Intrinsic value of Hess Corp. - HES

Previous Close

$45.23

  Intrinsic Value

$10.93

stock screener

  Rating & Target

str. sell

-76%

Previous close

$45.23

 
Intrinsic value

$10.93

 
Up/down potential

-76%

 
Rating

str. sell

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

We calculate the intrinsic value of HES 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 Hess Corp. (HES) 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, %
  -25.94
  16.40
  15.26
  14.23
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.97
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
Revenue, $m
  4,821
  5,612
  6,468
  7,389
  8,372
  9,417
  10,522
  11,685
  12,907
  14,185
  15,521
  16,914
  18,365
  19,874
  21,444
  23,075
  24,771
  26,533
  28,364
  30,267
  32,247
  34,306
  36,449
  38,681
  41,006
  43,429
  45,956
  48,592
  51,344
  54,217
  57,219
Variable operating expenses, $m
 
  7,031
  8,098
  9,245
  10,471
  11,773
  13,150
  14,600
  16,122
  17,716
  19,380
  21,079
  22,887
  24,768
  26,724
  28,757
  30,870
  33,066
  35,348
  37,720
  40,187
  42,753
  45,424
  48,205
  51,102
  54,122
  57,271
  60,556
  63,986
  67,567
  71,308
Fixed operating expenses, $m
 
  2,431
  2,492
  2,554
  2,618
  2,684
  2,751
  2,820
  2,890
  2,962
  3,036
  3,112
  3,190
  3,270
  3,352
  3,435
  3,521
  3,609
  3,700
  3,792
  3,887
  3,984
  4,084
  4,186
  4,290
  4,398
  4,507
  4,620
  4,736
  4,854
  4,975
Total operating expenses, $m
  8,360
  9,462
  10,590
  11,799
  13,089
  14,457
  15,901
  17,420
  19,012
  20,678
  22,416
  24,191
  26,077
  28,038
  30,076
  32,192
  34,391
  36,675
  39,048
  41,512
  44,074
  46,737
  49,508
  52,391
  55,392
  58,520
  61,778
  65,176
  68,722
  72,421
  76,283
Operating income, $m
  -3,539
  -3,851
  -4,122
  -4,411
  -4,717
  -5,040
  -5,379
  -5,734
  -6,105
  -6,493
  -6,895
  -7,277
  -7,712
  -8,163
  -8,632
  -9,117
  -9,620
  -10,142
  -10,683
  -11,244
  -11,827
  -12,431
  -13,058
  -13,710
  -14,387
  -15,091
  -15,823
  -16,585
  -17,378
  -18,204
  -19,064
EBITDA, $m
  -295
  -86
  211
  533
  880
  1,251
  1,646
  2,063
  2,503
  2,965
  3,450
  3,956
  4,484
  5,035
  5,609
  6,207
  6,830
  7,478
  8,153
  8,856
  9,588
  10,352
  11,148
  11,978
  12,845
  13,751
  14,697
  15,686
  16,720
  17,802
  18,935
Interest expense (income), $m
  338
  335
  451
  575
  708
  851
  1,003
  1,163
  1,332
  1,509
  1,695
  1,889
  2,091
  2,302
  2,521
  2,749
  2,986
  3,232
  3,487
  3,753
  4,030
  4,317
  4,616
  4,927
  5,251
  5,588
  5,940
  6,307
  6,690
  7,089
  7,506
Earnings before tax, $m
  -3,854
  -4,185
  -4,573
  -4,986
  -5,426
  -5,891
  -6,382
  -6,897
  -7,438
  -8,002
  -8,591
  -9,166
  -9,803
  -10,465
  -11,152
  -11,866
  -12,606
  -13,374
  -14,171
  -14,998
  -15,856
  -16,748
  -17,674
  -18,637
  -19,638
  -20,679
  -21,763
  -22,892
  -24,067
  -25,293
  -26,570
Tax expense, $m
  2,222
  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
  -6,132
  -4,185
  -4,573
  -4,986
  -5,426
  -5,891
  -6,382
  -6,897
  -7,438
  -8,002
  -8,591
  -9,166
  -9,803
  -10,465
  -11,152
  -11,866
  -12,606
  -13,374
  -14,171
  -14,998
  -15,856
  -16,748
  -17,674
  -18,637
  -19,638
  -20,679
  -21,763
  -22,892
  -24,067
  -25,293
  -26,570

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,732
  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
  28,621
  30,170
  34,774
  39,724
  45,011
  50,629
  56,568
  62,824
  69,390
  76,265
  83,447
  90,936
  98,736
  106,852
  115,290
  124,062
  133,177
  142,649
  152,493
  162,727
  173,370
  184,441
  195,964
  207,962
  220,461
  233,489
  247,074
  261,248
  276,042
  291,491
  307,631
Adjusted assets (=assets-cash), $m
  25,889
  30,170
  34,774
  39,724
  45,011
  50,629
  56,568
  62,824
  69,390
  76,265
  83,447
  90,936
  98,736
  106,852
  115,290
  124,062
  133,177
  142,649
  152,493
  162,727
  173,370
  184,441
  195,964
  207,962
  220,461
  233,489
  247,074
  261,248
  276,042
  291,491
  307,631
Revenue / Adjusted assets
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
Average production assets, $m
  24,974
  29,068
  33,504
  38,273
  43,368
  48,780
  54,502
  60,529
  66,856
  73,480
  80,399
  87,615
  95,130
  102,949
  111,080
  119,531
  128,313
  137,439
  146,924
  156,784
  167,038
  177,705
  188,807
  200,367
  212,410
  224,962
  238,051
  251,707
  265,961
  280,846
  296,396
Working capital, $m
  2,025
  -690
  -796
  -909
  -1,030
  -1,158
  -1,294
  -1,437
  -1,588
  -1,745
  -1,909
  -2,080
  -2,259
  -2,445
  -2,638
  -2,838
  -3,047
  -3,264
  -3,489
  -3,723
  -3,966
  -4,220
  -4,483
  -4,758
  -5,044
  -5,342
  -5,653
  -5,977
  -6,315
  -6,669
  -7,038
Total debt, $m
  6,806
  9,011
  11,497
  14,170
  17,025
  20,058
  23,266
  26,644
  30,190
  33,902
  37,780
  41,824
  46,036
  50,419
  54,976
  59,712
  64,634
  69,749
  75,065
  80,592
  86,339
  92,317
  98,539
  105,018
  111,768
  118,803
  126,139
  133,793
  141,782
  150,124
  158,840
Total liabilities, $m
  14,087
  16,292
  18,778
  21,451
  24,306
  27,339
  30,547
  33,925
  37,471
  41,183
  45,061
  49,105
  53,317
  57,700
  62,257
  66,993
  71,915
  77,030
  82,346
  87,873
  93,620
  99,598
  105,820
  112,299
  119,049
  126,084
  133,420
  141,074
  149,063
  157,405
  166,121
Total equity, $m
  14,534
  13,878
  15,996
  18,273
  20,705
  23,289
  26,021
  28,899
  31,920
  35,082
  38,385
  41,830
  45,418
  49,152
  53,034
  57,068
  61,261
  65,618
  70,147
  74,855
  79,750
  84,843
  90,143
  95,662
  101,412
  107,405
  113,654
  120,174
  126,979
  134,086
  141,510
Total liabilities and equity, $m
  28,621
  30,170
  34,774
  39,724
  45,011
  50,628
  56,568
  62,824
  69,391
  76,265
  83,446
  90,935
  98,735
  106,852
  115,291
  124,061
  133,176
  142,648
  152,493
  162,728
  173,370
  184,441
  195,963
  207,961
  220,461
  233,489
  247,074
  261,248
  276,042
  291,491
  307,631
Debt-to-equity ratio
  0.468
  0.650
  0.720
  0.780
  0.820
  0.860
  0.890
  0.920
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.050
  1.060
  1.060
  1.070
  1.080
  1.080
  1.090
  1.090
  1.100
  1.100
  1.110
  1.110
  1.110
  1.120
  1.120
  1.120
Adjusted equity ratio
  0.456
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6,132
  -4,185
  -4,573
  -4,986
  -5,426
  -5,891
  -6,382
  -6,897
  -7,438
  -8,002
  -8,591
  -9,166
  -9,803
  -10,465
  -11,152
  -11,866
  -12,606
  -13,374
  -14,171
  -14,998
  -15,856
  -16,748
  -17,674
  -18,637
  -19,638
  -20,679
  -21,763
  -22,892
  -24,067
  -25,293
  -26,570
Depreciation, amort., depletion, $m
  3,244
  3,764
  4,333
  4,944
  5,597
  6,291
  7,025
  7,798
  8,609
  9,458
  10,345
  11,233
  12,196
  13,199
  14,241
  15,324
  16,450
  17,620
  18,836
  20,101
  21,415
  22,783
  24,206
  25,688
  27,232
  28,841
  30,519
  32,270
  34,098
  36,006
  37,999
Funds from operations, $m
  748
  -421
  -240
  -42
  172
  400
  643
  900
  1,171
  1,456
  1,754
  2,067
  2,393
  2,733
  3,089
  3,459
  3,844
  4,247
  4,666
  5,103
  5,559
  6,035
  6,532
  7,051
  7,594
  8,162
  8,756
  9,379
  10,030
  10,713
  11,429
Change in working capital, $m
  -47
  -97
  -105
  -113
  -121
  -129
  -136
  -143
  -150
  -157
  -164
  -171
  -178
  -186
  -193
  -201
  -209
  -217
  -225
  -234
  -243
  -253
  -264
  -274
  -286
  -298
  -311
  -324
  -338
  -353
  -369
Cash from operations, $m
  795
  -324
  -134
  72
  293
  529
  779
  1,043
  1,321
  1,613
  1,919
  2,238
  2,571
  2,919
  3,282
  3,659
  4,053
  4,463
  4,891
  5,337
  5,802
  6,288
  6,796
  7,326
  7,880
  8,460
  9,067
  9,703
  10,369
  11,067
  11,798
Maintenance CAPEX, $m
  0
  -3,202
  -3,727
  -4,295
  -4,907
  -5,560
  -6,254
  -6,987
  -7,760
  -8,571
  -9,420
  -10,308
  -11,233
  -12,196
  -13,199
  -14,241
  -15,324
  -16,450
  -17,620
  -18,836
  -20,101
  -21,415
  -22,783
  -24,206
  -25,688
  -27,232
  -28,841
  -30,519
  -32,270
  -34,098
  -36,006
New CAPEX, $m
  -2,251
  -4,095
  -4,436
  -4,769
  -5,094
  -5,412
  -5,723
  -6,027
  -6,327
  -6,624
  -6,919
  -7,216
  -7,515
  -7,819
  -8,131
  -8,451
  -8,782
  -9,126
  -9,485
  -9,860
  -10,254
  -10,667
  -11,102
  -11,560
  -12,043
  -12,552
  -13,089
  -13,656
  -14,254
  -14,885
  -15,550
Cash from investing activities, $m
  -2,090
  -7,297
  -8,163
  -9,064
  -10,001
  -10,972
  -11,977
  -13,014
  -14,087
  -15,195
  -16,339
  -17,524
  -18,748
  -20,015
  -21,330
  -22,692
  -24,106
  -25,576
  -27,105
  -28,696
  -30,355
  -32,082
  -33,885
  -35,766
  -37,731
  -39,784
  -41,930
  -44,175
  -46,524
  -48,983
  -51,556
Free cash flow, $m
  -1,295
  -7,620
  -8,297
  -8,993
  -9,708
  -10,443
  -11,197
  -11,971
  -12,766
  -13,582
  -14,421
  -15,285
  -16,176
  -17,096
  -18,048
  -19,033
  -20,054
  -21,113
  -22,214
  -23,360
  -24,552
  -25,794
  -27,089
  -28,440
  -29,851
  -31,324
  -32,863
  -34,472
  -36,155
  -37,916
  -39,758
Issuance/(repayment) of debt, $m
  84
  2,317
  2,486
  2,673
  2,855
  3,033
  3,207
  3,378
  3,546
  3,712
  3,878
  4,044
  4,212
  4,383
  4,557
  4,736
  4,922
  5,115
  5,316
  5,526
  5,747
  5,979
  6,222
  6,479
  6,750
  7,035
  7,336
  7,654
  7,989
  8,342
  8,715
Issuance/(repurchase) of shares, $m
  1,644
  6,149
  6,691
  7,263
  7,858
  8,475
  9,114
  9,775
  10,458
  11,164
  11,894
  12,611
  13,391
  14,198
  15,034
  15,901
  16,799
  17,731
  18,699
  19,705
  20,752
  21,841
  22,974
  24,156
  25,387
  26,672
  28,012
  29,411
  30,873
  32,399
  33,995
Cash from financing (excl. dividends), $m  
  1,661
  8,466
  9,177
  9,936
  10,713
  11,508
  12,321
  13,153
  14,004
  14,876
  15,772
  16,655
  17,603
  18,581
  19,591
  20,637
  21,721
  22,846
  24,015
  25,231
  26,499
  27,820
  29,196
  30,635
  32,137
  33,707
  35,348
  37,065
  38,862
  40,741
  42,710
Total cash flow (excl. dividends), $m
  366
  846
  880
  943
  1,005
  1,065
  1,124
  1,182
  1,239
  1,295
  1,351
  1,370
  1,427
  1,485
  1,544
  1,604
  1,667
  1,733
  1,801
  1,872
  1,947
  2,025
  2,108
  2,195
  2,286
  2,383
  2,485
  2,593
  2,706
  2,826
  2,952
Retained Cash Flow (-), $m
  4,852
  -6,149
  -6,691
  -7,263
  -7,858
  -8,475
  -9,114
  -9,775
  -10,458
  -11,164
  -11,894
  -12,611
  -13,391
  -14,198
  -15,034
  -15,901
  -16,799
  -17,731
  -18,699
  -19,705
  -20,752
  -21,841
  -22,974
  -24,156
  -25,387
  -26,672
  -28,012
  -29,411
  -30,873
  -32,399
  -33,995
Prev. year cash balance distribution, $m
 
  2,620
  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
 
  -2,683
  -5,811
  -6,320
  -6,853
  -7,410
  -7,990
  -8,593
  -9,220
  -9,869
  -10,543
  -11,241
  -11,964
  -12,714
  -13,491
  -14,296
  -15,132
  -15,998
  -16,898
  -17,833
  -18,805
  -19,815
  -20,867
  -21,961
  -23,101
  -24,289
  -25,527
  -26,819
  -28,166
  -29,573
  -31,042
Discount rate, %
 
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
 
  -2,536
  -5,163
  -5,248
  -5,284
  -5,271
  -5,206
  -5,089
  -4,922
  -4,709
  -4,454
  -4,164
  -3,846
  -3,506
  -3,155
  -2,799
  -2,448
  -2,108
  -1,787
  -1,490
  -1,220
  -981
  -773
  -597
  -452
  -334
  -241
  -170
  -116
  -78
  -50
Current shareholders' claim on cash, %
  100
  66.1
  44.7
  30.8
  21.6
  15.4
  11.1
  8.1
  5.9
  4.4
  3.3
  2.5
  1.9
  1.4
  1.1
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0

Hess Corporation is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas. The Company's segments include Exploration and Production, and Bakken Midstream. Its Exploration and Production segment explores for, develops, produces, purchases and sells crude oil, NGLs and natural gas with production operations primarily in the United States, Denmark, the Malaysia/Thailand Joint Development Area (JDA), Malaysia and Norway. The Bakken Midstream segment provides fee-based services, including crude oil and natural gas gathering, processing of natural gas and the fractionation of NGLs, transportation of crude oil by rail car, terminaling and loading crude oil and NGLs, and the storage and terminaling of propane, primarily in the Bakken shale play of North Dakota.

FINANCIAL RATIOS  of  Hess Corp. (HES)

Valuation Ratios
P/E Ratio -2.3
Price to Sales 3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 18
Price to Free Cash Flow -9.8
Growth Rates
Sales Growth Rate -25.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.9%
Cap. Spend. - 3 Yr. Gr. Rate -17.2%
Financial Strength
Quick Ratio 24
Current Ratio 0.1
LT Debt to Equity 46.1%
Total Debt to Equity 46.8%
Interest Coverage -10
Management Effectiveness
Return On Assets -17.8%
Ret/ On Assets - 3 Yr. Avg. -6.5%
Return On Total Capital -25.9%
Ret/ On T. Cap. - 3 Yr. Avg. -9.8%
Return On Equity -36.2%
Return On Equity - 3 Yr. Avg. -13.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 75.9%
Gross Margin - 3 Yr. Avg. 78.3%
EBITDA Margin -5.6%
EBITDA Margin - 3 Yr. Avg. 17.1%
Operating Margin -73.4%
Oper. Margin - 3 Yr. Avg. -38.7%
Pre-Tax Margin -79.9%
Pre-Tax Margin - 3 Yr. Avg. -40.8%
Net Profit Margin -127.2%
Net Profit Margin - 3 Yr. Avg. -50.8%
Effective Tax Rate -57.7%
Eff/ Tax Rate - 3 Yr. Avg. 1.1%
Payout Ratio -5.7%

HES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HES stock intrinsic value calculation we used $4821 million for the last fiscal year's total revenue generated by Hess Corp.. The default revenue input number comes from 2016 income statement of Hess Corp.. 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 HES stock valuation model: a) initial revenue growth rate of 16.4% 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 5.8%, whose default value for HES is calculated based on our internal credit rating of Hess Corp., 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 Hess Corp..
    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 HES stock the variable cost ratio is equal to 125.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2372 million in the base year in the intrinsic value calculation for HES stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5% for Hess Corp..

Corporate tax rate of 27% is the nominal tax rate for Hess Corp.. 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 HES 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 HES are equal to 518%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Hess Corp. 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 HES is equal to -12.3%. 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 - $14534 million for Hess Corp. - 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 323.783 million for Hess Corp. 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 Hess Corp. at the current share price and the inputted number of shares is $14.6 billion.

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COMPANY NEWS

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▶ These 4 stocks are down 20% off highs   [03:05PM  CNBC Videos]
▶ Hess (HES) Q4 2017 Earnings Conference Call Transcript   [Feb-06-18 01:34PM  Motley Fool]
▶ Company News For Feb 6, 2018   [10:19AM  Zacks]
▶ The Ghosts in Hess's Machine   [01:30PM  Bloomberg]
▶ How Hess Earnings Disappointed Investors   [08:35AM  24/7 Wall St.]
▶ Hess reports 4Q loss   [07:45AM  Associated Press]
▶ Hess Corporation to Host Earnings Call   [07:00AM  ACCESSWIRE]
▶ Hess Corp Posts 4Q Loss As Costs Rise   [Feb-04-18 07:00PM  Rigzone.com]
▶ Deja Vu: Oil Investors Could Relive 2014's Swings   [Feb-02-18 10:51AM  The Wall Street Journal]
▶ Houston midstream cos. form JV to build gas processing plant   [Jan-26-18 09:25AM  American City Business Journals]
▶ Wall Street Targets for Worst-Performing XLE Stocks in 2017   [Jan-25-18 01:13PM  Market Realist]
▶ Gauging Short Interest Trends in Whiting Petroleum Stock   [Jan-24-18 09:02AM  Market Realist]
▶ Where Do Analysts See Hess Stock in 12 Months?   [Jan-19-18 01:50PM  Market Realist]
▶ Heres Whats Been Driving Hess Stock   [12:17PM  Market Realist]
▶ Hess Corp. cutting hundreds of jobs, including some from Houston   [Jan-17-18 04:10PM  American City Business Journals]
▶ 3 Top Oil Stocks to Buy in January   [06:12AM  Motley Fool]
▶ Hess Schedules Earnings Release Conference Call   [Jan-11-18 04:00PM  Business Wire]
▶ Stock Market News For Jan 8, 2018   [Jan-08-18 10:47AM  Zacks]
▶ What Are Analysts Views on Hess?   [09:00AM  Market Realist]
▶ What Hess Expects for Free Cash Flow   [07:30AM  Market Realist]
▶ Hesss Financial Position and Liquidity   [Jan-04-18 10:30AM  Market Realist]
▶ 3 Incredibly Cheap Oil and Gas Stocks   [10:17AM  Motley Fool]
▶ Hess Midstream Partners, a Bakken-Focused MLP   [09:01AM  Market Realist]
▶ A Look at Hesss Guyana Interests   [Jan-03-18 10:32AM  Market Realist]
▶ How Hess Has Categorized Its Portfolio   [07:33AM  Market Realist]
▶ A Look at Hesss Current Acreage Position   [Jan-02-18 04:25PM  Market Realist]
▶ Whiting Petroleums Implied Volatility: Stock Range Forecast   [Dec-28-17 10:33AM  Market Realist]
▶ Hess Corp. Value Analysis (NYSE:HES) : December 26, 2017   [Dec-26-17 12:56PM  Capital Cube]
▶ Hess and Charter Communications Rose on December 21   [Dec-22-17 10:32AM  Market Realist]
▶ Hess Completes Sale of Interests in Norway   [09:07AM  Business Wire]
▶ Cramer: Why investors should look at Hess shares   [Dec-20-17 07:09PM  CNBC Videos]
▶ Hess Just Wasn't Made for These Times   [Dec-19-17 01:47PM  Bloomberg]
▶ 3 Stocks Gain on Friday   [03:40PM  GuruFocus.com]
Financial statements of HES
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