Intrinsic value of Concho Resources - CXO

Previous Close

$149.16

  Intrinsic Value

$12.72

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  Rating & Target

str. sell

-91%

Previous close

$149.16

 
Intrinsic value

$12.72

 
Up/down potential

-91%

 
Rating

str. sell

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

We calculate the intrinsic value of CXO 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Concho Resources (CXO) stock.

STOCK VALUATION INPUT DATA

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

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.37
  45.50
  41.45
  37.81
  34.52
  31.57
  28.91
  26.52
  24.37
  22.43
  20.69
  19.12
  17.71
  16.44
  15.29
  14.27
  13.34
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
Revenue, $m
  1,635
  2,379
  3,365
  4,637
  6,238
  8,208
  10,581
  13,387
  16,650
  20,385
  24,603
  29,307
  34,497
  40,168
  46,311
  52,918
  59,976
  67,476
  75,407
  83,762
  92,532
  101,715
  111,308
  121,313
  131,733
  142,576
  153,850
  165,568
  177,746
  190,400
  203,552
Variable operating expenses, $m
 
  1,946
  2,753
  3,793
  5,103
  6,714
  8,655
  10,951
  13,619
  16,675
  20,125
  23,973
  28,219
  32,857
  37,883
  43,287
  49,061
  55,195
  61,683
  68,517
  75,691
  83,203
  91,050
  99,234
  107,758
  116,627
  125,849
  135,435
  145,396
  155,747
  166,506
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
  3,761
  1,946
  2,753
  3,793
  5,103
  6,714
  8,655
  10,951
  13,619
  16,675
  20,125
  23,973
  28,219
  32,857
  37,883
  43,287
  49,061
  55,195
  61,683
  68,517
  75,691
  83,203
  91,050
  99,234
  107,758
  116,627
  125,849
  135,435
  145,396
  155,747
  166,506
Operating income, $m
  -2,126
  433
  612
  844
  1,135
  1,494
  1,926
  2,436
  3,030
  3,710
  4,478
  5,334
  6,278
  7,311
  8,429
  9,631
  10,916
  12,281
  13,724
  15,245
  16,841
  18,512
  20,258
  22,079
  23,975
  25,949
  28,001
  30,133
  32,350
  34,653
  37,047
EBITDA, $m
  -959
  2,131
  3,014
  4,153
  5,587
  7,351
  9,476
  11,990
  14,912
  18,257
  22,035
  26,248
  30,896
  35,975
  41,477
  47,394
  53,716
  60,433
  67,536
  75,018
  82,873
  91,098
  99,690
  108,650
  117,982
  127,693
  137,790
  148,285
  159,192
  170,526
  182,305
Interest expense (income), $m
  232
  208
  362
  568
  833
  1,167
  1,577
  2,072
  2,657
  3,337
  4,116
  4,995
  5,975
  7,057
  8,239
  9,520
  10,897
  12,368
  13,931
  15,585
  17,326
  19,154
  21,068
  23,068
  25,153
  27,325
  29,585
  31,935
  34,378
  36,916
  39,554
Earnings before tax, $m
  -2,339
  225
  250
  276
  302
  327
  348
  364
  373
  373
  362
  339
  303
  253
  189
  111
  19
  -87
  -207
  -340
  -485
  -642
  -810
  -989
  -1,178
  -1,376
  -1,585
  -1,802
  -2,028
  -2,263
  -2,507
Tax expense, $m
  -877
  61
  67
  75
  82
  88
  94
  98
  101
  101
  98
  92
  82
  68
  51
  30
  5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -1,462
  164
  182
  201
  221
  239
  254
  266
  272
  272
  264
  248
  221
  185
  138
  81
  14
  -87
  -207
  -340
  -485
  -642
  -810
  -989
  -1,178
  -1,376
  -1,585
  -1,802
  -2,028
  -2,263
  -2,507

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  53
  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
  12,119
  17,492
  24,743
  34,096
  45,868
  60,350
  77,800
  98,435
  122,424
  149,889
  180,902
  215,493
  253,655
  295,352
  340,525
  389,101
  441,001
  496,147
  554,466
  615,894
  680,384
  747,905
  818,443
  892,007
  968,626
  1,048,349
  1,131,247
  1,217,412
  1,306,953
  1,400,002
  1,496,709
Adjusted assets (=assets-cash), $m
  12,066
  17,492
  24,743
  34,096
  45,868
  60,350
  77,800
  98,435
  122,424
  149,889
  180,902
  215,493
  253,655
  295,352
  340,525
  389,101
  441,001
  496,147
  554,466
  615,894
  680,384
  747,905
  818,443
  892,007
  968,626
  1,048,349
  1,131,247
  1,217,412
  1,306,953
  1,400,002
  1,496,709
Revenue / Adjusted assets
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
Average production assets, $m
  10,967
  15,958
  22,572
  31,106
  41,845
  55,056
  70,976
  89,801
  111,686
  136,742
  165,034
  196,591
  231,406
  269,446
  310,657
  354,972
  402,320
  452,629
  505,833
  561,873
  620,706
  682,304
  746,656
  813,768
  883,666
  956,397
  1,032,023
  1,110,630
  1,192,318
  1,277,205
  1,365,430
Working capital, $m
  -207
  -378
  -535
  -737
  -992
  -1,305
  -1,682
  -2,129
  -2,647
  -3,241
  -3,912
  -4,660
  -5,485
  -6,387
  -7,364
  -8,414
  -9,536
  -10,729
  -11,990
  -13,318
  -14,713
  -16,173
  -17,698
  -19,289
  -20,946
  -22,670
  -24,462
  -26,325
  -28,262
  -30,274
  -32,365
Total debt, $m
  2,741
  4,770
  7,474
  10,963
  15,354
  20,755
  27,264
  34,961
  43,909
  54,154
  65,721
  78,624
  92,858
  108,411
  125,261
  143,380
  162,739
  183,308
  205,061
  227,974
  252,028
  277,213
  303,524
  330,964
  359,543
  389,279
  420,200
  452,340
  485,738
  520,446
  556,517
Total liabilities, $m
  4,497
  6,525
  9,229
  12,718
  17,109
  22,510
  29,019
  36,716
  45,664
  55,909
  67,476
  80,379
  94,613
  110,166
  127,016
  145,135
  164,494
  185,063
  206,816
  229,729
  253,783
  278,968
  305,279
  332,719
  361,298
  391,034
  421,955
  454,095
  487,493
  522,201
  558,272
Total equity, $m
  7,623
  10,968
  15,514
  21,379
  28,759
  37,839
  48,780
  61,719
  76,760
  93,980
  113,425
  135,114
  159,042
  185,186
  213,509
  243,966
  276,508
  311,084
  347,650
  386,166
  426,601
  468,936
  513,164
  559,289
  607,329
  657,315
  709,292
  763,317
  819,460
  877,801
  938,436
Total liabilities and equity, $m
  12,120
  17,493
  24,743
  34,097
  45,868
  60,349
  77,799
  98,435
  122,424
  149,889
  180,901
  215,493
  253,655
  295,352
  340,525
  389,101
  441,002
  496,147
  554,466
  615,895
  680,384
  747,904
  818,443
  892,008
  968,627
  1,048,349
  1,131,247
  1,217,412
  1,306,953
  1,400,002
  1,496,708
Debt-to-equity ratio
  0.360
  0.430
  0.480
  0.510
  0.530
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627
  0.627

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,462
  164
  182
  201
  221
  239
  254
  266
  272
  272
  264
  248
  221
  185
  138
  81
  14
  -87
  -207
  -340
  -485
  -642
  -810
  -989
  -1,178
  -1,376
  -1,585
  -1,802
  -2,028
  -2,263
  -2,507
Depreciation, amort., depletion, $m
  1,167
  1,698
  2,401
  3,309
  4,452
  5,857
  7,551
  9,553
  11,882
  14,547
  17,557
  20,914
  24,618
  28,664
  33,049
  37,763
  42,800
  48,152
  53,812
  59,774
  66,033
  72,586
  79,431
  86,571
  94,007
  101,744
  109,790
  118,152
  126,842
  135,873
  145,258
Funds from operations, $m
  1,324
  1,862
  2,584
  3,511
  4,672
  6,096
  7,805
  9,819
  12,154
  14,819
  17,821
  21,161
  24,839
  28,849
  33,187
  37,844
  42,814
  48,065
  53,605
  59,434
  65,547
  71,944
  78,621
  85,582
  92,829
  100,368
  108,205
  116,350
  124,814
  133,610
  142,751
Change in working capital, $m
  -60
  -118
  -157
  -202
  -255
  -313
  -377
  -446
  -519
  -594
  -671
  -748
  -825
  -902
  -977
  -1,050
  -1,122
  -1,192
  -1,261
  -1,328
  -1,395
  -1,460
  -1,525
  -1,591
  -1,657
  -1,724
  -1,793
  -1,863
  -1,936
  -2,012
  -2,091
Cash from operations, $m
  1,384
  1,980
  2,741
  3,713
  4,927
  6,409
  8,182
  10,265
  12,673
  15,413
  18,492
  21,909
  25,664
  29,751
  34,164
  38,895
  43,936
  49,257
  54,866
  60,762
  66,942
  73,404
  80,147
  87,173
  94,486
  102,092
  109,998
  118,213
  126,750
  135,622
  144,842
Maintenance CAPEX, $m
  0
  -1,167
  -1,698
  -2,401
  -3,309
  -4,452
  -5,857
  -7,551
  -9,553
  -11,882
  -14,547
  -17,557
  -20,914
  -24,618
  -28,664
  -33,049
  -37,763
  -42,800
  -48,152
  -53,812
  -59,774
  -66,033
  -72,586
  -79,431
  -86,571
  -94,007
  -101,744
  -109,790
  -118,152
  -126,842
  -135,873
New CAPEX, $m
  -2,458
  -4,991
  -6,615
  -8,533
  -10,739
  -13,211
  -15,919
  -18,825
  -21,885
  -25,056
  -28,293
  -31,557
  -34,815
  -38,040
  -41,211
  -44,315
  -47,348
  -50,309
  -53,203
  -56,040
  -58,833
  -61,598
  -64,351
  -67,112
  -69,898
  -72,730
  -75,627
  -78,607
  -81,688
  -84,888
  -88,224
Cash from investing activities, $m
  -2,225
  -6,158
  -8,313
  -10,934
  -14,048
  -17,663
  -21,776
  -26,376
  -31,438
  -36,938
  -42,840
  -49,114
  -55,729
  -62,658
  -69,875
  -77,364
  -85,111
  -93,109
  -101,355
  -109,852
  -118,607
  -127,631
  -136,937
  -146,543
  -156,469
  -166,737
  -177,371
  -188,397
  -199,840
  -211,730
  -224,097
Free cash flow, $m
  -841
  -4,178
  -5,572
  -7,222
  -9,122
  -11,254
  -13,594
  -16,110
  -18,766
  -21,524
  -24,348
  -27,204
  -30,065
  -32,906
  -35,711
  -38,469
  -41,175
  -43,852
  -46,490
  -49,090
  -51,665
  -54,227
  -56,790
  -59,370
  -61,983
  -64,646
  -67,374
  -70,183
  -73,089
  -76,108
  -79,255
Issuance/(repayment) of debt, $m
  -600
  2,029
  2,704
  3,489
  4,391
  5,402
  6,509
  7,697
  8,948
  10,244
  11,568
  12,902
  14,235
  15,553
  16,849
  18,119
  19,359
  20,569
  21,753
  22,913
  24,055
  25,185
  26,311
  27,439
  28,579
  29,737
  30,921
  32,139
  33,399
  34,707
  36,072
Issuance/(repurchase) of shares, $m
  1,316
  3,234
  4,364
  5,663
  7,160
  8,841
  10,687
  12,672
  14,769
  16,948
  19,181
  21,441
  23,707
  25,959
  28,185
  30,376
  32,528
  34,664
  36,773
  38,856
  40,920
  42,977
  45,038
  47,114
  49,218
  51,363
  53,562
  55,827
  58,171
  60,605
  63,142
Cash from financing (excl. dividends), $m  
  665
  5,263
  7,068
  9,152
  11,551
  14,243
  17,196
  20,369
  23,717
  27,192
  30,749
  34,343
  37,942
  41,512
  45,034
  48,495
  51,887
  55,233
  58,526
  61,769
  64,975
  68,162
  71,349
  74,553
  77,797
  81,100
  84,483
  87,966
  91,570
  95,312
  99,214
Total cash flow (excl. dividends), $m
  -175
  1,084
  1,496
  1,931
  2,430
  2,989
  3,601
  4,259
  4,951
  5,668
  6,401
  7,139
  7,876
  8,606
  9,323
  10,026
  10,712
  11,381
  12,036
  12,678
  13,310
  13,935
  14,558
  15,183
  15,813
  16,454
  17,109
  17,783
  18,480
  19,204
  19,959
Retained Cash Flow (-), $m
  -680
  -3,398
  -4,546
  -5,865
  -7,381
  -9,080
  -10,941
  -12,938
  -15,041
  -17,220
  -19,445
  -21,689
  -23,928
  -26,144
  -28,323
  -30,457
  -32,542
  -34,664
  -36,773
  -38,856
  -40,920
  -42,977
  -45,038
  -47,114
  -49,218
  -51,363
  -53,562
  -55,827
  -58,171
  -60,605
  -63,142
Prev. year cash balance distribution, $m
 
  53
  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
 
  -2,260
  -3,050
  -3,934
  -4,951
  -6,091
  -7,340
  -8,679
  -10,090
  -11,552
  -13,044
  -14,549
  -16,052
  -17,538
  -19,000
  -20,432
  -21,830
  -23,283
  -24,737
  -26,178
  -27,610
  -29,042
  -30,479
  -31,931
  -33,405
  -34,909
  -36,453
  -38,044
  -39,690
  -41,401
  -43,183
Discount rate, %
 
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
 
  -2,161
  -2,775
  -3,392
  -4,023
  -4,640
  -5,212
  -5,710
  -6,109
  -6,392
  -6,547
  -6,572
  -6,469
  -6,250
  -5,929
  -5,527
  -5,063
  -4,577
  -4,072
  -3,561
  -3,061
  -2,587
  -2,147
  -1,750
  -1,401
  -1,099
  -845
  -637
  -469
  -338
  -238
Current shareholders' claim on cash, %
  100
  87.3
  76.8
  68.3
  61.3
  55.5
  50.6
  46.5
  43.0
  40.0
  37.4
  35.1
  33.1
  31.4
  29.8
  28.5
  27.2
  26.1
  25.1
  24.2
  23.3
  22.5
  21.8
  21.2
  20.6
  20.0
  19.4
  18.9
  18.4
  18.0
  17.6

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company's four operating areas include the Northern Delaware Basin, the Southern Delaware Basin, the Midland Basin and the New Mexico Shelf. As of December 31, 2016, the Company's operations were focused in the Permian Basin, which underlies an area of Southeast New Mexico and West Texas approximately 250 miles wide and 300 miles long. The Permian Basin is an oil and natural gas producing region in the United States and is characterized by multiple producing horizons and enhanced recovery potential. As of December 31, 2016, the Company produced approximately 55.1 million barrels of oil equivalent (MMBoe) of oil and natural gas. As of December 31, 2016, all of its 720 MMBoe total estimated proved reserves were located in its core operating areas and consisted of approximately 59.5% oil and 40.5% natural gas.

FINANCIAL RATIOS  of  Concho Resources (CXO)

Valuation Ratios
P/E Ratio -14.9
Price to Sales 13.3
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 15.7
Price to Free Cash Flow -20.3
Growth Rates
Sales Growth Rate -9.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.1%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 36%
Total Debt to Equity 36%
Interest Coverage -9
Management Effectiveness
Return On Assets -10.6%
Ret/ On Assets - 3 Yr. Avg. -0.9%
Return On Total Capital -14.2%
Ret/ On T. Cap. - 3 Yr. Avg. -2.3%
Return On Equity -20.1%
Return On Equity - 3 Yr. Avg. -2.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 72.4%
Gross Margin - 3 Yr. Avg. 74%
EBITDA Margin -57.5%
EBITDA Margin - 3 Yr. Avg. 34.8%
Operating Margin -130%
Oper. Margin - 3 Yr. Avg. -23.7%
Pre-Tax Margin -143.1%
Pre-Tax Margin - 3 Yr. Avg. -35.2%
Net Profit Margin -89.4%
Net Profit Margin - 3 Yr. Avg. -21.8%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.5%
Payout Ratio 0%

CXO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CXO stock intrinsic value calculation we used $1635 million for the last fiscal year's total revenue generated by Concho Resources. The default revenue input number comes from 2016 income statement of Concho Resources. 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 CXO stock valuation model: a) initial revenue growth rate of 45.5% 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 4.6%, whose default value for CXO is calculated based on our internal credit rating of Concho Resources, 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 Concho Resources.
    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 CXO stock the variable cost ratio is equal to 81.8%.

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 CXO 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 7.6% for Concho Resources.

Corporate tax rate of 27% is the nominal tax rate for Concho Resources. 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 CXO 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 CXO are equal to 670.8%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Concho Resources 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 CXO is equal to -15.9%. 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 - $7623 million for Concho Resources - 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 149.78 million for Concho Resources 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 Concho Resources at the current share price and the inputted number of shares is $22.3 billion.

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COMPANY NEWS

▶ Concho Resources Strikes a Quant Upgrade   [03:47PM  TheStreet.com]
▶ Shale Firms Concho, Devon To Boost Spending; Texas Roadhouse Beats   [Feb-20-18 05:42PM  Investor's Business Daily]
▶ Concho Resources beats Street 4Q forecasts   [04:37PM  Associated Press]
▶ Concho Resources Q4 Earnings Preview   [10:07AM  Benzinga]
▶ Concho Resources Tops Profit Estimates   [Feb-19-18 07:00PM  Rigzone.com]
▶ How Anadarkos Earnings and Revenue May Fare in 4Q17   [Jan-19-18 12:33PM  Market Realist]
▶ Crude Oil Makes a Comeback   [Jan-18-18 11:45AM  InvestorPlace]
▶ Hess Stocks Short Interest Trends   [07:30AM  Market Realist]
▶ Which Oil-Weighted Stocks Could Outperform Oil?   [Jan-04-18 10:04AM  Market Realist]
▶ What Are the EIAs Forecasts for WTI Crude Oil Prices?   [Jan-03-18 05:15PM  Market Realist]
▶ Recent Short Interest Trends in Whiting Petroleum Stock   [Dec-29-17 07:33AM  Market Realist]
▶ Analysts' Top Oil & Gas Stock Picks For 2018   [Dec-28-17 04:56PM  Forbes]
▶ Stocks Nurse Modest Losses As Bitcoin Deflates; Oil Names Rise Again   [Dec-22-17 03:03PM  Investor's Business Daily]
▶ Concho Resources Getting Closer To Key Technical Measure   [03:00AM  Investor's Business Daily]
▶ The Hot Stock: Go Oil Stocks Go!   [Dec-20-17 05:40PM  Barrons.com]
▶ Concho Resources and Chevron: Outliers among Permian Peers   [Dec-18-17 07:32AM  Market Realist]
▶ Whats the Forecast for West Texas Intermediate Crude Oil?   [Dec-15-17 10:32AM  Market Realist]
▶ 3 Fast-Growing Oil Stocks to Put on Your Watchlist   [Dec-14-17 12:32PM  Motley Fool]
▶ The Forecast for Continental Resources Implied Volatility   [Dec-13-17 09:01AM  Market Realist]
▶ Forecasting Anadarko Petroleums Stock Price   [03:05PM  Market Realist]
▶ Why Isn't Wall St. Backing The Next Shale Boom?   [Dec-07-17 07:00PM  Oilprice.com]
▶ Concho Resources Sees Relative Strength Rating Rise To 75   [Dec-04-17 03:00AM  Investor's Business Daily]
▶ Oil-Weighted Stocks to Watch if Oils Rally Cools   [Nov-28-17 01:01PM  Market Realist]
▶ What We Can Estimate from Apaches Implied Volatility   [Nov-24-17 07:30AM  Market Realist]
▶ Changes in Short Interest in Whiting Petroleum Stock   [Nov-22-17 07:33AM  Market Realist]
▶ Analyzing Oil-Weighted Stocks during Oils Downturn   [Nov-21-17 09:43AM  Market Realist]
▶ Recent Short Interest Trends: Whiting Petroleum Stock   [Nov-16-17 07:33AM  Market Realist]
▶ What Continental Resources Implied Volatility Tells Us   [Nov-10-17 09:02AM  Market Realist]
▶ Reading Concho Resources Stock Reaction to Its 3Q17 Earnings   [Nov-03-17 05:10PM  Market Realist]
▶ This Is Driving Conchos Production Growth   [03:40PM  Market Realist]
▶ Whiting Petroleum Stock: Implied Volatility Trends   [Nov-01-17 04:00PM  Market Realist]
▶ Shale Earnings: Concho Resources, Devon Energy Beat, Anadarko Misses   [Oct-31-17 04:34PM  Investor's Business Daily]
▶ Concho Resources reports 3Q loss   [04:13PM  Associated Press]
Financial statements of CXO
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