Intrinsic value of Devon Energy Corporation - DVN

Previous Close

$30.51

  Intrinsic Value

$4.76

stock screener

  Rating & Target

str. sell

-84%

Previous close

$30.51

 
Intrinsic value

$4.76

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of DVN 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 13.4

 

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, %
  55.80
  50.72
  46.15
  42.03
  38.33
  35.00
  32.00
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.62
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
Revenue, $m
  16,724
  25,206
  36,838
  52,322
  72,377
  97,706
  128,970
  166,754
  211,558
  263,772
  323,682
  391,466
  467,205
  550,894
  642,460
  741,780
  848,695
  963,031
  1,084,612
  1,213,272
  1,348,869
  1,491,289
  1,640,457
  1,796,339
  1,958,946
  2,128,335
  2,304,608
  2,487,917
  2,678,457
  2,876,468
Variable operating expenses, $m
  12,864
  19,345
  28,234
  40,067
  55,392
  74,748
  98,638
  127,512
  161,749
  201,649
  247,347
  299,145
  357,022
  420,974
  490,946
  566,842
  648,543
  735,915
  828,823
  927,140
  1,030,758
  1,139,591
  1,253,580
  1,372,700
  1,496,958
  1,626,399
  1,761,101
  1,901,179
  2,046,783
  2,198,097
Fixed operating expenses, $m
  980
  1,002
  1,024
  1,046
  1,069
  1,093
  1,117
  1,141
  1,166
  1,192
  1,218
  1,245
  1,273
  1,301
  1,329
  1,358
  1,388
  1,419
  1,450
  1,482
  1,515
  1,548
  1,582
  1,617
  1,652
  1,689
  1,726
  1,764
  1,803
  1,842
Total operating expenses, $m
  13,844
  20,347
  29,258
  41,113
  56,461
  75,841
  99,755
  128,653
  162,915
  202,841
  248,565
  300,390
  358,295
  422,275
  492,275
  568,200
  649,931
  737,334
  830,273
  928,622
  1,032,273
  1,141,139
  1,255,162
  1,374,317
  1,498,610
  1,628,088
  1,762,827
  1,902,943
  2,048,586
  2,199,939
Operating income, $m
  2,880
  4,859
  7,580
  11,209
  15,916
  21,866
  29,215
  38,101
  48,642
  60,930
  75,117
  91,076
  108,911
  128,619
  150,185
  173,579
  198,764
  225,698
  254,339
  284,650
  316,596
  350,150
  385,295
  422,023
  460,336
  500,247
  541,781
  584,974
  629,871
  676,529
EBITDA, $m
  5,478
  8,732
  13,202
  19,159
  26,880
  36,638
  48,687
  63,253
  80,530
  100,667
  123,776
  149,925
  179,145
  211,435
  246,766
  285,091
  326,348
  370,470
  417,389
  467,041
  519,371
  574,335
  631,904
  692,066
  754,823
  820,199
  888,232
  958,982
  1,032,523
  1,108,948
Interest expense (income), $m
  566
  553
  1,083
  1,834
  2,863
  4,234
  6,009
  8,251
  11,018
  14,362
  18,327
  22,949
  28,251
  34,251
  40,954
  48,361
  56,466
  65,256
  74,719
  84,839
  95,600
  106,987
  118,989
  131,594
  144,796
  158,593
  172,985
  187,978
  203,579
  219,803
  236,668
Earnings before tax, $m
  2,327
  3,776
  5,746
  8,346
  11,682
  15,857
  20,964
  27,083
  34,280
  42,603
  52,168
  62,825
  74,660
  87,665
  101,824
  117,113
  133,507
  150,978
  169,501
  189,050
  209,609
  231,162
  253,701
  277,226
  301,742
  327,262
  353,804
  381,395
  410,068
  439,862
Tax expense, $m
  628
  1,019
  1,551
  2,253
  3,154
  4,281
  5,660
  7,313
  9,256
  11,503
  14,085
  16,963
  20,158
  23,670
  27,492
  31,621
  36,047
  40,764
  45,765
  51,044
  56,594
  62,414
  68,499
  74,851
  81,470
  88,361
  95,527
  102,977
  110,718
  118,763
Net income, $m
  1,699
  2,756
  4,195
  6,092
  8,528
  11,576
  15,304
  19,771
  25,025
  31,100
  38,083
  45,862
  54,502
  63,996
  74,332
  85,493
  97,460
  110,214
  123,735
  138,007
  153,014
  168,748
  185,202
  202,375
  220,272
  238,901
  258,277
  278,418
  299,349
  321,099

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
  29,917
  45,091
  65,899
  93,599
  129,475
  174,788
  230,715
  298,308
  378,457
  471,864
  579,038
  700,297
  835,787
  985,499
  1,149,302
  1,326,976
  1,518,238
  1,722,775
  1,940,272
  2,170,433
  2,413,003
  2,667,780
  2,934,628
  3,213,487
  3,504,376
  3,807,397
  4,122,734
  4,450,657
  4,791,515
  5,145,740
Adjusted assets (=assets-cash), $m
  29,917
  45,091
  65,899
  93,599
  129,475
  174,788
  230,715
  298,308
  378,457
  471,864
  579,038
  700,297
  835,787
  985,499
  1,149,302
  1,326,976
  1,518,238
  1,722,775
  1,940,272
  2,170,433
  2,413,003
  2,667,780
  2,934,628
  3,213,487
  3,504,376
  3,807,397
  4,122,734
  4,450,657
  4,791,515
  5,145,740
Revenue / Adjusted assets
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
Average production assets, $m
  22,878
  34,481
  50,394
  71,576
  99,011
  133,662
  176,430
  228,120
  289,411
  360,840
  442,797
  535,526
  639,136
  753,623
  878,885
  1,014,755
  1,161,015
  1,317,427
  1,483,749
  1,659,756
  1,845,252
  2,040,083
  2,244,145
  2,457,392
  2,679,839
  2,911,562
  3,152,704
  3,403,471
  3,664,129
  3,935,009
Working capital, $m
  -67
  -101
  -147
  -209
  -290
  -391
  -516
  -667
  -846
  -1,055
  -1,295
  -1,566
  -1,869
  -2,204
  -2,570
  -2,967
  -3,395
  -3,852
  -4,338
  -4,853
  -5,395
  -5,965
  -6,562
  -7,185
  -7,836
  -8,513
  -9,218
  -9,952
  -10,714
  -11,506
Total debt, $m
  11,645
  19,717
  30,787
  45,524
  64,610
  88,716
  118,469
  154,429
  197,068
  246,761
  303,777
  368,287
  440,368
  520,014
  607,158
  701,680
  803,432
  912,245
  1,027,954
  1,150,400
  1,279,447
  1,414,988
  1,556,951
  1,705,304
  1,860,057
  2,021,264
  2,189,024
  2,363,478
  2,544,815
  2,733,263
Total liabilities, $m
  15,916
  23,988
  35,058
  49,795
  68,881
  92,987
  122,740
  158,700
  201,339
  251,032
  308,048
  372,558
  444,639
  524,285
  611,429
  705,951
  807,703
  916,516
  1,032,225
  1,154,671
  1,283,718
  1,419,259
  1,561,222
  1,709,575
  1,864,328
  2,025,535
  2,193,295
  2,367,749
  2,549,086
  2,737,534
Total equity, $m
  14,001
  21,103
  30,841
  43,804
  60,594
  81,801
  107,975
  139,608
  177,118
  220,832
  270,990
  327,739
  391,148
  461,213
  537,874
  621,025
  710,535
  806,259
  908,047
  1,015,763
  1,129,285
  1,248,521
  1,373,406
  1,503,912
  1,640,048
  1,781,862
  1,929,440
  2,082,907
  2,242,429
  2,408,206
Total liabilities and equity, $m
  29,917
  45,091
  65,899
  93,599
  129,475
  174,788
  230,715
  298,308
  378,457
  471,864
  579,038
  700,297
  835,787
  985,498
  1,149,303
  1,326,976
  1,518,238
  1,722,775
  1,940,272
  2,170,434
  2,413,003
  2,667,780
  2,934,628
  3,213,487
  3,504,376
  3,807,397
  4,122,735
  4,450,656
  4,791,515
  5,145,740
Debt-to-equity ratio
  0.830
  0.930
  1.000
  1.040
  1.070
  1.080
  1.100
  1.110
  1.110
  1.120
  1.120
  1.120
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
Adjusted equity ratio
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,699
  2,756
  4,195
  6,092
  8,528
  11,576
  15,304
  19,771
  25,025
  31,100
  38,083
  45,862
  54,502
  63,996
  74,332
  85,493
  97,460
  110,214
  123,735
  138,007
  153,014
  168,748
  185,202
  202,375
  220,272
  238,901
  258,277
  278,418
  299,349
  321,099
Depreciation, amort., depletion, $m
  2,598
  3,873
  5,622
  7,950
  10,964
  14,772
  19,472
  25,152
  31,887
  39,737
  48,659
  58,849
  70,235
  82,816
  96,581
  111,511
  127,584
  144,772
  163,049
  182,391
  202,775
  224,185
  246,609
  270,043
  294,488
  319,952
  346,451
  374,008
  402,652
  432,419
Funds from operations, $m
  4,297
  6,630
  9,817
  14,042
  19,492
  26,348
  34,776
  44,923
  56,912
  70,837
  86,742
  104,711
  124,737
  146,811
  170,912
  197,004
  225,044
  254,986
  286,785
  320,398
  355,789
  392,933
  431,811
  472,418
  514,760
  558,853
  604,728
  652,426
  702,001
  753,518
Change in working capital, $m
  -24
  -34
  -47
  -62
  -80
  -101
  -125
  -151
  -179
  -209
  -240
  -271
  -303
  -335
  -366
  -397
  -428
  -457
  -486
  -515
  -542
  -570
  -597
  -624
  -650
  -678
  -705
  -733
  -762
  -792
Cash from operations, $m
  4,321
  6,663
  9,863
  14,104
  19,572
  26,449
  34,901
  45,074
  57,091
  71,046
  86,982
  104,982
  125,039
  147,146
  171,279
  197,402
  225,472
  255,444
  287,271
  320,912
  356,332
  393,503
  432,408
  473,042
  515,410
  559,530
  605,433
  653,159
  702,763
  754,310
Maintenance CAPEX, $m
  -1,613
  -2,514
  -3,789
  -5,538
  -7,866
  -10,880
  -14,688
  -19,388
  -25,068
  -31,803
  -39,653
  -48,659
  -58,849
  -70,235
  -82,816
  -96,581
  -111,511
  -127,584
  -144,772
  -163,049
  -182,391
  -202,775
  -224,185
  -246,609
  -270,043
  -294,488
  -319,952
  -346,451
  -374,008
  -402,652
New CAPEX, $m
  -8,198
  -11,604
  -15,913
  -21,182
  -27,435
  -34,651
  -42,768
  -51,690
  -61,291
  -71,429
  -81,957
  -92,729
  -103,610
  -114,486
  -125,263
  -135,869
  -146,260
  -156,412
  -166,323
  -176,007
  -185,496
  -194,831
  -204,062
  -213,247
  -222,446
  -231,724
  -241,142
  -250,766
  -260,658
  -270,880
Cash from investing activities, $m
  -9,811
  -14,118
  -19,702
  -26,720
  -35,301
  -45,531
  -57,456
  -71,078
  -86,359
  -103,232
  -121,610
  -141,388
  -162,459
  -184,721
  -208,079
  -232,450
  -257,771
  -283,996
  -311,095
  -339,056
  -367,887
  -397,606
  -428,247
  -459,856
  -492,489
  -526,212
  -561,094
  -597,217
  -634,666
  -673,532
Free cash flow, $m
  -5,490
  -7,454
  -9,839
  -12,616
  -15,728
  -19,082
  -22,555
  -26,003
  -29,268
  -32,187
  -34,628
  -36,405
  -37,420
  -37,575
  -36,800
  -35,048
  -32,300
  -28,552
  -23,824
  -18,144
  -11,555
  -4,103
  4,161
  13,185
  22,921
  33,319
  44,339
  55,942
  68,097
  80,778
Issuance/(repayment) of debt, $m
  5,698
  8,073
  11,070
  14,736
  19,086
  24,106
  29,753
  35,960
  42,639
  49,692
  57,016
  64,510
  72,080
  79,647
  87,144
  94,522
  101,751
  108,814
  115,708
  122,446
  129,047
  135,541
  141,963
  148,353
  154,753
  161,207
  167,759
  174,455
  181,337
  188,447
Issuance/(repurchase) of shares, $m
  3,305
  4,345
  5,544
  6,871
  8,262
  9,631
  10,870
  11,863
  12,485
  12,614
  12,074
  10,887
  8,907
  6,070
  2,329
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  9,003
  12,418
  16,614
  21,607
  27,348
  33,737
  40,623
  47,823
  55,124
  62,306
  69,090
  75,397
  80,987
  85,717
  89,473
  94,522
  101,751
  108,814
  115,708
  122,446
  129,047
  135,541
  141,963
  148,353
  154,753
  161,207
  167,759
  174,455
  181,337
  188,447
Total cash flow (excl. dividends), $m
  3,512
  4,963
  6,775
  8,991
  11,620
  14,655
  18,068
  21,819
  25,857
  30,120
  34,463
  38,992
  43,568
  48,141
  52,672
  59,474
  69,452
  80,261
  91,885
  104,301
  117,492
  131,438
  146,124
  161,539
  177,674
  194,526
  212,098
  230,397
  249,433
  269,226
Retained Cash Flow (-), $m
  -5,003
  -7,101
  -9,738
  -12,963
  -16,790
  -21,206
  -26,174
  -31,634
  -37,510
  -43,714
  -50,157
  -56,750
  -63,409
  -70,065
  -76,660
  -83,151
  -89,510
  -95,723
  -101,789
  -107,716
  -113,523
  -119,235
  -124,885
  -130,506
  -136,136
  -141,814
  -147,578
  -153,468
  -159,522
  -165,777
Prev. year cash balance distribution, $m
  188
  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
  -1,303
  -2,138
  -2,963
  -3,972
  -5,170
  -6,552
  -8,106
  -9,814
  -11,653
  -13,595
  -15,695
  -17,757
  -19,841
  -21,924
  -23,988
  -23,677
  -20,059
  -15,462
  -9,904
  -3,414
  3,969
  12,203
  21,239
  31,032
  41,537
  52,713
  64,520
  76,929
  89,912
  103,449
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
  -1,249
  -1,957
  -2,579
  -3,271
  -4,007
  -4,755
  -5,476
  -6,134
  -6,694
  -7,127
  -7,453
  -7,578
  -7,544
  -7,360
  -7,042
  -6,017
  -4,364
  -2,847
  -1,525
  -434
  411
  1,012
  1,392
  1,581
  1,616
  1,538
  1,385
  1,190
  981
  779
Current shareholders' claim on cash, %
  79.9
  65.8
  55.8
  48.4
  42.8
  38.6
  35.4
  32.9
  31.0
  29.5
  28.5
  27.7
  27.2
  26.9
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8
  26.8

Devon Energy Corporation is an independent energy company. The Company also controls EnLink Midstream Partners, L.P. (EnLink). The Company's segments include U.S., Canada and EnLink. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). The Company's operations are concentrated in various North American onshore areas in the United States and Canada. The Company's U.S. and Canada segments are primarily engaged in oil and gas exploration and production activities. EnLink is a master limited partnership (MLP) with a midstream business and operations located across the United States. EnLink focuses on providing gathering, transmission, processing, storage, fractionation and marketing to upstream oil and natural gas producers. The Company's properties include Barnett Shale, Delaware Basin, Eagle Ford, Heavy Oil, Rockies Oil and STACK.

FINANCIAL RATIOS  of  Devon Energy Corporation (DVN)

Valuation Ratios
P/E Ratio -4.8
Price to Sales 1.5
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow -27.3
Growth Rates
Sales Growth Rate -21.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.1%
Cap. Spend. - 3 Yr. Gr. Rate -19.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 171.3%
Total Debt to Equity 171.3%
Interest Coverage -6
Management Effectiveness
Return On Assets -10%
Ret/ On Assets - 3 Yr. Avg. -13.8%
Return On Total Capital -18.3%
Ret/ On T. Cap. - 3 Yr. Avg. -22.7%
Return On Equity -50.9%
Return On Equity - 3 Yr. Avg. -48.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 83.3%
Gross Margin - 3 Yr. Avg. 84%
EBITDA Margin -14.7%
EBITDA Margin - 3 Yr. Avg. -36.2%
Operating Margin -30.7%
Oper. Margin - 3 Yr. Avg. -54.9%
Pre-Tax Margin -37.6%
Pre-Tax Margin - 3 Yr. Avg. -59.6%
Net Profit Margin -32%
Net Profit Margin - 3 Yr. Avg. -44.6%
Effective Tax Rate 4.5%
Eff/ Tax Rate - 3 Yr. Avg. 30.4%
Payout Ratio -6.7%

DVN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DVN stock intrinsic value calculation we used $10734 million for the last fiscal year's total revenue generated by Devon Energy Corporation. The default revenue input number comes from 0001 income statement of Devon Energy 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 DVN stock valuation model: a) initial revenue growth rate of 55.8% 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 DVN is calculated based on our internal credit rating of Devon Energy 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 Devon Energy 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 DVN stock the variable cost ratio is equal to 77.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $959 million in the base year in the intrinsic value calculation for DVN 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 9.3% for Devon Energy Corporation.

Corporate tax rate of 27% is the nominal tax rate for Devon Energy 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 DVN 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 DVN are equal to 136.8%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Devon Energy 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 DVN is equal to -0.4%. 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 - $9186 million for Devon Energy 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 438.259 million for Devon Energy 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 Devon Energy Corporation at the current share price and the inputted number of shares is $13.4 billion.

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