Intrinsic value of Gastar Exploration - GST

Previous Close

$0.06

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.06

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of GST 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 0.0

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  74
  75
  77
  79
  82
  84
  87
  90
  94
  97
  101
  105
  110
  114
  119
  124
  130
  136
  142
  149
  155
  163
  170
  178
  187
  196
  205
  215
  226
  237
Variable operating expenses, $m
  142
  145
  149
  153
  158
  163
  169
  175
  181
  188
  195
  203
  212
  221
  230
  240
  251
  262
  274
  287
  300
  314
  329
  345
  361
  378
  396
  416
  436
  457
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
  142
  145
  149
  153
  158
  163
  169
  175
  181
  188
  195
  203
  212
  221
  230
  240
  251
  262
  274
  287
  300
  314
  329
  345
  361
  378
  396
  416
  436
  457
Operating income, $m
  -68
  -70
  -72
  -74
  -76
  -79
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -126
  -132
  -138
  -145
  -152
  -159
  -166
  -174
  -182
  -191
  -200
  -210
  -220
EBITDA, $m
  -44
  -45
  -46
  -48
  -49
  -51
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -142
Interest expense (income), $m
  0
  36
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  90
  95
  99
  105
Earnings before tax, $m
  -104
  -99
  -102
  -105
  -108
  -112
  -116
  -120
  -125
  -130
  -135
  -141
  -147
  -154
  -160
  -168
  -176
  -184
  -192
  -202
  -211
  -221
  -232
  -243
  -255
  -268
  -281
  -295
  -309
  -325
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
  -104
  -99
  -102
  -105
  -108
  -112
  -116
  -120
  -125
  -130
  -135
  -141
  -147
  -154
  -160
  -168
  -176
  -184
  -192
  -202
  -211
  -221
  -232
  -243
  -255
  -268
  -281
  -295
  -309
  -325

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
  389
  398
  408
  420
  433
  447
  462
  478
  496
  515
  535
  557
  580
  605
  631
  659
  688
  719
  752
  786
  823
  861
  902
  944
  989
  1,036
  1,086
  1,139
  1,194
  1,252
Adjusted assets (=assets-cash), $m
  389
  398
  408
  420
  433
  447
  462
  478
  496
  515
  535
  557
  580
  605
  631
  659
  688
  719
  752
  786
  823
  861
  902
  944
  989
  1,036
  1,086
  1,139
  1,194
  1,252
Revenue / Adjusted assets
  0.190
  0.188
  0.189
  0.188
  0.189
  0.188
  0.188
  0.188
  0.190
  0.188
  0.189
  0.189
  0.190
  0.188
  0.189
  0.188
  0.189
  0.189
  0.189
  0.190
  0.188
  0.189
  0.188
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
Average production assets, $m
  264
  270
  277
  285
  294
  303
  313
  325
  337
  350
  363
  378
  394
  411
  428
  447
  467
  488
  510
  534
  558
  584
  612
  641
  671
  703
  737
  773
  810
  850
Working capital, $m
  -21
  -22
  -23
  -23
  -24
  -25
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
Total debt, $m
  281
  289
  299
  309
  320
  333
  347
  361
  377
  395
  413
  432
  453
  475
  499
  524
  550
  578
  607
  639
  671
  706
  742
  781
  821
  864
  909
  956
  1,005
  1,058
Total liabilities, $m
  350
  358
  368
  378
  389
  402
  416
  430
  446
  464
  482
  501
  522
  544
  568
  593
  619
  647
  676
  708
  740
  775
  811
  850
  890
  933
  978
  1,025
  1,074
  1,127
Total equity, $m
  39
  40
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  104
  109
  114
  119
  125
Total liabilities and equity, $m
  389
  398
  409
  420
  432
  447
  462
  478
  496
  516
  536
  557
  580
  604
  631
  659
  688
  719
  751
  787
  822
  861
  901
  944
  989
  1,037
  1,087
  1,139
  1,193
  1,252
Debt-to-equity ratio
  7.230
  7.270
  7.310
  7.360
  7.410
  7.460
  7.510
  7.560
  7.610
  7.660
  7.710
  7.760
  7.810
  7.860
  7.910
  7.950
  8.000
  8.040
  8.080
  8.120
  8.160
  8.200
  8.230
  8.270
  8.300
  8.330
  8.360
  8.390
  8.420
  8.450
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
  -104
  -99
  -102
  -105
  -108
  -112
  -116
  -120
  -125
  -130
  -135
  -141
  -147
  -154
  -160
  -168
  -176
  -184
  -192
  -202
  -211
  -221
  -232
  -243
  -255
  -268
  -281
  -295
  -309
  -325
Depreciation, amort., depletion, $m
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
Funds from operations, $m
  -80
  -74
  -76
  -79
  -81
  -84
  -87
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -126
  -132
  -139
  -145
  -152
  -159
  -167
  -175
  -184
  -193
  -203
  -213
  -223
  -234
  -246
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  -79
  -74
  -76
  -78
  -80
  -83
  -86
  -89
  -93
  -96
  -100
  -105
  -109
  -114
  -119
  -125
  -131
  -137
  -143
  -150
  -157
  -165
  -173
  -182
  -191
  -200
  -210
  -220
  -231
  -243
Maintenance CAPEX, $m
  -24
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
New CAPEX, $m
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -37
  -39
Cash from investing activities, $m
  -30
  -30
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -78
  -81
  -86
  -90
  -94
  -99
  -104
  -109
  -114
Free cash flow, $m
  -109
  -104
  -108
  -111
  -115
  -120
  -124
  -129
  -135
  -141
  -147
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
  -243
  -255
  -267
  -280
  -294
  -309
  -324
  -340
  -357
Issuance/(repayment) of debt, $m
  -62
  8
  9
  10
  11
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  36
  38
  40
  43
  45
  47
  50
  52
Issuance/(repurchase) of shares, $m
  175
  100
  103
  106
  110
  113
  117
  122
  127
  132
  137
  143
  149
  156
  163
  171
  178
  187
  196
  205
  215
  225
  236
  248
  260
  273
  286
  300
  315
  331
Cash from financing (excl. dividends), $m  
  113
  108
  112
  116
  121
  126
  131
  137
  143
  149
  155
  163
  170
  178
  186
  196
  204
  215
  225
  236
  248
  260
  272
  286
  300
  316
  331
  347
  365
  383
Total cash flow (excl. dividends), $m
  4
  4
  4
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Retained Cash Flow (-), $m
  -175
  -100
  -103
  -106
  -110
  -113
  -117
  -122
  -127
  -132
  -137
  -143
  -149
  -156
  -163
  -171
  -178
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -300
  -315
  -331
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
  -170
  -96
  -98
  -101
  -104
  -107
  -111
  -115
  -119
  -123
  -128
  -134
  -139
  -145
  -152
  -158
  -166
  -173
  -181
  -190
  -199
  -208
  -218
  -229
  -240
  -252
  -264
  -277
  -291
  -305
Discount rate, %
  14.90
  15.65
  16.43
  17.25
  18.11
  19.02
  19.97
  20.97
  22.01
  23.11
  24.27
  25.48
  26.76
  28.10
  29.50
  30.98
  32.52
  34.15
  35.86
  37.65
  39.53
  41.51
  43.59
  45.77
  48.05
  50.46
  52.98
  55.63
  58.41
  61.33
PV of cash for distribution, $m
  -148
  -72
  -62
  -53
  -45
  -38
  -31
  -25
  -20
  -15
  -12
  -9
  -6
  -5
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  14.0
  3.9
  1.1
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Gastar Exploration Inc., an independent energy company, engages in the exploration, development, and production of oil, condensate, natural gas, and natural gas liquids in the United States. Its principal activities include the identification, acquisition, development, and exploration of oil and natural gas properties on unconventional reserves, such as shale resource plays. The company is also developing the primarily oil-bearing reservoirs of the Hunton Limestone horizontal oil play in Oklahoma; and liquids-rich natural gas in the Marcellus Shale in West Virginia. As of December 31, 2015, its principal assets included approximately 36,900 net acres in the Appalachian Basin in West Virginia and southwestern Pennsylvania, as well as approximately 110,700 net acres in the Mid-Continent area of the U.S. in the state of Oklahoma. The company was formerly known as Gastar Exploration Ltd. and changed its name to Gastar Exploration Inc. in January 2014. Gastar Exploration Inc. is based in Houston, Texas.

FINANCIAL RATIOS  of  Gastar Exploration (GST)

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

GST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GST stock intrinsic value calculation we used $72.13 million for the last fiscal year's total revenue generated by Gastar Exploration. The default revenue input number comes from 0001 income statement of Gastar Exploration. 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 GST stock valuation model: a) initial revenue growth rate of 2% 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 14.9%, whose default value for GST is calculated based on our internal credit rating of Gastar Exploration, 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 Gastar Exploration.
    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 GST stock the variable cost ratio is equal to 193.1%.

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 GST 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 10.4% for Gastar Exploration.

Corporate tax rate of 27% is the nominal tax rate for Gastar Exploration. 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 GST 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 GST are equal to 359.1%.

Life of production assets of 10.8 years is the average useful life of capital assets used in Gastar Exploration 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 GST is equal to -29.2%. 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 - $-31.828 million for Gastar Exploration - 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 218.934 million for Gastar Exploration 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 Gastar Exploration at the current share price and the inputted number of shares is $0.0 billion.

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