  -3,357
  -3,890
  -4,465
  -5,081
  -5,738
  -6,434
  -7,169
  -7,942
  -8,752
  -9,599
  -10,483
  -11,405
  -12,364
  -13,362
  -14,399
New CAPEX, $m
  -289
  -414
  -574
  -772
  -1,010
  -1,287
  -1,602
  -1,951
  -2,329
  -2,731
  -3,151
  -3,583
  -4,021
  -4,460
  -4,897
  -5,328
  -5,751
  -6,164
  -6,568
  -6,962
  -7,348
  -7,726
  -8,100
  -8,471
  -8,842
  -9,215
  -9,593
  -9,978
  -10,373
  -10,781
Cash from investing activities, $m
  -339
  -493
  -694
  -950
  -1,265
  -1,643
  -2,087
  -2,596
  -3,169
  -3,804
  -4,497
  -5,244
  -6,040
  -6,881
  -7,764
  -8,685
  -9,641
  -10,629
  -11,649
  -12,700
  -13,782
  -14,895
  -16,042
  -17,223
  -18,441
  -19,698
  -20,998
  -22,342
  -23,735
  -25,180
Free cash flow, $m
  -92
  129
  449
  895
  1,498
  2,287
  3,294
  4,547
  6,073
  7,893
  10,026
  12,486
  15,281
  18,416
  21,893
  25,707
  29,856
  34,331
  39,127
  44,235
  49,648
  55,361
  61,366
  67,661
  74,245
  81,115
  88,276
  95,729
  103,482
  111,542
Issuance/(repayment) of debt, $m
  279
  399
  554
  745
  974
  1,242
  1,545
  1,882
  2,246
  2,634
  3,039
  3,455
  3,878
  4,302
  4,723
  5,139
  5,546
  5,945
  6,334
  6,714
  7,086
  7,452
  7,812
  8,170
  8,528
  8,888
  9,252
  9,624
  10,004
  10,397
Issuance/(repurchase) of shares, $m
  54
  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 from financing (excl. dividends), $m  
  333
  399
  554
  745
  974
  1,242
  1,545
  1,882
  2,246
  2,634
  3,039
  3,455
  3,878
  4,302
  4,723
  5,139
  5,546
  5,945
  6,334
  6,714
  7,086
  7,452
  7,812
  8,170
  8,528
  8,888
  9,252
  9,624
  10,004
  10,397
Total cash flow (excl. dividends), $m
  240
  528
  1,002
  1,640
  2,472
  3,529
  4,839
  6,429
  8,319
  10,527
  13,065
  15,941
  19,159
  22,718
  26,616
  30,846
  35,402
  40,276
  45,461
  50,950
  56,735
  62,812
  69,179
  75,832
  82,773
  90,003
  97,528
  105,353
  113,487
  121,940
Retained Cash Flow (-), $m
  -196
  -281
  -390
  -524
  -686
  -874
  -1,087
  -1,324
  -1,580
  -1,853
  -2,138
  -2,431
  -2,728
  -3,027
  -3,323
  -3,615
  -3,902
  -4,183
  -4,457
  -4,724
  -4,986
  -5,243
  -5,497
  -5,748
  -6,000
  -6,253
  -6,510
  -6,771
  -7,039
  -7,315
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
  23
  37
  56
  83
  119
  166
  226
  301
  392
  501
  629
  776
  943
  1,131
  1,339
  1,568
  1,817
  2,086
  2,374
  2,680
  3,006
  3,349
  3,710
  4,088
  4,484
  4,897
  5,327
  5,776
  6,242
  6,726
Cash available for distribution, $m
  44
  247
  613
  1,116
  1,787
  2,655
  3,752
  5,105
  6,739
  8,674
  10,927
  13,510
  16,431
  19,692
  23,293
  27,230
  31,500
  36,094
  41,005
  46,225
  51,749
  57,569
  63,682
  70,083
  76,772
  83,750
  91,018
  98,582
  106,448
  114,624
Discount rate, %
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
  42
  218
  502
  846
  1,242
  1,681
  2,146
  2,614
  3,062
  3,462
  3,792
  4,031
  4,165
  4,188
  4,101
  3,914
  3,641
  3,302
  2,919
  2,516
  2,113
  1,729
  1,378
  1,068
  806
  590
  420
  290
  194
  125
Current shareholders' claim on cash, %
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6

Basic Energy Services, Inc. provides well site services to oil and natural gas drilling and producing companies in the United States. Its Completion and Remedial Services segment offers pumping services, such as cementing, acidizing, fracturing, nitrogen, and pressure testing; rental and fishing tools; coiled tubing; snubbing services; thru-tubing; cased-hole wireline services; and underbalanced drilling in low pressure and fluid sensitive reservoirs. This segment operates 291 pumping units; and 42 air compressor packages. The company’s Fluid Services segment is involved in the transportation of fluids; production of salt water; sale and transportation of fresh and brine water; rental of portable fracturing and test tanks; recycling and treatment of wastewater; operation of fresh water and brine source wells, and non-hazardous wastewater disposal wells; and preparation, construction, and maintenance of access roads, drilling locations, and production facilities. As of December 31, 2015, this segment owned and operated 985 fluid service trucks with an average fluid hauling capacity of up to 150 barrels apiece; and owned 85 salt water disposal facilities. Its Well Servicing segment provides services performed with a mobile well servicing rig and ancillary equipment, such as maintenance work, hoisting tools and equipment required by the operation, and plugging and abandonment services, as well as manufactures and sells workover rigs. As of December 31, 2015, this segment operated a fleet of 421 well servicing rigs. Its Contract Drilling segment employs drilling rigs and related equipment to penetrate the earth to a desired depth and initiate production. This segment owns and operates 12 land drilling rigs. The company was formerly known as Sierra Well Service, Inc. and changed its name to Basic Energy Services, Inc. in 2000. Basic Energy Services, Inc. was founded in 1992 and is headquartered in Fort Worth, Texas.

FINANCIAL RATIOS  of  Basic Energy Services (BAS)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BAS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BAS stock intrinsic value calculation we used $864 million for the last fiscal year's total revenue generated by Basic Energy Services. The default revenue input number comes from 2017 income statement of Basic Energy Services. 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 BAS stock valuation model: a) initial revenue growth rate of 57.8% 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 6.2%, whose default value for BAS is calculated based on our internal credit rating of Basic Energy Services, 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 Basic Energy Services.
    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 BAS stock the variable cost ratio is equal to 30.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $690 million in the base year in the intrinsic value calculation for BAS 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 13.9% for Basic Energy Services.

Corporate tax rate of 27% is the nominal tax rate for Basic Energy Services. 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 BAS stock is equal to 2.7%.

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 BAS are equal to 57.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Basic Energy Services 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 BAS is equal to -5.1%. 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 - $339 million for Basic Energy Services - 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 26 million for Basic Energy Services 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 Basic Energy Services at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Basic Energy: 2Q Earnings Snapshot   [Jul-31-18 07:26PM  Associated Press]
▶ New Strong Sell Stocks for July 20th   [Jul-20-18 07:44AM  Zacks]
▶ New Strong Sell Stocks for July 5th   [Jul-05-18 09:31AM  Zacks]
▶ Basic Energy: 1Q Earnings Snapshot   [May-03-18 07:56PM  Associated Press]
▶ Famous 'Big Short' Bank Trader Now High on Big Banks   [Mar-05-18 06:00AM  Investopedia]
▶ Basic Energy reports 4Q loss   [05:00AM  Associated Press]
▶ ION Geophysical: Top Loser in the Oilfield Services Industry   [Jan-17-18 05:50PM  Market Realist]
▶ Will the Rig Count Impact Halliburtons Earnings in 4Q17?   [Jan-10-18 03:30PM  Market Realist]
▶ Weatherford Internationals Short Interest on December 26   [Jan-03-18 07:33AM  Market Realist]
▶ Wall Street Analysts Recommendations for TechnipFMC   [Nov-14-17 10:31AM  Market Realist]
▶ Gauging Short Interest in TechnipFMC   [Nov-13-17 05:55PM  Market Realist]
▶ Basic Energy reports 3Q loss   [05:37AM  Associated Press]
▶ Basic Energy Services, Inc. to Host Earnings Call   [Nov-03-17 07:20AM  ACCESSWIRE]
▶ Basic Energy Services Reports Third Quarter 2017 Results   [Nov-02-17 06:45PM  PR Newswire]
▶ A Look at Short Interest in Flotek Industries on October 16   [Oct-20-17 10:37AM  Market Realist]
▶ BASF Agrees to $7B Bayer Deal   [02:56AM  Bloomberg Video]
▶ Oilfield Services Gainers: FTK, KEG, BAS, DWSN, and AROC   [Oct-04-17 01:36PM  Market Realist]
▶ Rising Oilfield Service Stocks: BAS, EXH, TESO, WFT, and KEG   [Sep-28-17 05:41PM  Market Realist]
▶ How Bearish Are Investors on Basic Energy Services?   [Sep-27-17 10:38AM  Market Realist]
▶ Basic Energy Services 2017 Capex Budget: Must-Knows   [Sep-26-17 04:36PM  Market Realist]
▶ Dicamba Manufacturers Face Lawsuit   [12:14PM  GuruFocus.com]
▶ Whats Affected National Oilwell Varcos Margin in 2017   [Sep-11-17 10:37AM  Market Realist]
▶ Short Interest in Weatherford International as of August 25   [Aug-29-17 06:06PM  Market Realist]
▶ Analysts Target for Patterson-UTI Energy on August 21   [Aug-24-17 09:07AM  Market Realist]
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