Intrinsic value of Cabot Oil & Gas Corporation - COG

Previous Close

$16.47

  Intrinsic Value

$1.23

stock screener

  Rating & Target

str. sell

-93%

Previous close

$16.47

 
Intrinsic value

$1.23

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of COG 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 0001), $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 7.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  3,501
  5,409
  8,089
  11,736
  16,558
  22,764
  30,556
  40,122
  51,627
  65,209
  80,975
  98,999
  119,328
  141,976
  166,939
  194,190
  223,691
  255,393
  289,246
  325,198
  363,203
  403,221
  445,222
  489,186
  535,106
  582,990
  632,857
  684,740
  738,686
  794,757
Variable operating expenses, $m
  3,602
  5,566
  8,323
  12,077
  17,039
  23,424
  31,442
  41,285
  53,124
  67,100
  83,323
  101,870
  122,788
  146,094
  171,780
  199,822
  230,178
  262,799
  297,634
  334,629
  373,736
  414,915
  458,133
  503,372
  550,624
  599,897
  651,209
  704,597
  760,108
  817,805
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
  3,602
  5,566
  8,323
  12,077
  17,039
  23,424
  31,442
  41,285
  53,124
  67,100
  83,323
  101,870
  122,788
  146,094
  171,780
  199,822
  230,178
  262,799
  297,634
  334,629
  373,736
  414,915
  458,133
  503,372
  550,624
  599,897
  651,209
  704,597
  760,108
  817,805
Operating income, $m
  -102
  -157
  -235
  -340
  -480
  -660
  -886
  -1,164
  -1,497
  -1,891
  -2,348
  -2,871
  -3,461
  -4,117
  -4,841
  -5,632
  -6,487
  -7,406
  -8,388
  -9,431
  -10,533
  -11,693
  -12,911
  -14,186
  -15,518
  -16,907
  -18,353
  -19,857
  -21,422
  -23,048
EBITDA, $m
  569
  879
  1,315
  1,908
  2,691
  3,700
  4,966
  6,521
  8,391
  10,599
  13,162
  16,091
  19,395
  23,077
  27,134
  31,563
  36,358
  41,511
  47,014
  52,857
  59,035
  65,539
  72,366
  79,511
  86,975
  94,758
  102,864
  111,297
  120,065
  129,179
Interest expense (income), $m
  87
  66
  135
  234
  374
  564
  815
  1,139
  1,545
  2,044
  2,644
  3,352
  4,174
  5,114
  6,173
  7,354
  8,655
  10,076
  11,614
  13,267
  15,032
  16,906
  18,888
  20,974
  23,164
  25,456
  27,850
  30,346
  32,946
  35,651
  38,463
Earnings before tax, $m
  -168
  -292
  -469
  -714
  -1,044
  -1,476
  -2,025
  -2,709
  -3,541
  -4,535
  -5,700
  -7,045
  -8,574
  -10,291
  -12,195
  -14,287
  -16,563
  -19,021
  -21,655
  -24,463
  -27,439
  -30,581
  -33,885
  -37,350
  -40,974
  -44,756
  -48,699
  -52,803
  -57,073
  -61,511
Tax expense, $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
Net income, $m
  -168
  -292
  -469
  -714
  -1,044
  -1,476
  -2,025
  -2,709
  -3,541
  -4,535
  -5,700
  -7,045
  -8,574
  -10,291
  -12,195
  -14,287
  -16,563
  -19,021
  -21,655
  -24,463
  -27,439
  -30,581
  -33,885
  -37,350
  -40,974
  -44,756
  -48,699
  -52,803
  -57,073
  -61,511

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
  6,719
  10,381
  15,525
  22,527
  31,782
  43,693
  58,648
  77,009
  99,092
  125,161
  155,422
  190,018
  229,036
  272,507
  320,420
  372,726
  429,349
  490,198
  555,175
  624,181
  697,127
  773,937
  854,552
  938,936
  1,027,075
  1,118,983
  1,214,696
  1,314,280
  1,417,824
  1,525,445
Adjusted assets (=assets-cash), $m
  6,719
  10,381
  15,525
  22,527
  31,782
  43,693
  58,648
  77,009
  99,092
  125,161
  155,422
  190,018
  229,036
  272,507
  320,420
  372,726
  429,349
  490,198
  555,175
  624,181
  697,127
  773,937
  854,552
  938,936
  1,027,075
  1,118,983
  1,214,696
  1,314,280
  1,417,824
  1,525,445
Revenue / Adjusted assets
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
Average production assets, $m
  5,230
  8,081
  12,085
  17,534
  24,738
  34,009
  45,650
  59,942
  77,131
  97,422
  120,976
  147,905
  178,275
  212,113
  249,407
  290,120
  334,194
  381,557
  432,133
  485,846
  542,626
  602,413
  665,161
  730,843
  799,449
  870,987
  945,488
  1,023,001
  1,103,597
  1,187,367
Working capital, $m
  315
  487
  728
  1,056
  1,490
  2,049
  2,750
  3,611
  4,646
  5,869
  7,288
  8,910
  10,739
  12,778
  15,025
  17,477
  20,132
  22,985
  26,032
  29,268
  32,688
  36,290
  40,070
  44,027
  48,160
  52,469
  56,957
  61,627
  66,482
  71,528
Total debt, $m
  2,495
  4,337
  6,925
  10,446
  15,102
  21,093
  28,616
  37,851
  48,959
  62,072
  77,293
  94,695
  114,320
  136,187
  160,287
  186,596
  215,078
  245,685
  278,368
  313,079
  349,770
  388,406
  428,955
  471,400
  515,734
  561,964
  610,107
  660,198
  712,281
  766,414
Total liabilities, $m
  3,380
  5,222
  7,809
  11,331
  15,986
  21,977
  29,500
  38,736
  49,843
  62,956
  78,177
  95,579
  115,205
  137,071
  161,171
  187,481
  215,962
  246,570
  279,253
  313,963
  350,655
  389,290
  429,840
  472,285
  516,619
  562,848
  610,992
  661,083
  713,165
  767,299
Total equity, $m
  3,340
  5,160
  7,716
  11,196
  15,796
  21,715
  29,148
  38,274
  49,249
  62,205
  77,245
  94,439
  113,831
  135,436
  159,249
  185,245
  213,386
  243,628
  275,922
  310,218
  346,472
  384,647
  424,712
  466,651
  510,456
  556,134
  603,704
  653,197
  704,658
  758,146
Total liabilities and equity, $m
  6,720
  10,382
  15,525
  22,527
  31,782
  43,692
  58,648
  77,010
  99,092
  125,161
  155,422
  190,018
  229,036
  272,507
  320,420
  372,726
  429,348
  490,198
  555,175
  624,181
  697,127
  773,937
  854,552
  938,936
  1,027,075
  1,118,982
  1,214,696
  1,314,280
  1,417,823
  1,525,445
Debt-to-equity ratio
  0.750
  0.840
  0.900
  0.930
  0.960
  0.970
  0.980
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
Adjusted equity ratio
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -168
  -292
  -469
  -714
  -1,044
  -1,476
  -2,025
  -2,709
  -3,541
  -4,535
  -5,700
  -7,045
  -8,574
  -10,291
  -12,195
  -14,287
  -16,563
  -19,021
  -21,655
  -24,463
  -27,439
  -30,581
  -33,885
  -37,350
  -40,974
  -44,756
  -48,699
  -52,803
  -57,073
  -61,511
Depreciation, amort., depletion, $m
  671
  1,036
  1,549
  2,248
  3,172
  4,360
  5,853
  7,685
  9,889
  12,490
  15,510
  18,962
  22,856
  27,194
  31,975
  37,195
  42,845
  48,918
  55,402
  62,288
  69,567
  77,232
  85,277
  93,698
  102,493
  111,665
  121,216
  131,154
  141,487
  152,226
Funds from operations, $m
  503
  744
  1,081
  1,534
  2,127
  2,885
  3,827
  4,976
  6,347
  7,955
  9,810
  11,917
  14,282
  16,903
  19,780
  22,908
  26,282
  29,897
  33,747
  37,825
  42,128
  46,651
  51,392
  56,348
  61,520
  66,909
  72,517
  78,351
  84,414
  90,715
Change in working capital, $m
  118
  172
  241
  328
  434
  559
  701
  861
  1,035
  1,222
  1,419
  1,622
  1,830
  2,038
  2,247
  2,453
  2,655
  2,853
  3,047
  3,236
  3,420
  3,602
  3,780
  3,957
  4,133
  4,310
  4,488
  4,669
  4,855
  5,046
Cash from operations, $m
  385
  573
  839
  1,205
  1,693
  2,326
  3,126
  4,115
  5,312
  6,733
  8,391
  10,295
  12,452
  14,865
  17,533
  20,455
  23,627
  27,044
  30,700
  34,590
  38,708
  43,050
  47,612
  52,391
  57,387
  62,599
  68,029
  73,681
  79,559
  85,669
Maintenance CAPEX, $m
  -419
  -671
  -1,036
  -1,549
  -2,248
  -3,172
  -4,360
  -5,853
  -7,685
  -9,889
  -12,490
  -15,510
  -18,962
  -22,856
  -27,194
  -31,975
  -37,195
  -42,845
  -48,918
  -55,402
  -62,288
  -69,567
  -77,232
  -85,277
  -93,698
  -102,493
  -111,665
  -121,216
  -131,154
  -141,487
New CAPEX, $m
  -1,962
  -2,850
  -4,004
  -5,450
  -7,204
  -9,271
  -11,641
  -14,291
  -17,189
  -20,292
  -23,554
  -26,929
  -30,370
  -33,837
  -37,294
  -40,713
  -44,074
  -47,363
  -50,576
  -53,713
  -56,779
  -59,787
  -62,749
  -65,682
  -68,605
  -71,538
  -74,501
  -77,513
  -80,596
  -83,769
Cash from investing activities, $m
  -2,381
  -3,521
  -5,040
  -6,999
  -9,452
  -12,443
  -16,001
  -20,144
  -24,874
  -30,181
  -36,044
  -42,439
  -49,332
  -56,693
  -64,488
  -72,688
  -81,269
  -90,208
  -99,494
  -109,115
  -119,067
  -129,354
  -139,981
  -150,959
  -162,303
  -174,031
  -186,166
  -198,729
  -211,750
  -225,256
Free cash flow, $m
  -1,997
  -2,948
  -4,201
  -5,793
  -7,759
  -10,117
  -12,875
  -16,029
  -19,562
  -23,447
  -27,653
  -32,143
  -36,880
  -41,828
  -46,955
  -52,233
  -57,642
  -63,165
  -68,794
  -74,525
  -80,360
  -86,304
  -92,369
  -98,568
  -104,916
  -111,433
  -118,136
  -125,048
  -132,191
  -139,587
Issuance/(repayment) of debt, $m
  1,269
  1,842
  2,587
  3,522
  4,655
  5,991
  7,523
  9,235
  11,108
  13,113
  15,221
  17,402
  19,626
  21,866
  24,100
  26,310
  28,481
  30,607
  32,683
  34,710
  36,692
  38,635
  40,549
  42,445
  44,334
  46,229
  48,144
  50,091
  52,083
  54,133
Issuance/(repurchase) of shares, $m
  1,419
  2,112
  3,025
  4,194
  5,644
  7,395
  9,458
  11,834
  14,516
  17,491
  20,740
  24,239
  27,966
  31,896
  36,008
  40,283
  44,705
  49,263
  53,949
  58,759
  63,693
  68,755
  73,951
  79,289
  84,779
  90,434
  96,268
  102,296
  108,534
  114,999
Cash from financing (excl. dividends), $m  
  2,688
  3,954
  5,612
  7,716
  10,299
  13,386
  16,981
  21,069
  25,624
  30,604
  35,961
  41,641
  47,592
  53,762
  60,108
  66,593
  73,186
  79,870
  86,632
  93,469
  100,385
  107,390
  114,500
  121,734
  129,113
  136,663
  144,412
  152,387
  160,617
  169,132
Total cash flow (excl. dividends), $m
  692
  1,005
  1,412
  1,922
  2,541
  3,270
  4,106
  5,041
  6,062
  7,157
  8,307
  9,498
  10,711
  11,934
  13,153
  14,359
  15,545
  16,705
  17,838
  18,944
  20,026
  21,086
  22,131
  23,166
  24,197
  25,231
  26,276
  27,338
  28,426
  29,545
Retained Cash Flow (-), $m
  -1,419
  -2,112
  -3,025
  -4,194
  -5,644
  -7,395
  -9,458
  -11,834
  -14,516
  -17,491
  -20,740
  -24,239
  -27,966
  -31,896
  -36,008
  -40,283
  -44,705
  -49,263
  -53,949
  -58,759
  -63,693
  -68,755
  -73,951
  -79,289
  -84,779
  -90,434
  -96,268
  -102,296
  -108,534
  -114,999
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -727
  -1,106
  -1,613
  -2,272
  -3,103
  -4,125
  -5,352
  -6,794
  -8,454
  -10,335
  -12,432
  -14,742
  -17,254
  -19,962
  -22,855
  -25,924
  -29,160
  -32,558
  -36,111
  -39,815
  -43,668
  -47,669
  -51,820
  -56,123
  -60,582
  -65,203
  -69,992
  -74,958
  -80,108
  -85,454
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
  -697
  -1,013
  -1,404
  -1,871
  -2,405
  -2,994
  -3,616
  -4,246
  -4,856
  -5,418
  -5,904
  -6,291
  -6,560
  -6,702
  -6,710
  -6,588
  -6,345
  -5,996
  -5,560
  -5,059
  -4,517
  -3,955
  -3,396
  -2,858
  -2,357
  -1,902
  -1,502
  -1,160
  -874
  -643
Current shareholders' claim on cash, %
  83.1
  69.9
  59.4
  51.1
  44.4
  38.9
  34.5
  30.7
  27.6
  24.9
  22.7
  20.7
  19.0
  17.6
  16.3
  15.1
  14.1
  13.2
  12.4
  11.6
  11.0
  10.3
  9.8
  9.3
  8.8
  8.3
  7.9
  7.5
  7.2
  6.9

Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, its exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States. Its Marcellus Shale properties are principally located in Susquehanna County, Pennsylvania. Its properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas.

FINANCIAL RATIOS  of  Cabot Oil & Gas Corporation (COG)

Valuation Ratios
P/E Ratio -18.4
Price to Sales 6.6
Price to Book 3
Price to Tangible Book
Price to Cash Flow 19.5
Price to Free Cash Flow 450.6
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.8%
Cap. Spend. - 3 Yr. Gr. Rate -20.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 59.2%
Total Debt to Equity 59.2%
Interest Coverage -7
Management Effectiveness
Return On Assets -7%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital -10.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -18.2%
Return On Equity - 3 Yr. Avg. -6.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 1.6%
Gross Margin - 3 Yr. Avg. 19.9%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. 22.3%
Operating Margin -49.4%
Oper. Margin - 3 Yr. Avg. -17.1%
Pre-Tax Margin -57.1%
Pre-Tax Margin - 3 Yr. Avg. -23.1%
Net Profit Margin -36.1%
Net Profit Margin - 3 Yr. Avg. -13.2%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. -49.7%
Payout Ratio -8.6%

COG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COG stock intrinsic value calculation we used $2188 million for the last fiscal year's total revenue generated by Cabot Oil & Gas Corporation. The default revenue input number comes from 0001 income statement of Cabot Oil & Gas Corporation. 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 COG stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for COG is calculated based on our internal credit rating of Cabot Oil & Gas Corporation, 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 Cabot Oil & Gas Corporation.
    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 COG stock the variable cost ratio is equal to 102.9%.

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 COG 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 5.4% for Cabot Oil & Gas Corporation.

Corporate tax rate of 27% is the nominal tax rate for Cabot Oil & Gas Corporation. 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 COG 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 COG are equal to 149.4%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Cabot Oil & Gas Corporation 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 COG is equal to 9%. 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 - $2088.159 million for Cabot Oil & Gas Corporation - 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 423.448 million for Cabot Oil & Gas Corporation 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 Cabot Oil & Gas Corporation at the current share price and the inputted number of shares is $7.0 billion.

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