Intrinsic value of Montage Resources Corporation - MR

Previous Close

$6.40

  Intrinsic Value

$260.59

stock screener

  Rating & Target

str. buy

+999%

Previous close

$6.40

 
Intrinsic value

$260.59

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of MR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  42.10
  38.39
  35.05
  32.05
  29.34
  26.91
  24.72
  22.74
  20.97
  19.37
  17.94
  16.64
  15.48
  14.43
  13.49
  12.64
  11.87
  11.19
  10.57
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
Revenue, $m
  546
  755
  1,020
  1,347
  1,742
  2,210
  2,757
  3,384
  4,093
  4,886
  5,763
  6,722
  7,762
  8,882
  10,080
  11,354
  12,703
  14,124
  15,617
  17,180
  18,814
  20,518
  22,294
  24,142
  26,063
  28,061
  30,136
  32,293
  34,535
  36,865
Variable operating expenses, $m
  163
  226
  305
  403
  521
  661
  824
  1,012
  1,224
  1,461
  1,723
  2,010
  2,321
  2,656
  3,014
  3,395
  3,798
  4,223
  4,669
  5,137
  5,625
  6,135
  6,666
  7,218
  7,793
  8,390
  9,011
  9,656
  10,326
  11,023
Fixed operating expenses, $m
  294
  301
  307
  314
  321
  328
  335
  343
  350
  358
  366
  374
  382
  391
  399
  408
  417
  426
  435
  445
  455
  465
  475
  486
  496
  507
  518
  530
  541
  553
Total operating expenses, $m
  457
  527
  612
  717
  842
  989
  1,159
  1,355
  1,574
  1,819
  2,089
  2,384
  2,703
  3,047
  3,413
  3,803
  4,215
  4,649
  5,104
  5,582
  6,080
  6,600
  7,141
  7,704
  8,289
  8,897
  9,529
  10,186
  10,867
  11,576
Operating income, $m
  88
  229
  407
  630
  900
  1,221
  1,597
  2,029
  2,519
  3,067
  3,674
  4,338
  5,059
  5,836
  6,667
  7,552
  8,488
  9,475
  10,512
  11,598
  12,734
  13,919
  15,153
  16,438
  17,774
  19,163
  20,607
  22,108
  23,668
  25,289
EBITDA, $m
  257
  462
  722
  1,045
  1,437
  1,904
  2,448
  3,074
  3,782
  4,575
  5,452
  6,413
  7,455
  8,577
  9,778
  11,056
  12,408
  13,834
  15,331
  16,900
  18,540
  20,251
  22,033
  23,888
  25,818
  27,823
  29,908
  32,074
  34,326
  36,666
Interest expense (income), $m
  0
  50
  77
  112
  157
  213
  279
  359
  451
  558
  678
  812
  961
  1,123
  1,300
  1,489
  1,692
  1,908
  2,137
  2,377
  2,630
  2,895
  3,172
  3,461
  3,762
  4,075
  4,400
  4,739
  5,090
  5,456
  5,836
Earnings before tax, $m
  39
  152
  295
  473
  687
  942
  1,238
  1,578
  1,961
  2,389
  2,862
  3,377
  3,936
  4,536
  5,178
  5,859
  6,580
  7,338
  8,134
  8,968
  9,839
  10,747
  11,692
  12,676
  13,699
  14,763
  15,869
  17,018
  18,212
  19,454
Tax expense, $m
  10
  41
  80
  128
  186
  254
  334
  426
  530
  645
  773
  912
  1,063
  1,225
  1,398
  1,582
  1,776
  1,981
  2,196
  2,421
  2,656
  2,902
  3,157
  3,423
  3,699
  3,986
  4,285
  4,595
  4,917
  5,252
Net income, $m
  28
  111
  215
  345
  502
  688
  904
  1,152
  1,432
  1,744
  2,089
  2,465
  2,873
  3,312
  3,780
  4,277
  4,803
  5,357
  5,938
  6,547
  7,182
  7,845
  8,535
  9,254
  10,001
  10,777
  11,584
  12,423
  13,295
  14,201

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
  1,738
  2,405
  3,248
  4,289
  5,547
  7,040
  8,780
  10,776
  13,036
  15,562
  18,353
  21,407
  24,721
  28,288
  32,103
  36,161
  40,455
  44,980
  49,734
  54,713
  59,917
  65,345
  71,000
  76,884
  83,004
  89,365
  95,975
  102,844
  109,983
  117,405
Adjusted assets (=assets-cash), $m
  1,738
  2,405
  3,248
  4,289
  5,547
  7,040
  8,780
  10,776
  13,036
  15,562
  18,353
  21,407
  24,721
  28,288
  32,103
  36,161
  40,455
  44,980
  49,734
  54,713
  59,917
  65,345
  71,000
  76,884
  83,004
  89,365
  95,975
  102,844
  109,983
  117,405
Revenue / Adjusted assets
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
Average production assets, $m
  1,465
  2,028
  2,738
  3,616
  4,677
  5,935
  7,402
  9,085
  10,991
  13,120
  15,473
  18,048
  20,842
  23,849
  27,066
  30,487
  34,107
  37,923
  41,930
  46,128
  50,515
  55,092
  59,859
  64,820
  69,980
  75,343
  80,916
  86,707
  92,726
  98,983
Working capital, $m
  -85
  -118
  -159
  -210
  -272
  -345
  -430
  -528
  -639
  -762
  -899
  -1,049
  -1,211
  -1,386
  -1,573
  -1,771
  -1,982
  -2,203
  -2,436
  -2,680
  -2,935
  -3,201
  -3,478
  -3,766
  -4,066
  -4,377
  -4,701
  -5,038
  -5,387
  -5,751
Total debt, $m
  768
  1,123
  1,572
  2,125
  2,795
  3,589
  4,515
  5,577
  6,779
  8,123
  9,608
  11,233
  12,995
  14,893
  16,923
  19,081
  21,366
  23,773
  26,302
  28,951
  31,720
  34,607
  37,616
  40,746
  44,002
  47,386
  50,903
  54,557
  58,355
  62,303
Total liabilities, $m
  925
  1,279
  1,728
  2,282
  2,951
  3,745
  4,671
  5,733
  6,935
  8,279
  9,764
  11,389
  13,151
  15,049
  17,079
  19,238
  21,522
  23,930
  26,459
  29,108
  31,876
  34,764
  37,772
  40,902
  44,158
  47,542
  51,059
  54,713
  58,511
  62,459
Total equity, $m
  813
  1,126
  1,520
  2,007
  2,596
  3,295
  4,109
  5,043
  6,101
  7,283
  8,589
  10,019
  11,569
  13,239
  15,024
  16,923
  18,933
  21,051
  23,276
  25,606
  28,041
  30,582
  33,228
  35,982
  38,846
  41,823
  44,916
  48,131
  51,472
  54,945
Total liabilities and equity, $m
  1,738
  2,405
  3,248
  4,289
  5,547
  7,040
  8,780
  10,776
  13,036
  15,562
  18,353
  21,408
  24,720
  28,288
  32,103
  36,161
  40,455
  44,981
  49,735
  54,714
  59,917
  65,346
  71,000
  76,884
  83,004
  89,365
  95,975
  102,844
  109,983
  117,404
Debt-to-equity ratio
  0.940
  1.000
  1.030
  1.060
  1.080
  1.090
  1.100
  1.110
  1.110
  1.120
  1.120
  1.120
  1.120
  1.120
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
Adjusted equity ratio
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  111
  215
  345
  502
  688
  904
  1,152
  1,432
  1,744
  2,089
  2,465
  2,873
  3,312
  3,780
  4,277
  4,803
  5,357
  5,938
  6,547
  7,182
  7,845
  8,535
  9,254
  10,001
  10,777
  11,584
  12,423
  13,295
  14,201
Depreciation, amort., depletion, $m
  168
  233
  315
  416
  538
  682
  851
  1,044
  1,263
  1,508
  1,779
  2,075
  2,396
  2,741
  3,111
  3,504
  3,920
  4,359
  4,820
  5,302
  5,806
  6,332
  6,880
  7,451
  8,044
  8,660
  9,301
  9,966
  10,658
  11,377
Funds from operations, $m
  197
  344
  530
  761
  1,039
  1,370
  1,755
  2,196
  2,695
  3,252
  3,867
  4,540
  5,269
  6,053
  6,891
  7,781
  8,723
  9,716
  10,758
  11,849
  12,989
  14,177
  15,416
  16,704
  18,044
  19,437
  20,885
  22,389
  23,953
  25,578
Change in working capital, $m
  -25
  -33
  -41
  -51
  -62
  -73
  -85
  -98
  -111
  -124
  -137
  -150
  -162
  -175
  -187
  -199
  -210
  -222
  -233
  -244
  -255
  -266
  -277
  -288
  -300
  -312
  -324
  -336
  -350
  -364
Cash from operations, $m
  222
  376
  571
  812
  1,101
  1,443
  1,840
  2,294
  2,806
  3,376
  4,004
  4,690
  5,431
  6,228
  7,078
  7,980
  8,934
  9,937
  10,991
  12,093
  13,243
  14,443
  15,693
  16,993
  18,344
  19,749
  21,209
  22,726
  24,303
  25,942
Maintenance CAPEX, $m
  -118
  -168
  -233
  -315
  -416
  -538
  -682
  -851
  -1,044
  -1,263
  -1,508
  -1,779
  -2,075
  -2,396
  -2,741
  -3,111
  -3,504
  -3,920
  -4,359
  -4,820
  -5,302
  -5,806
  -6,332
  -6,880
  -7,451
  -8,044
  -8,660
  -9,301
  -9,966
  -10,658
New CAPEX, $m
  -434
  -562
  -711
  -877
  -1,061
  -1,258
  -1,467
  -1,684
  -1,905
  -2,129
  -2,353
  -2,575
  -2,794
  -3,008
  -3,217
  -3,421
  -3,620
  -3,816
  -4,008
  -4,198
  -4,387
  -4,576
  -4,767
  -4,961
  -5,159
  -5,363
  -5,573
  -5,791
  -6,019
  -6,257
Cash from investing activities, $m
  -552
  -730
  -944
  -1,192
  -1,477
  -1,796
  -2,149
  -2,535
  -2,949
  -3,392
  -3,861
  -4,354
  -4,869
  -5,404
  -5,958
  -6,532
  -7,124
  -7,736
  -8,367
  -9,018
  -9,689
  -10,382
  -11,099
  -11,841
  -12,610
  -13,407
  -14,233
  -15,092
  -15,985
  -16,915
Free cash flow, $m
  -331
  -354
  -372
  -381
  -376
  -353
  -309
  -240
  -144
  -17
  143
  336
  563
  825
  1,120
  1,448
  1,809
  2,201
  2,624
  3,075
  3,554
  4,060
  4,593
  5,151
  5,734
  6,342
  6,975
  7,634
  8,317
  9,027
Issuance/(repayment) of debt, $m
  273
  355
  448
  554
  669
  794
  926
  1,062
  1,202
  1,344
  1,485
  1,625
  1,763
  1,898
  2,030
  2,159
  2,284
  2,408
  2,529
  2,649
  2,768
  2,888
  3,008
  3,131
  3,256
  3,384
  3,517
  3,654
  3,798
  3,948
Issuance/(repurchase) of shares, $m
  213
  201
  179
  142
  87
  11
  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 from financing (excl. dividends), $m  
  486
  556
  627
  696
  756
  805
  926
  1,062
  1,202
  1,344
  1,485
  1,625
  1,763
  1,898
  2,030
  2,159
  2,284
  2,408
  2,529
  2,649
  2,768
  2,888
  3,008
  3,131
  3,256
  3,384
  3,517
  3,654
  3,798
  3,948
Total cash flow (excl. dividends), $m
  155
  202
  255
  315
  381
  452
  616
  822
  1,059
  1,327
  1,628
  1,961
  2,326
  2,722
  3,150
  3,607
  4,094
  4,609
  5,153
  5,724
  6,323
  6,948
  7,601
  8,282
  8,990
  9,726
  10,492
  11,288
  12,115
  12,975
Retained Cash Flow (-), $m
  -241
  -312
  -394
  -487
  -589
  -699
  -814
  -935
  -1,058
  -1,182
  -1,306
  -1,429
  -1,551
  -1,669
  -1,786
  -1,899
  -2,010
  -2,118
  -2,225
  -2,330
  -2,435
  -2,540
  -2,646
  -2,754
  -2,864
  -2,977
  -3,094
  -3,215
  -3,341
  -3,473
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
  -86
  -110
  -139
  -172
  -208
  -247
  -198
  -113
  1
  145
  322
  531
  775
  1,053
  1,364
  1,708
  2,084
  2,491
  2,928
  3,394
  3,887
  4,408
  4,955
  5,528
  6,126
  6,749
  7,398
  8,073
  8,774
  9,502
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  -80
  -96
  -111
  -126
  -138
  -148
  -106
  -53
  0
  52
  98
  137
  166
  186
  195
  194
  186
  171
  152
  131
  109
  87
  68
  52
  38
  27
  18
  12
  8
  5
Current shareholders' claim on cash, %
  65.3
  48.2
  39.3
  34.7
  32.7
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5
  32.5

FINANCIAL RATIOS  of  Montage Resources Corporation (MR)

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

MR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MR stock intrinsic value calculation we used $384 million for the last fiscal year's total revenue generated by Montage Resources Corporation. The default revenue input number comes from 0001 income statement of Montage Resources Corporation. 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 MR stock valuation model: a) initial revenue growth rate of 42.1% 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 7%, whose default value for MR is calculated based on our internal credit rating of Montage Resources Corporation, 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 Montage Resources Corporation.
    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 MR stock the variable cost ratio is equal to 29.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $288 million in the base year in the intrinsic value calculation for MR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 10% for Montage Resources Corporation.

Corporate tax rate of 27% is the nominal tax rate for Montage Resources Corporation. 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 MR 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 MR are equal to 268.5%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Montage Resources Corporation 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 MR is equal to -15.6%. 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 - $572.354 million for Montage Resources Corporation - 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 1.344 million for Montage Resources Corporation 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 Montage Resources Corporation at the current share price and the inputted number of shares is $0.0 billion.

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