Intrinsic value of Helmerich&Payne - HP

Previous Close

$71.13

  Intrinsic Value

$9.44

stock screener

  Rating & Target

str. sell

-87%

Previous close

$71.13

 
Intrinsic value

$9.44

 
Up/down potential

-87%

 
Rating

str. sell

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

We calculate the intrinsic value of HP 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

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
2017(a)
   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, %
  11.15
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,805
  2,888
  4,462
  6,673
  9,682
  13,660
  18,779
  25,207
  33,099
  42,590
  53,794
  66,801
  81,670
  98,440
  117,124
  137,717
  160,198
  184,535
  210,688
  238,615
  268,274
  299,626
  332,639
  367,288
  403,556
  441,438
  480,940
  522,078
  564,879
  609,382
  655,638
Variable operating expenses, $m
 
  2,931
  4,526
  6,766
  9,814
  13,844
  19,031
  25,543
  33,538
  43,154
  54,505
  67,677
  82,741
  99,731
  118,661
  139,524
  162,300
  186,955
  213,452
  241,745
  271,793
  303,557
  337,003
  372,106
  408,850
  447,230
  487,250
  528,927
  572,290
  617,377
  664,239
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
  1,977
  2,931
  4,526
  6,766
  9,814
  13,844
  19,031
  25,543
  33,538
  43,154
  54,505
  67,677
  82,741
  99,731
  118,661
  139,524
  162,300
  186,955
  213,452
  241,745
  271,793
  303,557
  337,003
  372,106
  408,850
  447,230
  487,250
  528,927
  572,290
  617,377
  664,239
Operating income, $m
  -173
  -43
  -64
  -93
  -132
  -184
  -252
  -336
  -439
  -564
  -711
  -876
  -1,071
  -1,291
  -1,537
  -1,807
  -2,102
  -2,421
  -2,764
  -3,130
  -3,520
  -3,931
  -4,364
  -4,818
  -5,294
  -5,791
  -6,310
  -6,849
  -7,411
  -7,995
  -8,601
EBITDA, $m
  413
  900
  1,390
  2,079
  3,017
  4,256
  5,851
  7,854
  10,313
  13,271
  16,762
  20,815
  25,448
  30,673
  36,495
  42,912
  49,917
  57,500
  65,649
  74,351
  83,592
  93,362
  103,648
  114,444
  125,745
  137,549
  149,858
  162,676
  176,013
  189,880
  204,293
Interest expense (income), $m
  23
  23
  87
  181
  312
  490
  726
  1,029
  1,410
  1,877
  2,440
  3,103
  3,874
  4,755
  5,749
  6,856
  8,076
  9,408
  10,849
  12,399
  14,054
  15,811
  17,668
  19,624
  21,677
  23,826
  26,070
  28,411
  30,848
  33,384
  36,021
Earnings before tax, $m
  -185
  -66
  -151
  -273
  -444
  -674
  -977
  -1,365
  -1,849
  -2,441
  -3,151
  -3,980
  -4,945
  -6,046
  -7,285
  -8,662
  -10,177
  -11,829
  -13,614
  -15,529
  -17,573
  -19,742
  -22,032
  -24,443
  -26,971
  -29,617
  -32,380
  -35,260
  -38,259
  -41,378
  -44,622
Tax expense, $m
  -57
  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
  -128
  -66
  -151
  -273
  -444
  -674
  -977
  -1,365
  -1,849
  -2,441
  -3,151
  -3,980
  -4,945
  -6,046
  -7,285
  -8,662
  -10,177
  -11,829
  -13,614
  -15,529
  -17,573
  -19,742
  -22,032
  -24,443
  -26,971
  -29,617
  -32,380
  -35,260
  -38,259
  -41,378
  -44,622

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  566
  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
  6,440
  9,407
  14,534
  21,736
  31,537
  44,495
  61,170
  82,108
  107,813
  138,729
  175,226
  217,591
  266,026
  320,651
  381,511
  448,590
  521,817
  601,090
  686,279
  777,247
  873,856
  975,981
  1,083,515
  1,196,377
  1,314,514
  1,437,910
  1,566,580
  1,700,579
  1,839,996
  1,984,959
  2,135,629
Adjusted assets (=assets-cash), $m
  5,874
  9,407
  14,534
  21,736
  31,537
  44,495
  61,170
  82,108
  107,813
  138,729
  175,226
  217,591
  266,026
  320,651
  381,511
  448,590
  521,817
  601,090
  686,279
  777,247
  873,856
  975,981
  1,083,515
  1,196,377
  1,314,514
  1,437,910
  1,566,580
  1,700,579
  1,839,996
  1,984,959
  2,135,629
Revenue / Adjusted assets
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
Average production assets, $m
  5,099
  8,159
  12,605
  18,851
  27,352
  38,589
  53,051
  71,210
  93,504
  120,316
  151,969
  188,711
  230,718
  278,093
  330,875
  389,050
  452,559
  521,310
  595,193
  674,087
  757,873
  846,444
  939,705
  1,037,587
  1,140,045
  1,247,063
  1,358,656
  1,474,870
  1,595,783
  1,721,505
  1,852,177
Working capital, $m
  891
  520
  803
  1,201
  1,743
  2,459
  3,380
  4,537
  5,958
  7,666
  9,683
  12,024
  14,701
  17,719
  21,082
  24,789
  28,836
  33,216
  37,924
  42,951
  48,289
  53,933
  59,875
  66,112
  72,640
  79,459
  86,569
  93,974
  101,678
  109,689
  118,015
Total debt, $m
  493
  1,859
  3,843
  6,630
  10,423
  15,437
  21,891
  29,994
  39,942
  51,906
  66,031
  82,426
  101,170
  122,310
  145,863
  171,822
  200,161
  230,840
  263,808
  299,012
  336,400
  375,923
  417,538
  461,216
  506,935
  554,689
  604,484
  656,342
  710,297
  766,397
  824,706
Total liabilities, $m
  2,275
  3,641
  5,625
  8,412
  12,205
  17,219
  23,673
  31,776
  41,724
  53,688
  67,813
  84,208
  102,952
  124,092
  147,645
  173,604
  201,943
  232,622
  265,590
  300,794
  338,182
  377,705
  419,320
  462,998
  508,717
  556,471
  606,266
  658,124
  712,079
  768,179
  826,488
Total equity, $m
  4,165
  5,767
  8,909
  13,324
  19,332
  27,275
  37,497
  50,332
  66,089
  85,041
  107,414
  133,383
  163,074
  196,559
  233,866
  274,985
  319,874
  368,468
  420,689
  476,452
  535,674
  598,276
  664,195
  733,379
  805,797
  881,439
  960,314
  1,042,455
  1,127,918
  1,216,780
  1,309,140
Total liabilities and equity, $m
  6,440
  9,408
  14,534
  21,736
  31,537
  44,494
  61,170
  82,108
  107,813
  138,729
  175,227
  217,591
  266,026
  320,651
  381,511
  448,589
  521,817
  601,090
  686,279
  777,246
  873,856
  975,981
  1,083,515
  1,196,377
  1,314,514
  1,437,910
  1,566,580
  1,700,579
  1,839,997
  1,984,959
  2,135,628
Debt-to-equity ratio
  0.118
  0.320
  0.430
  0.500
  0.540
  0.570
  0.580
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.620
  0.620
  0.620
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
Adjusted equity ratio
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -128
  -66
  -151
  -273
  -444
  -674
  -977
  -1,365
  -1,849
  -2,441
  -3,151
  -3,980
  -4,945
  -6,046
  -7,285
  -8,662
  -10,177
  -11,829
  -13,614
  -15,529
  -17,573
  -19,742
  -22,032
  -24,443
  -26,971
  -29,617
  -32,380
  -35,260
  -38,259
  -41,378
  -44,622
Depreciation, amort., depletion, $m
  586
  943
  1,454
  2,172
  3,149
  4,441
  6,103
  8,190
  10,753
  13,835
  17,473
  21,691
  26,519
  31,965
  38,032
  44,718
  52,018
  59,921
  68,413
  77,481
  87,112
  97,292
  108,012
  119,263
  131,040
  143,341
  156,167
  169,525
  183,423
  197,874
  212,894
Funds from operations, $m
  271
  877
  1,303
  1,899
  2,705
  3,766
  5,126
  6,826
  8,904
  11,393
  14,322
  17,711
  21,574
  25,918
  30,747
  36,056
  41,841
  48,092
  54,799
  61,952
  69,539
  77,551
  85,980
  94,820
  104,068
  113,723
  123,787
  134,265
  145,165
  156,496
  168,272
Change in working capital, $m
  -86
  195
  283
  398
  542
  716
  921
  1,157
  1,420
  1,708
  2,017
  2,341
  2,677
  3,019
  3,363
  3,707
  4,047
  4,381
  4,708
  5,027
  5,339
  5,643
  5,942
  6,237
  6,528
  6,819
  7,110
  7,405
  7,704
  8,011
  8,326
Cash from operations, $m
  357
  682
  1,020
  1,501
  2,164
  3,050
  4,204
  5,668
  7,483
  9,685
  12,306
  15,370
  18,897
  22,900
  27,383
  32,349
  37,794
  43,712
  50,092
  56,925
  64,200
  71,907
  80,037
  88,583
  97,540
  106,905
  116,677
  126,860
  137,460
  148,485
  159,946
Maintenance CAPEX, $m
  0
  -586
  -938
  -1,449
  -2,167
  -3,144
  -4,436
  -6,098
  -8,185
  -10,748
  -13,829
  -17,468
  -21,691
  -26,519
  -31,965
  -38,032
  -44,718
  -52,018
  -59,921
  -68,413
  -77,481
  -87,112
  -97,292
  -108,012
  -119,263
  -131,040
  -143,341
  -156,167
  -169,525
  -183,423
  -197,874
New CAPEX, $m
  -398
  -3,060
  -4,446
  -6,246
  -8,501
  -11,238
  -14,462
  -18,159
  -22,293
  -26,813
  -31,653
  -36,742
  -42,006
  -47,375
  -52,783
  -58,175
  -63,509
  -68,751
  -73,882
  -78,894
  -83,787
  -88,571
  -93,262
  -97,882
  -102,458
  -107,018
  -111,593
  -116,214
  -120,913
  -125,722
  -130,672
Cash from investing activities, $m
  -445
  -3,646
  -5,384
  -7,695
  -10,668
  -14,382
  -18,898
  -24,257
  -30,478
  -37,561
  -45,482
  -54,210
  -63,697
  -73,894
  -84,748
  -96,207
  -108,227
  -120,769
  -133,803
  -147,307
  -161,268
  -175,683
  -190,554
  -205,894
  -221,721
  -238,058
  -254,934
  -272,381
  -290,438
  -309,145
  -328,546
Free cash flow, $m
  -88
  -2,964
  -4,365
  -6,194
  -8,504
  -11,331
  -14,693
  -18,588
  -22,995
  -27,875
  -33,177
  -38,840
  -44,800
  -50,994
  -57,364
  -63,857
  -70,433
  -77,058
  -83,711
  -90,382
  -97,068
  -103,775
  -110,516
  -117,311
  -124,181
  -131,153
  -138,256
  -145,521
  -152,978
  -160,661
  -168,600
Issuance/(repayment) of debt, $m
  0
  1,366
  1,984
  2,787
  3,793
  5,014
  6,453
  8,103
  9,948
  11,965
  14,124
  16,395
  18,744
  21,140
  23,553
  25,959
  28,339
  30,678
  32,968
  35,204
  37,388
  39,522
  41,616
  43,677
  45,719
  47,754
  49,795
  51,858
  53,955
  56,100
  58,309
Issuance/(repurchase) of shares, $m
  11
  2,234
  3,294
  4,688
  6,452
  8,617
  11,199
  14,200
  17,606
  21,393
  25,523
  29,950
  34,636
  39,531
  44,593
  49,781
  55,066
  60,423
  65,834
  71,293
  76,795
  82,344
  87,951
  93,627
  99,390
  105,259
  111,255
  117,401
  123,722
  130,241
  136,983
Cash from financing (excl. dividends), $m  
  10
  3,600
  5,278
  7,475
  10,245
  13,631
  17,652
  22,303
  27,554
  33,358
  39,647
  46,345
  53,380
  60,671
  68,146
  75,740
  83,405
  91,101
  98,802
  106,497
  114,183
  121,866
  129,567
  137,304
  145,109
  153,013
  161,050
  169,259
  177,677
  186,341
  195,292
Total cash flow (excl. dividends), $m
  -78
  635
  913
  1,281
  1,742
  2,301
  2,959
  3,714
  4,559
  5,482
  6,471
  7,505
  8,580
  9,677
  10,782
  11,883
  12,972
  14,043
  15,091
  16,115
  17,115
  18,092
  19,050
  19,994
  20,928
  21,860
  22,794
  23,738
  24,698
  25,680
  26,691
Retained Cash Flow (-), $m
  396
  -2,234
  -3,294
  -4,688
  -6,452
  -8,617
  -11,199
  -14,200
  -17,606
  -21,393
  -25,523
  -29,950
  -34,636
  -39,531
  -44,593
  -49,781
  -55,066
  -60,423
  -65,834
  -71,293
  -76,795
  -82,344
  -87,951
  -93,627
  -99,390
  -105,259
  -111,255
  -117,401
  -123,722
  -130,241
  -136,983
Prev. year cash balance distribution, $m
 
  566
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -1,033
  -2,380
  -3,407
  -4,711
  -6,317
  -8,240
  -10,485
  -13,047
  -15,911
  -19,052
  -22,445
  -26,056
  -29,855
  -33,811
  -37,898
  -42,094
  -46,379
  -50,743
  -55,177
  -59,680
  -64,253
  -68,901
  -73,633
  -78,461
  -83,399
  -88,461
  -93,663
  -99,024
  -104,560
  -110,291
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
 
  -990
  -2,179
  -2,965
  -3,879
  -4,896
  -5,980
  -7,084
  -8,155
  -9,140
  -9,988
  -10,659
  -11,119
  -11,351
  -11,351
  -11,126
  -10,697
  -10,091
  -9,345
  -8,496
  -7,584
  -6,646
  -5,717
  -4,826
  -3,996
  -3,244
  -2,581
  -2,010
  -1,532
  -1,141
  -830
Current shareholders' claim on cash, %
  100
  75.0
  57.4
  44.7
  35.5
  28.6
  23.4
  19.5
  16.4
  14.0
  12.0
  10.5
  9.2
  8.1
  7.2
  6.5
  5.9
  5.3
  4.9
  4.4
  4.1
  3.8
  3.5
  3.3
  3.0
  2.8
  2.7
  2.5
  2.3
  2.2
  2.1

Helmerich & Payne, Inc. is engaged in contract drilling of oil and gas wells for others. The Company operates in the contract drilling industry. The Company's contract drilling business consists of three segments: U.S. Land, Offshore and International Land. The Company is also engaged in the ownership, development and operation of commercial real estate and the research and development of rotary steerable technology. Its real estate investments are located within Tulsa, Oklahoma, and include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet and approximately 210 acres of undeveloped real estate. The Company provides drilling rigs, equipment, personnel and camps on a contract basis. The Company's subsidiaries include Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.

FINANCIAL RATIOS  of  Helmerich&Payne (HP)

Valuation Ratios
P/E Ratio -60.3
Price to Sales 4.3
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 21.6
Price to Free Cash Flow -188.4
Growth Rates
Sales Growth Rate 11.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 54.9%
Cap. Spend. - 3 Yr. Gr. Rate -16%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 11.8%
Total Debt to Equity 11.8%
Interest Coverage -7
Management Effectiveness
Return On Assets -1.7%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 1.5%
Return On Equity -2.9%
Return On Equity - 3 Yr. Avg. 1.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 30.7%
Gross Margin - 3 Yr. Avg. 40.5%
EBITDA Margin 23.5%
EBITDA Margin - 3 Yr. Avg. 32.7%
Operating Margin -9.5%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin -10.2%
Pre-Tax Margin - 3 Yr. Avg. 2.1%
Net Profit Margin -7.1%
Net Profit Margin - 3 Yr. Avg. 0.9%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 31.6%
Payout Ratio -239.1%

HP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HP stock intrinsic value calculation we used $1805 million for the last fiscal year's total revenue generated by Helmerich&Payne. The default revenue input number comes from 2017 income statement of Helmerich&Payne. 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 HP stock valuation model: a) initial revenue growth rate of 60% 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 HP is calculated based on our internal credit rating of Helmerich&Payne, 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 Helmerich&Payne.
    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 HP stock the variable cost ratio is equal to 101.6%.

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 HP 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 4.7% for Helmerich&Payne.

Corporate tax rate of 27% is the nominal tax rate for Helmerich&Payne. 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 HP 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 HP are equal to 282.5%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Helmerich&Payne 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 HP is equal to 18%. 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 - $4165 million for Helmerich&Payne - 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 108.911 million for Helmerich&Payne 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 Helmerich&Payne at the current share price and the inputted number of shares is $7.7 billion.

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COMPANY NEWS

▶ Better Buy: Helmerich & Payne, Inc. vs. Transocean   [Jan-12-18 06:03AM  Motley Fool]
▶ Helmerich & Payne Sees IBD RS Rating Climb To 73   [03:00AM  Investor's Business Daily]
▶ Schlumberger Reacts to Crude Oil Price Change   [Jan-09-18 10:33AM  Market Realist]
▶ Best Energy Dividend Stocks In NYSE   [08:02AM  Simply Wall St.]
▶ Helmerich & Payne Sees Relative Strength Rating Improve To 74   [03:00AM  Investor's Business Daily]
▶ Hows Halliburton Reacting to the Crude Oil Price Change?   [Jan-03-18 12:50PM  Market Realist]
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▶ Exxon Mobil's new strategy: lean and mean   [12:05PM  Yahoo Finance Video]
▶ Profits Remain Elusive at Helmerich & Payne   [Nov-20-17 01:02PM  Motley Fool]
▶ Helmerich & Payne reports 4Q loss   [06:21AM  Associated Press]
▶ How TechnipFMC Reacted to Crude Oil Prices   [Nov-14-17 09:01AM  Market Realist]
▶ Why crude oil could easily soar to $70/bbl   [Nov-07-17 10:37AM  Yahoo Finance Video]
▶ How Schlumberger Reacted to Crude Oil Prices Last Week   [Nov-06-17 11:45AM  Market Realist]
▶ 9 Stocks Outperforming by Investing in Growth: Goldman   [Nov-03-17 08:00AM  Investopedia]
▶ Analyzing Schlumbergers 7-Day Stock Price Forecast   [Oct-31-17 09:04AM  Market Realist]
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▶ How Schlumberger Reacted to the Price of Crude Oil Last Week   [Oct-17-17 08:38AM  Market Realist]
▶ Weatherford Reacts to Crude Oil Price Changes   [09:07AM  Market Realist]
▶ Oil: Why the Bakken Is Best   [Oct-09-17 09:30AM  Barrons.com]
▶ Why You Should Hold Helmerich & Payne (HP) Now   [Oct-06-17 04:51PM  Zacks]
▶ Schlumbergers Stock Price Forecast for the Next 7 Days   [Oct-05-17 10:39AM  Market Realist]
▶ Oil: Time To Take Profits In Drillers   [Oct-04-17 02:46PM  Barrons.com]
▶ How Schlumberger Reacted to Crude Oil Prices   [07:43AM  Market Realist]
▶ Hello Pal Releases Moments Feature   [12:10AM  Newsfile]
▶ Juan Pablo Tardio to Retire in June of 2018   [06:00AM  GlobeNewswire]
▶ Helmerich & Payne: Remain Cautious Even After Recent Upside   [Sep-25-17 01:48PM  GuruFocus.com]
▶ [$$] Energy stocks power Wall Street's record-breaking run   [Sep-18-17 04:24PM  Financial Times]
▶ Comparing Schlumbergers 7-Day Stock Price Forecast   [Sep-12-17 07:39AM  Market Realist]
▶ Decoding Helmerich & Paynes Dividend Yield   [12:32PM  Market Realist]
▶ Why crude oil and gas prices are likely to go down: NYSE trader   [Sep-06-17 01:15PM  Yahoo Finance Video]
▶ 2 Top Dividend Stocks for Your Roth IRA   [10:32AM  Motley Fool]
▶ Correlation between Weatherford and Crude Oil on August 25   [Aug-30-17 07:37AM  Market Realist]
Financial statements of HP
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