Intrinsic value of EP Energy Cl A - EPE

Previous Close

$1.43

  Intrinsic Value

$19.10

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.43

 
Intrinsic value

$19.10

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of EPE 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 0.4

 

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, %
  39.00
  35.60
  32.54
  29.79
  27.31
  25.08
  23.07
  21.26
  19.64
  18.17
  16.86
  15.67
  14.60
  13.64
  12.78
  12.00
  11.30
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
Revenue, $m
  1,482
  2,009
  2,663
  3,456
  4,400
  5,503
  6,773
  8,213
  9,826
  11,611
  13,569
  15,695
  17,987
  20,440
  23,052
  25,819
  28,736
  31,802
  35,015
  38,374
  41,879
  45,531
  49,332
  53,286
  57,395
  61,666
  66,104
  70,716
  75,510
  80,495
Variable operating expenses, $m
  333
  452
  599
  778
  990
  1,238
  1,524
  1,848
  2,211
  2,613
  3,053
  3,531
  4,047
  4,599
  5,187
  5,809
  6,466
  7,156
  7,878
  8,634
  9,423
  10,245
  11,100
  11,989
  12,914
  13,875
  14,873
  15,911
  16,990
  18,111
Fixed operating expenses, $m
  723
  738
  755
  771
  788
  806
  823
  841
  860
  879
  898
  918
  938
  959
  980
  1,001
  1,023
  1,046
  1,069
  1,093
  1,117
  1,141
  1,166
  1,192
  1,218
  1,245
  1,272
  1,300
  1,329
  1,358
Total operating expenses, $m
  1,056
  1,190
  1,354
  1,549
  1,778
  2,044
  2,347
  2,689
  3,071
  3,492
  3,951
  4,449
  4,985
  5,558
  6,167
  6,810
  7,489
  8,202
  8,947
  9,727
  10,540
  11,386
  12,266
  13,181
  14,132
  15,120
  16,145
  17,211
  18,319
  19,469
Operating income, $m
  426
  819
  1,309
  1,907
  2,622
  3,460
  4,426
  5,524
  6,755
  8,120
  9,617
  11,245
  13,001
  14,882
  16,886
  19,008
  21,247
  23,601
  26,068
  28,648
  31,340
  34,146
  37,066
  40,104
  43,263
  46,546
  49,958
  53,504
  57,191
  61,025
EBITDA, $m
  1,046
  1,659
  2,423
  3,353
  4,463
  5,762
  7,260
  8,960
  10,866
  12,978
  15,295
  17,812
  20,527
  23,435
  26,531
  29,810
  33,270
  36,907
  40,718
  44,704
  48,862
  53,196
  57,707
  62,399
  67,277
  72,347
  77,616
  83,092
  88,785
  94,704
Interest expense (income), $m
  0
  337
  471
  651
  875
  1,147
  1,471
  1,849
  2,284
  2,777
  3,330
  3,942
  4,612
  5,341
  6,126
  6,967
  7,862
  8,810
  9,810
  10,860
  11,961
  13,112
  14,313
  15,565
  16,867
  18,222
  19,630
  21,093
  22,614
  24,194
  25,837
Earnings before tax, $m
  89
  348
  658
  1,032
  1,475
  1,989
  2,577
  3,240
  3,978
  4,790
  5,676
  6,633
  7,661
  8,756
  9,919
  11,146
  12,437
  13,791
  15,208
  16,686
  18,228
  19,832
  21,502
  23,237
  25,041
  26,916
  28,865
  30,891
  32,997
  35,188
Tax expense, $m
  24
  94
  178
  279
  398
  537
  696
  875
  1,074
  1,293
  1,532
  1,791
  2,068
  2,364
  2,678
  3,009
  3,358
  3,724
  4,106
  4,505
  4,921
  5,355
  5,805
  6,274
  6,761
  7,267
  7,794
  8,340
  8,909
  9,501
Net income, $m
  65
  254
  480
  753
  1,076
  1,452
  1,881
  2,365
  2,904
  3,497
  4,143
  4,842
  5,592
  6,392
  7,241
  8,137
  9,079
  10,068
  11,102
  12,181
  13,306
  14,478
  15,696
  16,963
  18,280
  19,649
  21,071
  22,550
  24,088
  25,687

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
  6,797
  9,217
  12,216
  15,854
  20,184
  25,245
  31,069
  37,675
  45,073
  53,264
  62,241
  71,994
  82,507
  93,763
  105,744
  118,434
  131,817
  145,882
  160,621
  176,030
  192,107
  208,860
  226,296
  244,430
  263,280
  282,871
  303,228
  324,385
  346,376
  369,242
Adjusted assets (=assets-cash), $m
  6,797
  9,217
  12,216
  15,854
  20,184
  25,245
  31,069
  37,675
  45,073
  53,264
  62,241
  71,994
  82,507
  93,763
  105,744
  118,434
  131,817
  145,882
  160,621
  176,030
  192,107
  208,860
  226,296
  244,430
  263,280
  282,871
  303,228
  324,385
  346,376
  369,242
Revenue / Adjusted assets
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
Average production assets, $m
  6,200
  8,407
  11,142
  14,461
  18,410
  23,027
  28,338
  34,364
  41,111
  48,582
  56,771
  65,667
  75,256
  85,522
  96,451
  108,025
  120,232
  133,061
  146,505
  160,559
  175,223
  190,503
  206,407
  222,947
  240,141
  258,010
  276,578
  295,875
  315,934
  336,790
Working capital, $m
  -320
  -434
  -575
  -747
  -950
  -1,189
  -1,463
  -1,774
  -2,122
  -2,508
  -2,931
  -3,390
  -3,885
  -4,415
  -4,979
  -5,577
  -6,207
  -6,869
  -7,563
  -8,289
  -9,046
  -9,835
  -10,656
  -11,510
  -12,397
  -13,320
  -14,278
  -15,275
  -16,310
  -17,387
Total debt, $m
  5,669
  7,847
  10,546
  13,821
  17,717
  22,273
  27,514
  33,460
  40,118
  47,489
  55,569
  64,347
  73,808
  83,939
  94,722
  106,143
  118,188
  130,846
  144,111
  157,979
  172,449
  187,526
  203,218
  219,539
  236,504
  254,135
  272,457
  291,498
  311,290
  331,869
Total liabilities, $m
  6,117
  8,295
  10,994
  14,269
  18,165
  22,721
  27,962
  33,908
  40,566
  47,937
  56,017
  64,795
  74,256
  84,387
  95,170
  106,591
  118,636
  131,294
  144,559
  158,427
  172,897
  187,974
  203,666
  219,987
  236,952
  254,583
  272,905
  291,946
  311,738
  332,317
Total equity, $m
  680
  922
  1,222
  1,585
  2,018
  2,525
  3,107
  3,768
  4,507
  5,326
  6,224
  7,199
  8,251
  9,376
  10,574
  11,843
  13,182
  14,588
  16,062
  17,603
  19,211
  20,886
  22,630
  24,443
  26,328
  28,287
  30,323
  32,438
  34,638
  36,924
Total liabilities and equity, $m
  6,797
  9,217
  12,216
  15,854
  20,183
  25,246
  31,069
  37,676
  45,073
  53,263
  62,241
  71,994
  82,507
  93,763
  105,744
  118,434
  131,818
  145,882
  160,621
  176,030
  192,108
  208,860
  226,296
  244,430
  263,280
  282,870
  303,228
  324,384
  346,376
  369,241
Debt-to-equity ratio
  8.340
  8.510
  8.630
  8.720
  8.780
  8.820
  8.860
  8.880
  8.900
  8.920
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  65
  254
  480
  753
  1,076
  1,452
  1,881
  2,365
  2,904
  3,497
  4,143
  4,842
  5,592
  6,392
  7,241
  8,137
  9,079
  10,068
  11,102
  12,181
  13,306
  14,478
  15,696
  16,963
  18,280
  19,649
  21,071
  22,550
  24,088
  25,687
Depreciation, amort., depletion, $m
  620
  841
  1,114
  1,446
  1,841
  2,303
  2,834
  3,436
  4,111
  4,858
  5,677
  6,567
  7,526
  8,552
  9,645
  10,802
  12,023
  13,306
  14,650
  16,056
  17,522
  19,050
  20,641
  22,295
  24,014
  25,801
  27,658
  29,588
  31,593
  33,679
Funds from operations, $m
  685
  1,095
  1,594
  2,199
  2,917
  3,755
  4,715
  5,802
  7,015
  8,355
  9,820
  11,409
  13,118
  14,944
  16,886
  18,939
  21,102
  23,374
  25,752
  28,237
  30,829
  33,528
  36,337
  39,258
  42,294
  45,450
  48,729
  52,138
  55,681
  59,366
Change in working capital, $m
  -90
  -114
  -141
  -171
  -204
  -238
  -274
  -311
  -348
  -386
  -423
  -459
  -495
  -530
  -564
  -598
  -630
  -662
  -694
  -726
  -757
  -789
  -821
  -854
  -888
  -922
  -959
  -996
  -1,036
  -1,077
Cash from operations, $m
  775
  1,209
  1,736
  2,371
  3,121
  3,993
  4,989
  6,113
  7,363
  8,741
  10,243
  11,868
  13,613
  15,474
  17,450
  19,537
  21,733
  24,036
  26,446
  28,962
  31,586
  34,317
  37,158
  40,112
  43,182
  46,372
  49,688
  53,134
  56,717
  60,443
Maintenance CAPEX, $m
  -446
  -620
  -841
  -1,114
  -1,446
  -1,841
  -2,303
  -2,834
  -3,436
  -4,111
  -4,858
  -5,677
  -6,567
  -7,526
  -8,552
  -9,645
  -10,802
  -12,023
  -13,306
  -14,650
  -16,056
  -17,522
  -19,050
  -20,641
  -22,295
  -24,014
  -25,801
  -27,658
  -29,588
  -31,593
New CAPEX, $m
  -1,740
  -2,207
  -2,736
  -3,319
  -3,949
  -4,617
  -5,312
  -6,025
  -6,748
  -7,471
  -8,189
  -8,896
  -9,589
  -10,267
  -10,928
  -11,574
  -12,207
  -12,829
  -13,443
  -14,054
  -14,665
  -15,280
  -15,904
  -16,540
  -17,194
  -17,869
  -18,568
  -19,297
  -20,058
  -20,856
Cash from investing activities, $m
  -2,186
  -2,827
  -3,577
  -4,433
  -5,395
  -6,458
  -7,615
  -8,859
  -10,184
  -11,582
  -13,047
  -14,573
  -16,156
  -17,793
  -19,480
  -21,219
  -23,009
  -24,852
  -26,749
  -28,704
  -30,721
  -32,802
  -34,954
  -37,181
  -39,489
  -41,883
  -44,369
  -46,955
  -49,646
  -52,449
Free cash flow, $m
  -1,411
  -1,618
  -1,841
  -2,062
  -2,274
  -2,465
  -2,625
  -2,747
  -2,821
  -2,841
  -2,804
  -2,705
  -2,543
  -2,318
  -2,031
  -1,683
  -1,277
  -816
  -303
  258
  865
  1,515
  2,204
  2,931
  3,693
  4,490
  5,318
  6,179
  7,071
  7,993
Issuance/(repayment) of debt, $m
  1,609
  2,178
  2,699
  3,275
  3,896
  4,555
  5,241
  5,945
  6,658
  7,372
  8,080
  8,778
  9,462
  10,130
  10,783
  11,421
  12,045
  12,659
  13,265
  13,867
  14,470
  15,077
  15,692
  16,321
  16,966
  17,631
  18,322
  19,041
  19,792
  20,579
Issuance/(repurchase) of shares, $m
  223
  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  
  1,832
  2,178
  2,699
  3,275
  3,896
  4,555
  5,241
  5,945
  6,658
  7,372
  8,080
  8,778
  9,462
  10,130
  10,783
  11,421
  12,045
  12,659
  13,265
  13,867
  14,470
  15,077
  15,692
  16,321
  16,966
  17,631
  18,322
  19,041
  19,792
  20,579
Total cash flow (excl. dividends), $m
  421
  559
  859
  1,212
  1,623
  2,091
  2,616
  3,199
  3,837
  4,530
  5,276
  6,073
  6,919
  7,813
  8,752
  9,738
  10,768
  11,842
  12,961
  14,125
  15,335
  16,592
  17,897
  19,252
  20,659
  22,121
  23,640
  25,220
  26,863
  28,573
Retained Cash Flow (-), $m
  -288
  -242
  -300
  -364
  -433
  -506
  -582
  -661
  -740
  -819
  -898
  -975
  -1,051
  -1,126
  -1,198
  -1,269
  -1,338
  -1,407
  -1,474
  -1,541
  -1,608
  -1,675
  -1,744
  -1,813
  -1,885
  -1,959
  -2,036
  -2,116
  -2,199
  -2,287
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
  -19
  -27
  -36
  -48
  -62
  -79
  -99
  -122
  -148
  -177
  -209
  -244
  -283
  -324
  -368
  -415
  -465
  -517
  -572
  -630
  -691
  -754
  -820
  -888
  -959
  -1,033
  -1,110
  -1,190
  -1,273
  -1,359
Cash available for distribution, $m
  133
  318
  559
  849
  1,190
  1,585
  2,034
  2,538
  3,098
  3,711
  4,378
  5,098
  5,868
  6,687
  7,554
  8,469
  9,430
  10,436
  11,488
  12,585
  13,727
  14,916
  16,153
  17,438
  18,774
  20,162
  21,604
  23,104
  24,664
  26,286
Discount rate, %
  12.80
  13.44
  14.11
  14.82
  15.56
  16.34
  17.15
  18.01
  18.91
  19.86
  20.85
  21.89
  22.99
  24.14
  25.34
  26.61
  27.94
  29.34
  30.80
  32.34
  33.96
  35.66
  37.44
  39.32
  41.28
  43.35
  45.51
  47.79
  50.18
  52.69
PV of cash for distribution, $m
  118
  247
  376
  488
  577
  639
  671
  675
  652
  607
  545
  474
  398
  324
  255
  194
  143
  102
  70
  46
  30
  18
  11
  6
  3
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2
  61.2

EP Energy Corporation (EP Energy) is an independent exploration and production company. The Company is engaged in the acquisition and development of unconventional onshore oil and natural gas properties in the United States. The Company operates through a base of producing assets. It is involved in the development of its drilling inventory located in three areas: the Eagle Ford Shale (South Texas), the Wolfcamp Shale (Permian Basin in West Texas) and the Altamont Field in the Uinta Basin (Northeastern Utah). As of December 31, 2016, in its operating areas, the Company had identified 5,156 drilling locations (including 639 drilling locations to which it has attributed proved undeveloped reserves). As of December 31, 2016, the Company had proved reserves of 432.4 million barrels of oil equivalent (MMBoe) and an average net daily production of 87,641 barrel of oil equivalent per day (Boe/d).

FINANCIAL RATIOS  of  EP Energy Cl A (EPE)

Valuation Ratios
P/E Ratio -13.3
Price to Sales 0.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 0.5
Price to Free Cash Flow 1.4
Growth Rates
Sales Growth Rate -59.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.8%
Cap. Spend. - 3 Yr. Gr. Rate -22.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 625.2%
Total Debt to Equity 625.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. -13.2%
Return On Total Capital -0.5%
Ret/ On T. Cap. - 3 Yr. Avg. -14.6%
Return On Equity -4.4%
Return On Equity - 3 Yr. Avg. -45.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 57.2%
Gross Margin - 3 Yr. Avg. 73.7%
EBITDA Margin 56.8%
EBITDA Margin - 3 Yr. Avg. -17.4%
Operating Margin 37.3%
Oper. Margin - 3 Yr. Avg. -41.4%
Pre-Tax Margin -3.4%
Pre-Tax Margin - 3 Yr. Avg. -64.2%
Net Profit Margin -3.5%
Net Profit Margin - 3 Yr. Avg. -58.8%
Effective Tax Rate -3.8%
Eff/ Tax Rate - 3 Yr. Avg. 15.6%
Payout Ratio 0%

EPE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EPE stock intrinsic value calculation we used $1066 million for the last fiscal year's total revenue generated by EP Energy Cl A. The default revenue input number comes from 2017 income statement of EP Energy Cl A. 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 EPE stock valuation model: a) initial revenue growth rate of 39% 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 12.8%, whose default value for EPE is calculated based on our internal credit rating of EP Energy Cl A, 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 EP Energy Cl A.
    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 EPE stock the variable cost ratio is equal to 22.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $707 million in the base year in the intrinsic value calculation for EPE 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 8.3% for EP Energy Cl A.

Corporate tax rate of 27% is the nominal tax rate for EP Energy Cl A. 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 EPE stock is equal to -1.8%.

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 EPE are equal to 418.4%.

Life of production assets of 10 years is the average useful life of capital assets used in EP Energy Cl A 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 EPE is equal to -21.6%. 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 - $392 million for EP Energy Cl A - 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 246 million for EP Energy Cl A 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 EP Energy Cl A at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ EP Energy: 2Q Earnings Snapshot   [04:24PM  Associated Press]
▶ Moving Average Crossover Alert: EP Energy (EPE)   [Jun-25-18 08:24AM  Zacks]
▶ At $2.69, Is EP Energy Corporation (NYSE:EPE) A Buy?   [Jun-07-18 09:14AM  Simply Wall St.]
▶ Houston oil and gas co. to spend more than $600M in 2018   [May-21-18 09:02AM  American City Business Journals]
▶ EP Energy: 1Q Earnings Snapshot   [May-08-18 07:00PM  Associated Press]
▶ EP Energy to Host First Quarter Results Webcast on May 9   [May-07-18 05:54PM  PR Newswire]
▶ Why Oil Stocks Are Rocketing Today   [Apr-18-18 05:24PM  Motley Fool]
▶ Are EP Energy Corporations (NYSE:EPE) Interest Costs Too High?   [Jan-30-18 08:21PM  Simply Wall St.]
▶ The Second-Worst-Performing Upstream Stock Year-to-Date   [Dec-07-17 10:30AM  Market Realist]
▶ Southwestern Energy names new COO   [Dec-04-17 06:20PM  American City Business Journals]
▶ These Stocks Were the Biggest Upstream Losers   [09:40AM  Market Realist]
▶ Your Upstream Losers This Week: EXXI, REN, EPE, CPE, and UNT   [Nov-15-17 02:40PM  Market Realist]
▶ Breaking Down EP Energy Corporations (EPE) Ownership Structure   [Nov-09-17 04:25PM  Simply Wall St.]
▶ ETFs with exposure to EP Energy Corp. : November 8, 2017   [Nov-08-17 06:02PM  Capital Cube]
▶ EP Energy Corp. Class A to Host Earnings Call   [Nov-02-17 09:25AM  ACCESSWIRE]
▶ EP Energy reports 3Q loss   [05:47AM  Associated Press]
▶ Is It The Right Time To Buy EP Energy Corporation (EPE)?   [Oct-20-17 01:56PM  Simply Wall St.]
▶ Is There Now An Opportunity In EP Energy Corporation (EPE)?   [Sep-13-17 09:49PM  Simply Wall St.]
▶ ETFs with exposure to EP Energy Corp. : September 7, 2017   [Sep-07-17 01:04PM  Capital Cube]
▶ How Encana Stock Has Performed This Year   [Aug-16-17 03:25PM  Market Realist]
▶ Andeavor Reports Second Quarter 2017 Results   [Aug-08-17 04:41PM  GlobeNewswire]
▶ EP Energy reports 2Q loss   [Aug-04-17 02:50AM  Associated Press]
▶ ETFs with exposure to EP Energy Corp. : July 24, 2017   [Jul-24-17 03:44PM  Capital Cube]
▶ ETFs with exposure to EP Energy Corp. : July 14, 2017   [Jul-14-17 02:14PM  Capital Cube]
▶ ETFs with exposure to EP Energy Corp. : June 15, 2017   [Jun-15-17 01:48PM  Capital Cube]
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