Intrinsic value of Hess Corp. - HES

Previous Close

$69.42

  Intrinsic Value

$8.92

stock screener

  Rating & Target

str. sell

-87%

Previous close

$69.42

 
Intrinsic value

$8.92

 
Up/down potential

-87%

 
Rating

str. sell

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.

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 20.8

 

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, %
  30.30
  27.77
  25.49
  23.44
  21.60
  19.94
  18.45
  17.10
  15.89
  14.80
  13.82
  12.94
  12.15
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
Revenue, $m
  7,043
  8,998
  11,292
  13,940
  16,951
  20,331
  24,081
  28,199
  32,680
  37,517
  42,702
  48,228
  54,085
  60,268
  66,769
  73,586
  80,715
  88,156
  95,912
  103,985
  112,383
  121,113
  130,186
  139,615
  149,413
  159,597
  170,186
  181,199
  192,658
  204,587
Variable operating expenses, $m
  11,926
  15,228
  19,102
  23,571
  28,655
  34,361
  40,692
  47,645
  55,210
  63,377
  72,096
  81,425
  91,314
  101,752
  112,729
  124,238
  136,274
  148,838
  161,931
  175,562
  189,740
  204,480
  219,799
  235,717
  252,260
  269,455
  287,332
  305,926
  325,273
  345,413
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
  11,926
  15,228
  19,102
  23,571
  28,655
  34,361
  40,692
  47,645
  55,210
  63,377
  72,096
  81,425
  91,314
  101,752
  112,729
  124,238
  136,274
  148,838
  161,931
  175,562
  189,740
  204,480
  219,799
  235,717
  252,260
  269,455
  287,332
  305,926
  325,273
  345,413
Operating income, $m
  -4,884
  -6,230
  -7,809
  -9,631
  -11,704
  -14,030
  -16,612
  -19,446
  -22,531
  -25,860
  -29,394
  -33,197
  -37,229
  -41,485
  -45,960
  -50,652
  -55,559
  -60,681
  -66,020
  -71,577
  -77,358
  -83,367
  -89,612
  -96,102
  -102,847
  -109,857
  -117,146
  -124,727
  -132,614
  -140,825
EBITDA, $m
  -1,110
  -1,418
  -1,780
  -2,197
  -2,672
  -3,205
  -3,796
  -4,445
  -5,151
  -5,914
  -6,731
  -7,602
  -8,525
  -9,500
  -10,525
  -11,599
  -12,723
  -13,896
  -15,118
  -16,391
  -17,714
  -19,090
  -20,521
  -22,007
  -23,551
  -25,157
  -26,826
  -28,562
  -30,368
  -32,248
Interest expense (income), $m
  338
  377
  564
  788
  1,051
  1,355
  1,700
  2,087
  2,517
  2,989
  3,503
  4,057
  4,652
  5,285
  5,956
  6,665
  7,410
  8,192
  9,009
  9,862
  10,751
  11,676
  12,639
  13,639
  14,679
  15,760
  16,883
  18,051
  19,264
  20,527
  21,840
Earnings before tax, $m
  -5,261
  -6,794
  -8,597
  -10,683
  -13,058
  -15,730
  -18,699
  -21,963
  -25,520
  -29,363
  -33,451
  -37,849
  -42,514
  -47,441
  -52,625
  -58,062
  -63,751
  -69,690
  -75,881
  -82,328
  -89,034
  -96,006
  -103,252
  -110,782
  -118,607
  -126,740
  -135,196
  -143,991
  -153,141
  -162,666
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
  -5,261
  -6,794
  -8,597
  -10,683
  -13,058
  -15,730
  -18,699
  -21,963
  -25,520
  -29,363
  -33,451
  -37,849
  -42,514
  -47,441
  -52,625
  -58,062
  -63,751
  -69,690
  -75,881
  -82,328
  -89,034
  -96,006
  -103,252
  -110,782
  -118,607
  -126,740
  -135,196
  -143,991
  -153,141
  -162,666

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
  26,181
  33,452
  41,979
  51,821
  63,014
  75,578
  89,519
  104,828
  121,486
  139,468
  158,745
  179,285
  201,060
  224,043
  248,213
  273,553
  300,055
  327,718
  356,549
  386,562
  417,780
  450,234
  483,964
  519,014
  555,439
  593,299
  632,662
  673,603
  716,202
  760,547
Adjusted assets (=assets-cash), $m
  26,181
  33,452
  41,979
  51,821
  63,014
  75,578
  89,519
  104,828
  121,486
  139,468
  158,745
  179,285
  201,060
  224,043
  248,213
  273,553
  300,055
  327,718
  356,549
  386,562
  417,780
  450,234
  483,964
  519,014
  555,439
  593,299
  632,662
  673,603
  716,202
  760,547
Revenue / Adjusted assets
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
Average production assets, $m
  26,164
  33,429
  41,951
  51,786
  62,972
  75,528
  89,460
  104,758
  121,405
  139,375
  158,639
  179,166
  200,927
  223,894
  248,048
  273,371
  299,855
  327,500
  356,312
  386,305
  417,502
  449,935
  483,642
  518,669
  555,069
  592,904
  632,242
  673,155
  715,726
  760,041
Working capital, $m
  -711
  -909
  -1,141
  -1,408
  -1,712
  -2,053
  -2,432
  -2,848
  -3,301
  -3,789
  -4,313
  -4,871
  -5,463
  -6,087
  -6,744
  -7,432
  -8,152
  -8,904
  -9,687
  -10,502
  -11,351
  -12,232
  -13,149
  -14,101
  -15,091
  -16,119
  -17,189
  -18,301
  -19,458
  -20,663
Total debt, $m
  10,445
  14,597
  19,466
  25,086
  31,477
  38,651
  46,612
  55,353
  64,864
  75,132
  86,139
  97,868
  110,301
  123,425
  137,225
  151,695
  166,827
  182,623
  199,085
  216,223
  234,048
  252,580
  271,839
  291,853
  312,651
  334,270
  356,746
  380,123
  404,447
  429,768
Total liabilities, $m
  14,949
  19,101
  23,970
  29,590
  35,981
  43,155
  51,116
  59,857
  69,368
  79,636
  90,643
  102,372
  114,805
  127,929
  141,729
  156,199
  171,331
  187,127
  203,589
  220,727
  238,552
  257,084
  276,343
  296,357
  317,155
  338,774
  361,250
  384,627
  408,951
  434,272
Total equity, $m
  11,232
  14,351
  18,009
  22,231
  27,033
  32,423
  38,404
  44,971
  52,117
  59,832
  68,101
  76,913
  86,255
  96,115
  106,483
  117,354
  128,724
  140,591
  152,959
  165,835
  179,228
  193,151
  207,620
  222,657
  238,283
  254,525
  271,412
  288,976
  307,251
  326,275
Total liabilities and equity, $m
  26,181
  33,452
  41,979
  51,821
  63,014
  75,578
  89,520
  104,828
  121,485
  139,468
  158,744
  179,285
  201,060
  224,044
  248,212
  273,553
  300,055
  327,718
  356,548
  386,562
  417,780
  450,235
  483,963
  519,014
  555,438
  593,299
  632,662
  673,603
  716,202
  760,547
Debt-to-equity ratio
  0.930
  1.020
  1.080
  1.130
  1.160
  1.190
  1.210
  1.230
  1.240
  1.260
  1.260
  1.270
  1.280
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
Adjusted equity ratio
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5,261
  -6,794
  -8,597
  -10,683
  -13,058
  -15,730
  -18,699
  -21,963
  -25,520
  -29,363
  -33,451
  -37,849
  -42,514
  -47,441
  -52,625
  -58,062
  -63,751
  -69,690
  -75,881
  -82,328
  -89,034
  -96,006
  -103,252
  -110,782
  -118,607
  -126,740
  -135,196
  -143,991
  -153,141
  -162,666
Depreciation, amort., depletion, $m
  3,774
  4,812
  6,029
  7,434
  9,032
  10,826
  12,816
  15,001
  17,380
  19,947
  22,663
  25,595
  28,704
  31,985
  35,435
  39,053
  42,836
  46,786
  50,902
  55,186
  59,643
  64,276
  69,092
  74,096
  79,296
  84,701
  90,320
  96,165
  102,247
  108,577
Funds from operations, $m
  -1,487
  -1,982
  -2,568
  -3,248
  -4,026
  -4,904
  -5,883
  -6,962
  -8,140
  -9,416
  -10,788
  -12,253
  -13,810
  -15,456
  -17,189
  -19,009
  -20,914
  -22,904
  -24,980
  -27,141
  -29,390
  -31,729
  -34,160
  -36,686
  -39,311
  -42,040
  -44,876
  -47,826
  -50,894
  -54,088
Change in working capital, $m
  -165
  -198
  -232
  -267
  -304
  -341
  -379
  -416
  -453
  -489
  -524
  -558
  -592
  -624
  -657
  -688
  -720
  -752
  -783
  -815
  -848
  -882
  -916
  -952
  -990
  -1,029
  -1,069
  -1,112
  -1,157
  -1,205
Cash from operations, $m
  -1,321
  -1,785
  -2,337
  -2,981
  -3,722
  -4,563
  -5,504
  -6,546
  -7,688
  -8,928
  -10,264
  -11,695
  -13,218
  -14,832
  -16,533
  -18,321
  -20,194
  -22,153
  -24,196
  -26,326
  -28,542
  -30,847
  -33,244
  -35,734
  -38,322
  -41,011
  -43,807
  -46,714
  -49,737
  -52,883
Maintenance CAPEX, $m
  -2,868
  -3,738
  -4,776
  -5,993
  -7,398
  -8,996
  -10,790
  -12,780
  -14,965
  -17,344
  -19,911
  -22,663
  -25,595
  -28,704
  -31,985
  -35,435
  -39,053
  -42,836
  -46,786
  -50,902
  -55,186
  -59,643
  -64,276
  -69,092
  -74,096
  -79,296
  -84,701
  -90,320
  -96,165
  -102,247
New CAPEX, $m
  -6,086
  -7,266
  -8,522
  -9,835
  -11,186
  -12,556
  -13,932
  -15,298
  -16,647
  -17,970
  -19,264
  -20,527
  -21,761
  -22,968
  -24,153
  -25,323
  -26,485
  -27,645
  -28,811
  -29,993
  -31,198
  -32,433
  -33,707
  -35,027
  -36,401
  -37,835
  -39,337
  -40,914
  -42,571
  -44,315
Cash from investing activities, $m
  -8,954
  -11,004
  -13,298
  -15,828
  -18,584
  -21,552
  -24,722
  -28,078
  -31,612
  -35,314
  -39,175
  -43,190
  -47,356
  -51,672
  -56,138
  -60,758
  -65,538
  -70,481
  -75,597
  -80,895
  -86,384
  -92,076
  -97,983
  -104,119
  -110,497
  -117,131
  -124,038
  -131,234
  -138,736
  -146,562
Free cash flow, $m
  -10,276
  -12,788
  -15,634
  -18,809
  -22,306
  -26,115
  -30,225
  -34,624
  -39,300
  -44,241
  -49,439
  -54,885
  -60,574
  -66,503
  -72,671
  -79,079
  -85,732
  -92,634
  -99,794
  -107,221
  -114,926
  -122,923
  -131,227
  -139,852
  -148,818
  -158,142
  -167,845
  -177,947
  -188,473
  -199,445
Issuance/(repayment) of debt, $m
  3,468
  4,151
  4,869
  5,620
  6,391
  7,174
  7,960
  8,741
  9,512
  10,268
  11,007
  11,729
  12,434
  13,123
  13,801
  14,469
  15,133
  15,796
  16,462
  17,137
  17,826
  18,531
  19,259
  20,014
  20,799
  21,618
  22,476
  23,377
  24,324
  25,321
Issuance/(repurchase) of shares, $m
  7,853
  9,913
  12,256
  14,905
  17,860
  21,120
  24,679
  28,531
  32,666
  37,077
  41,720
  46,660
  51,855
  57,301
  62,993
  68,933
  75,120
  81,557
  88,250
  95,203
  102,426
  109,928
  117,721
  125,818
  134,233
  142,982
  152,083
  161,554
  171,416
  181,690
Cash from financing (excl. dividends), $m  
  11,321
  14,064
  17,125
  20,525
  24,251
  28,294
  32,639
  37,272
  42,178
  47,345
  52,727
  58,389
  64,289
  70,424
  76,794
  83,402
  90,253
  97,353
  104,712
  112,340
  120,252
  128,459
  136,980
  145,832
  155,032
  164,600
  174,559
  184,931
  195,740
  207,011
Total cash flow (excl. dividends), $m
  1,046
  1,276
  1,491
  1,715
  1,945
  2,179
  2,414
  2,648
  2,878
  3,104
  3,289
  3,504
  3,715
  3,921
  4,123
  4,323
  4,521
  4,719
  4,918
  5,120
  5,326
  5,537
  5,754
  5,979
  6,214
  6,459
  6,715
  6,984
  7,267
  7,565
Retained Cash Flow (-), $m
  -7,853
  -9,913
  -12,256
  -14,905
  -17,860
  -21,120
  -24,679
  -28,531
  -32,666
  -37,077
  -41,720
  -46,660
  -51,855
  -57,301
  -62,993
  -68,933
  -75,120
  -81,557
  -88,250
  -95,203
  -102,426
  -109,928
  -117,721
  -125,818
  -134,233
  -142,982
  -152,083
  -161,554
  -171,416
  -181,690
Prev. year cash balance distribution, $m
  2,412
  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
  -4,396
  -8,637
  -10,765
  -13,190
  -15,915
  -18,941
  -22,265
  -25,883
  -29,788
  -33,974
  -38,432
  -43,156
  -48,141
  -53,380
  -58,870
  -64,610
  -70,599
  -76,838
  -83,331
  -90,083
  -97,100
  -104,392
  -111,967
  -119,839
  -128,019
  -136,524
  -145,368
  -154,570
  -164,149
  -174,124
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
  -4,214
  -7,907
  -9,368
  -10,860
  -12,336
  -13,746
  -15,042
  -16,178
  -17,112
  -17,811
  -18,251
  -18,416
  -18,304
  -17,921
  -17,283
  -16,419
  -15,361
  -14,151
  -12,831
  -11,447
  -10,043
  -8,662
  -7,338
  -6,104
  -4,980
  -3,983
  -3,120
  -2,391
  -1,792
  -1,311
Current shareholders' claim on cash, %
  67.4
  45.9
  31.6
  21.9
  15.4
  10.9
  7.7
  5.5
  4.0
  2.9
  2.1
  1.6
  1.1
  0.8
  0.6
  0.5
  0.3
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  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 -3.6
Price to Sales 4.6
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 27.6
Price to Free Cash Flow -15.1
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 $5405 million for the last fiscal year's total revenue generated by Hess Corp.. The default revenue input number comes from 0001 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 30.3% 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 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 169.5%.

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 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 5.4% 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 371.5%.

Life of production assets of 7 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 -10.1%. 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 - $11051 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 299.688 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 $20.8 billion.

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COMPANY NEWS

▶ 3 Top Stocks With High Dividend Yields   [Sep-18-18 10:15AM  Motley Fool]
▶ Closer Look at Hess' Guyana Stake Raises Our FVE   [Sep-12-18 07:00AM  Morningstar]
▶ Stocks - Activision Jumps Midday on Call of Duty Enthusiasm   [Sep-11-18 02:45PM  Investing.com]
▶ Hess Announces Regular Quarterly Dividend On Common Stock   [Sep-05-18 04:31PM  Business Wire]
▶ Hess Completes Sale of Utica Acreage   [Aug-31-18 06:45AM  Business Wire]
▶ Hess Corp.'s Giant Oil Find Just Keeps Growing   [Aug-30-18 05:04PM  Motley Fool]
▶ NWQ Investment Management's 2nd Quarter Shareholder Letter   [Aug-29-18 07:06PM  GuruFocus.com]
▶ Nasdaq at Record High Wednesday   [01:18PM  GuruFocus.com]
▶ Deals of the day-Mergers and acquisitions   [Aug-20-18 04:06PM  Reuters]
▶ Stocks - Apache Tumbles as Energy Stocks Fall Midday   [Aug-09-18 02:50PM  Investing.com]
▶ 3 Top Large-Cap Stocks to Buy in August   [Aug-06-18 11:00AM  Motley Fool]
▶ This Oil Stock Sees Massive Growth Just Over the Horizon   [Jul-28-18 10:21AM  Motley Fool]
▶ Hess Corp. Continued to Show Improvement in Q2   [Jul-25-18 03:30PM  Motley Fool]
▶ Hess Corporation to Host Earnings Call   [08:00AM  ACCESSWIRE]
▶ Hess: 2Q Earnings Snapshot   [07:43AM  Associated Press]
▶ Oil Prices Spike Again After Brief Respite   [Jul-24-18 03:00PM  Oilprice.com]
▶ Guyanas Oil Reserves Are Larger Than Expected   [Jul-23-18 01:00PM  Oilprice.com]
▶ Stocks - Energy Stocks Fall as Oil Prices Sink Below $70   [Jul-16-18 05:12PM  Investing.com]
▶ ConocoPhillips Is Emphatic: Its Stock Is Still Cheap   [Jul-12-18 12:30PM  Motley Fool]
▶ Hess Corporation Publishes 2017 Sustainability Report   [Jul-10-18 08:00AM  Business Wire]
▶ Top Ranked Momentum Stocks to Buy for July 6th   [Jul-06-18 09:49AM  Zacks]
▶ USVI: Oil refinery to reopen under $1.4B deal with ArcLight   [Jul-02-18 09:49PM  Associated Press]
▶ Hess Announces Sale of Utica Acreage   [07:00AM  Business Wire]
▶ Stock Market News For Jun 25, 2018   [Jun-25-18 10:00AM  Zacks]
▶ Stock Market News For Jun 21, 2018   [Jun-21-18 10:10AM  Zacks]
▶ U.S. Shale, OPEC To Discuss Market Balance In Vienna   [Jun-15-18 10:30AM  Oilprice.com]
▶ Hess Edging Toward a Major Breakout   [Jun-07-18 02:46PM  TheStreet.com]
▶ Hess Announces Regular Quarterly Dividend On Common Stock   [Jun-05-18 08:23PM  Business Wire]
▶ What Is Hess Corporations (NYSE:HES) Share Price Doing?   [May-18-18 05:47PM  Simply Wall St.]
▶ 3 Energy Stocks to Buy in May   [May-15-18 03:00PM  Motley Fool]
▶ 3 High-Yield Stocks at Rock-Bottom Prices   [May-11-18 10:14AM  Motley Fool]

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