Intrinsic value of Jagged Peak Energy Inc. - JAG

Previous Close

$7.87

  Intrinsic Value

$1.11

stock screener

  Rating & Target

str. sell

-86%

Previous close

$7.87

 
Intrinsic value

$1.11

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of JAG 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 1.7

 

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, %
  32.70
  29.93
  27.44
  25.19
  23.17
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
Revenue, $m
  772
  1,003
  1,279
  1,601
  1,972
  2,393
  2,865
  3,388
  3,961
  4,584
  5,256
  5,976
  6,742
  7,554
  8,411
  9,311
  10,254
  11,241
  12,270
  13,343
  14,459
  15,621
  16,828
  18,082
  19,386
  20,741
  22,149
  23,613
  25,136
  26,721
Variable operating expenses, $m
  1,781
  2,314
  2,949
  3,692
  4,547
  5,519
  6,607
  7,812
  9,135
  10,572
  12,121
  13,781
  15,548
  17,420
  19,395
  21,471
  23,647
  25,922
  28,295
  30,769
  33,344
  36,021
  38,805
  41,698
  44,704
  47,828
  51,076
  54,452
  57,964
  61,619
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
  1,781
  2,314
  2,949
  3,692
  4,547
  5,519
  6,607
  7,812
  9,135
  10,572
  12,121
  13,781
  15,548
  17,420
  19,395
  21,471
  23,647
  25,922
  28,295
  30,769
  33,344
  36,021
  38,805
  41,698
  44,704
  47,828
  51,076
  54,452
  57,964
  61,619
Operating income, $m
  -1,009
  -1,311
  -1,670
  -2,091
  -2,575
  -3,125
  -3,742
  -4,425
  -5,173
  -5,987
  -6,865
  -7,805
  -8,806
  -9,866
  -10,984
  -12,160
  -13,392
  -14,681
  -16,025
  -17,426
  -18,884
  -20,401
  -21,977
  -23,616
  -25,318
  -27,088
  -28,927
  -30,839
  -32,828
  -34,898
EBITDA, $m
  -715
  -929
  -1,183
  -1,482
  -1,825
  -2,215
  -2,652
  -3,135
  -3,666
  -4,243
  -4,865
  -5,531
  -6,240
  -6,991
  -7,784
  -8,617
  -9,490
  -10,403
  -11,356
  -12,349
  -13,382
  -14,457
  -15,574
  -16,735
  -17,941
  -19,195
  -20,499
  -21,854
  -23,263
  -24,730
Interest expense (income), $m
  2
  36
  55
  77
  104
  135
  172
  212
  258
  309
  365
  426
  491
  561
  636
  715
  798
  886
  978
  1,073
  1,174
  1,278
  1,387
  1,500
  1,617
  1,739
  1,866
  1,998
  2,135
  2,277
  2,426
Earnings before tax, $m
  -1,045
  -1,365
  -1,747
  -2,195
  -2,711
  -3,297
  -3,954
  -4,683
  -5,483
  -6,352
  -7,291
  -8,296
  -9,367
  -10,502
  -11,699
  -12,958
  -14,278
  -15,658
  -17,099
  -18,600
  -20,162
  -21,787
  -23,477
  -25,233
  -27,057
  -28,954
  -30,925
  -32,974
  -35,105
  -37,323
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
  -1,045
  -1,365
  -1,747
  -2,195
  -2,711
  -3,297
  -3,954
  -4,683
  -5,483
  -6,352
  -7,291
  -8,296
  -9,367
  -10,502
  -11,699
  -12,958
  -14,278
  -15,658
  -17,099
  -18,600
  -20,162
  -21,787
  -23,477
  -25,233
  -27,057
  -28,954
  -30,925
  -32,974
  -35,105
  -37,323

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
  2,347
  3,050
  3,887
  4,866
  5,994
  7,274
  8,708
  10,298
  12,040
  13,934
  15,977
  18,165
  20,494
  22,962
  25,565
  28,301
  31,169
  34,167
  37,296
  40,556
  43,950
  47,479
  51,148
  54,962
  58,924
  63,042
  67,322
  71,773
  76,402
  81,219
Adjusted assets (=assets-cash), $m
  2,347
  3,050
  3,887
  4,866
  5,994
  7,274
  8,708
  10,298
  12,040
  13,934
  15,977
  18,165
  20,494
  22,962
  25,565
  28,301
  31,169
  34,167
  37,296
  40,556
  43,950
  47,479
  51,148
  54,962
  58,924
  63,042
  67,322
  71,773
  76,402
  81,219
Revenue / Adjusted assets
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
Average production assets, $m
  1,704
  2,215
  2,822
  3,533
  4,352
  5,282
  6,323
  7,477
  8,742
  10,118
  11,601
  13,189
  14,881
  16,672
  18,563
  20,549
  22,632
  24,809
  27,081
  29,448
  31,912
  34,475
  37,139
  39,908
  42,785
  45,775
  48,883
  52,115
  55,476
  58,973
Working capital, $m
  -135
  -176
  -224
  -280
  -345
  -419
  -501
  -593
  -693
  -802
  -920
  -1,046
  -1,180
  -1,322
  -1,472
  -1,629
  -1,795
  -1,967
  -2,147
  -2,335
  -2,530
  -2,734
  -2,945
  -3,164
  -3,393
  -3,630
  -3,876
  -4,132
  -4,399
  -4,676
Total debt, $m
  794
  1,120
  1,508
  1,962
  2,486
  3,079
  3,745
  4,482
  5,291
  6,170
  7,118
  8,133
  9,214
  10,359
  11,566
  12,836
  14,167
  15,558
  17,010
  18,522
  20,097
  21,735
  23,437
  25,207
  27,045
  28,956
  30,942
  33,007
  35,155
  37,390
Total liabilities, $m
  1,089
  1,415
  1,804
  2,258
  2,781
  3,375
  4,041
  4,778
  5,587
  6,466
  7,413
  8,428
  9,509
  10,654
  11,862
  13,132
  14,462
  15,853
  17,305
  18,818
  20,393
  22,030
  23,733
  25,502
  27,341
  29,251
  31,238
  33,303
  35,451
  37,686
Total equity, $m
  1,258
  1,635
  2,083
  2,608
  3,213
  3,899
  4,668
  5,519
  6,454
  7,469
  8,564
  9,736
  10,985
  12,307
  13,703
  15,169
  16,706
  18,313
  19,991
  21,738
  23,557
  25,449
  27,416
  29,459
  31,583
  33,791
  36,085
  38,470
  40,951
  43,533
Total liabilities and equity, $m
  2,347
  3,050
  3,887
  4,866
  5,994
  7,274
  8,709
  10,297
  12,041
  13,935
  15,977
  18,164
  20,494
  22,961
  25,565
  28,301
  31,168
  34,166
  37,296
  40,556
  43,950
  47,479
  51,149
  54,961
  58,924
  63,042
  67,323
  71,773
  76,402
  81,219
Debt-to-equity ratio
  0.630
  0.680
  0.720
  0.750
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.840
  0.840
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
Adjusted equity ratio
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536
  0.536

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,045
  -1,365
  -1,747
  -2,195
  -2,711
  -3,297
  -3,954
  -4,683
  -5,483
  -6,352
  -7,291
  -8,296
  -9,367
  -10,502
  -11,699
  -12,958
  -14,278
  -15,658
  -17,099
  -18,600
  -20,162
  -21,787
  -23,477
  -25,233
  -27,057
  -28,954
  -30,925
  -32,974
  -35,105
  -37,323
Depreciation, amort., depletion, $m
  294
  382
  487
  609
  750
  911
  1,090
  1,289
  1,507
  1,744
  2,000
  2,274
  2,566
  2,875
  3,200
  3,543
  3,902
  4,277
  4,669
  5,077
  5,502
  5,944
  6,403
  6,881
  7,377
  7,892
  8,428
  8,985
  9,565
  10,168
Funds from operations, $m
  -751
  -983
  -1,261
  -1,586
  -1,960
  -2,386
  -2,864
  -3,394
  -3,975
  -4,608
  -5,290
  -6,022
  -6,801
  -7,627
  -8,499
  -9,415
  -10,376
  -11,381
  -12,429
  -13,522
  -14,660
  -15,843
  -17,074
  -18,352
  -19,681
  -21,061
  -22,497
  -23,989
  -25,541
  -27,156
Change in working capital, $m
  -33
  -40
  -48
  -56
  -65
  -74
  -83
  -91
  -100
  -109
  -118
  -126
  -134
  -142
  -150
  -158
  -165
  -173
  -180
  -188
  -195
  -203
  -211
  -220
  -228
  -237
  -246
  -256
  -267
  -277
Cash from operations, $m
  -718
  -943
  -1,213
  -1,529
  -1,895
  -2,313
  -2,781
  -3,302
  -3,875
  -4,499
  -5,173
  -5,896
  -6,667
  -7,485
  -8,349
  -9,258
  -10,211
  -11,208
  -12,249
  -13,335
  -14,465
  -15,640
  -16,862
  -18,133
  -19,453
  -20,824
  -22,250
  -23,732
  -25,274
  -26,878
Maintenance CAPEX, $m
  -221
  -294
  -382
  -487
  -609
  -750
  -911
  -1,090
  -1,289
  -1,507
  -1,744
  -2,000
  -2,274
  -2,566
  -2,875
  -3,200
  -3,543
  -3,902
  -4,277
  -4,669
  -5,077
  -5,502
  -5,944
  -6,403
  -6,881
  -7,377
  -7,892
  -8,428
  -8,985
  -9,565
New CAPEX, $m
  -420
  -510
  -608
  -711
  -819
  -929
  -1,042
  -1,154
  -1,265
  -1,375
  -1,483
  -1,588
  -1,691
  -1,792
  -1,890
  -1,987
  -2,082
  -2,177
  -2,272
  -2,367
  -2,464
  -2,563
  -2,664
  -2,769
  -2,877
  -2,990
  -3,108
  -3,232
  -3,361
  -3,498
Cash from investing activities, $m
  -641
  -804
  -990
  -1,198
  -1,428
  -1,679
  -1,953
  -2,244
  -2,554
  -2,882
  -3,227
  -3,588
  -3,965
  -4,358
  -4,765
  -5,187
  -5,625
  -6,079
  -6,549
  -7,036
  -7,541
  -8,065
  -8,608
  -9,172
  -9,758
  -10,367
  -11,000
  -11,660
  -12,346
  -13,063
Free cash flow, $m
  -1,359
  -1,747
  -2,202
  -2,727
  -3,323
  -3,992
  -4,734
  -5,546
  -6,430
  -7,381
  -8,400
  -9,485
  -10,632
  -11,843
  -13,114
  -14,445
  -15,836
  -17,287
  -18,799
  -20,371
  -22,006
  -23,705
  -25,470
  -27,305
  -29,210
  -31,191
  -33,250
  -35,392
  -37,621
  -39,941
Issuance/(repayment) of debt, $m
  270
  326
  388
  454
  523
  594
  666
  737
  809
  879
  948
  1,015
  1,081
  1,145
  1,208
  1,270
  1,331
  1,391
  1,452
  1,513
  1,575
  1,638
  1,702
  1,769
  1,839
  1,911
  1,986
  2,065
  2,148
  2,235
Issuance/(repurchase) of shares, $m
  1,355
  1,742
  2,196
  2,720
  3,315
  3,983
  4,723
  5,535
  6,417
  7,368
  8,385
  9,469
  10,615
  11,824
  13,095
  14,425
  15,815
  17,265
  18,776
  20,347
  21,981
  23,679
  25,444
  27,277
  29,181
  31,161
  33,219
  35,359
  37,587
  39,905
Cash from financing (excl. dividends), $m  
  1,625
  2,068
  2,584
  3,174
  3,838
  4,577
  5,389
  6,272
  7,226
  8,247
  9,333
  10,484
  11,696
  12,969
  14,303
  15,695
  17,146
  18,656
  20,228
  21,860
  23,556
  25,317
  27,146
  29,046
  31,020
  33,072
  35,205
  37,424
  39,735
  42,140
Total cash flow (excl. dividends), $m
  266
  321
  382
  447
  515
  585
  655
  726
  796
  865
  933
  999
  1,064
  1,127
  1,189
  1,250
  1,310
  1,369
  1,429
  1,489
  1,550
  1,612
  1,676
  1,741
  1,810
  1,881
  1,955
  2,032
  2,114
  2,200
Retained Cash Flow (-), $m
  -1,355
  -1,742
  -2,196
  -2,720
  -3,315
  -3,983
  -4,723
  -5,535
  -6,417
  -7,368
  -8,385
  -9,469
  -10,615
  -11,824
  -13,095
  -14,425
  -15,815
  -17,265
  -18,776
  -20,347
  -21,981
  -23,679
  -25,444
  -27,277
  -29,181
  -31,161
  -33,219
  -35,359
  -37,587
  -39,905
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
  -1,089
  -1,421
  -1,814
  -2,273
  -2,800
  -3,398
  -4,068
  -4,809
  -5,621
  -6,503
  -7,453
  -8,470
  -9,552
  -10,698
  -11,906
  -13,175
  -14,506
  -15,896
  -17,347
  -18,858
  -20,431
  -22,067
  -23,768
  -25,535
  -27,372
  -29,280
  -31,264
  -33,327
  -35,473
  -37,706
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
  -1,044
  -1,301
  -1,578
  -1,871
  -2,171
  -2,466
  -2,748
  -3,006
  -3,229
  -3,409
  -3,539
  -3,614
  -3,632
  -3,591
  -3,495
  -3,348
  -3,156
  -2,927
  -2,671
  -2,396
  -2,113
  -1,831
  -1,558
  -1,301
  -1,065
  -854
  -671
  -516
  -387
  -284
Current shareholders' claim on cash, %
  55.4
  31.1
  17.7
  10.2
  5.9
  3.5
  2.1
  1.2
  0.8
  0.5
  0.3
  0.2
  0.1
  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

Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the Southern Delaware Basin. The Company’s acreage is located on contiguous blocks in the adjacent counties of Winkler, Ward, Reeves and Pecos, with original oil-in-place within multiple stacked hydrocarbon-bearing formations. As of September 30, 2016, it drilled and completed 16 horizontal wells. As of September 30, 2016, it held approximately 90% working interest in approximately 68,121 gross leased or acquired acres. It classifies its acreage position into three project areas: Whiskey River, Cochise and Big Tex. As of September 30, 2016, it drilled and completed eight operated wells in the Whiskey River project area targeting the Lower Wolfcamp A, Upper Wolfcamp A and Wolfcamp B. As of September 30, 2016, it also drilled and completed six operated wells in the Cochise project area.

FINANCIAL RATIOS  of  Jagged Peak Energy Inc. (JAG)

Valuation Ratios
P/E Ratio -167.6
Price to Sales 21.8
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 52.4
Price to Free Cash Flow -10.2
Growth Rates
Sales Growth Rate 126.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 76.6%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 40.5%
Total Debt to Equity 40.5%
Interest Coverage -4
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.5%
Return On Equity -3.3%
Return On Equity - 3 Yr. Avg. -1.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 84.4%
Gross Margin - 3 Yr. Avg. 82.7%
EBITDA Margin 41.6%
EBITDA Margin - 3 Yr. Avg. 48.3%
Operating Margin 10.4%
Oper. Margin - 3 Yr. Avg. -12.7%
Pre-Tax Margin -13%
Pre-Tax Margin - 3 Yr. Avg. -9.1%
Net Profit Margin -13%
Net Profit Margin - 3 Yr. Avg. -9.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

JAG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JAG stock intrinsic value calculation we used $582 million for the last fiscal year's total revenue generated by Jagged Peak Energy Inc.. The default revenue input number comes from 0001 income statement of Jagged Peak Energy Inc.. 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 JAG stock valuation model: a) initial revenue growth rate of 32.7% 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 JAG is calculated based on our internal credit rating of Jagged Peak Energy Inc., 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 Jagged Peak Energy Inc..
    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 JAG stock the variable cost ratio is equal to 230.6%.

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 JAG 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 6.9% for Jagged Peak Energy Inc..

Corporate tax rate of 27% is the nominal tax rate for Jagged Peak Energy Inc.. 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 JAG 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 JAG are equal to 220.7%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Jagged Peak Energy Inc. 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 JAG is equal to -17.5%. 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 - $947.95 million for Jagged Peak Energy Inc. - 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 213.583 million for Jagged Peak Energy Inc. 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 Jagged Peak Energy Inc. at the current share price and the inputted number of shares is $1.7 billion.

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