Intrinsic value of Matador Resources Company - MTDR

Previous Close

$20.95

  Intrinsic Value

$14.42

stock screener

  Rating & Target

sell

-31%

Previous close

$20.95

 
Intrinsic value

$14.42

 
Up/down potential

-31%

 
Rating

sell

We calculate the intrinsic value of MTDR 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 2.4

 

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, %
  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
  1,440
  2,225
  3,327
  4,828
  6,811
  9,364
  12,569
  16,503
  21,236
  26,823
  33,308
  40,722
  49,084
  58,400
  68,668
  79,877
  92,012
  105,052
  118,977
  133,765
  149,398
  165,859
  183,135
  201,219
  220,108
  239,804
  260,316
  281,657
  303,847
  326,911
Variable operating expenses, $m
  619
  957
  1,431
  2,076
  2,929
  4,026
  5,405
  7,096
  9,131
  11,534
  14,322
  17,510
  21,106
  25,112
  29,527
  34,347
  39,565
  45,172
  51,160
  57,519
  64,241
  71,319
  78,748
  86,524
  94,646
  103,116
  111,936
  121,113
  130,654
  140,572
Fixed operating expenses, $m
  155
  159
  162
  166
  169
  173
  177
  181
  185
  189
  193
  197
  202
  206
  211
  215
  220
  225
  230
  235
  240
  245
  251
  256
  262
  268
  274
  280
  286
  292
Total operating expenses, $m
  774
  1,116
  1,593
  2,242
  3,098
  4,199
  5,582
  7,277
  9,316
  11,723
  14,515
  17,707
  21,308
  25,318
  29,738
  34,562
  39,785
  45,397
  51,390
  57,754
  64,481
  71,564
  78,999
  86,780
  94,908
  103,384
  112,210
  121,393
  130,940
  140,864
Operating income, $m
  665
  1,109
  1,734
  2,586
  3,713
  5,164
  6,987
  9,226
  11,920
  15,100
  18,792
  23,014
  27,776
  33,082
  38,930
  45,315
  52,227
  59,655
  67,587
  76,011
  84,917
  94,294
  104,136
  114,439
  125,200
  136,421
  148,106
  160,265
  172,907
  186,047
EBITDA, $m
  1,091
  1,767
  2,718
  4,014
  5,727
  7,933
  10,704
  14,107
  18,200
  23,033
  28,643
  35,057
  42,292
  50,353
  59,238
  68,938
  79,439
  90,723
  102,774
  115,572
  129,101
  143,346
  158,297
  173,948
  190,295
  207,341
  225,093
  243,564
  262,768
  282,729
Interest expense (income), $m
  27
  70
  128
  211
  328
  487
  698
  968
  1,309
  1,726
  2,228
  2,821
  3,510
  4,297
  5,184
  6,173
  7,262
  8,452
  9,740
  11,124
  12,602
  14,171
  15,830
  17,577
  19,411
  21,330
  23,335
  25,425
  27,602
  29,867
  32,222
Earnings before tax, $m
  595
  982
  1,523
  2,258
  3,226
  4,466
  6,019
  7,917
  10,193
  12,872
  15,971
  19,504
  23,479
  27,898
  32,757
  38,052
  43,775
  49,915
  56,463
  63,410
  70,746
  78,464
  86,559
  95,028
  103,869
  113,086
  122,681
  132,663
  143,040
  153,825
Tax expense, $m
  161
  265
  411
  610
  871
  1,206
  1,625
  2,138
  2,752
  3,475
  4,312
  5,266
  6,339
  7,532
  8,844
  10,274
  11,819
  13,477
  15,245
  17,121
  19,101
  21,185
  23,371
  25,657
  28,045
  30,533
  33,124
  35,819
  38,621
  41,533
Net income, $m
  435
  717
  1,112
  1,648
  2,355
  3,261
  4,394
  5,780
  7,441
  9,396
  11,659
  14,238
  17,140
  20,365
  23,913
  27,778
  31,955
  36,438
  41,218
  46,289
  51,644
  57,279
  63,188
  69,370
  75,825
  82,553
  89,557
  96,844
  104,419
  112,292

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
  5,538
  8,557
  12,797
  18,568
  26,196
  36,014
  48,341
  63,475
  81,677
  103,164
  128,107
  156,623
  188,783
  224,614
  264,107
  307,220
  353,891
  404,046
  457,603
  514,482
  574,608
  637,919
  704,366
  773,919
  846,568
  922,323
  1,001,214
  1,083,296
  1,168,643
  1,257,350
Adjusted assets (=assets-cash), $m
  5,538
  8,557
  12,797
  18,568
  26,196
  36,014
  48,341
  63,475
  81,677
  103,164
  128,107
  156,623
  188,783
  224,614
  264,107
  307,220
  353,891
  404,046
  457,603
  514,482
  574,608
  637,919
  704,366
  773,919
  846,568
  922,323
  1,001,214
  1,083,296
  1,168,643
  1,257,350
Revenue / Adjusted assets
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
Average production assets, $m
  4,003
  6,185
  9,250
  13,421
  18,935
  26,031
  34,941
  45,880
  59,036
  74,567
  92,595
  113,207
  136,452
  162,351
  190,896
  222,058
  255,793
  292,045
  330,756
  371,868
  415,327
  461,088
  509,116
  559,389
  611,899
  666,655
  723,678
  783,007
  844,695
  908,812
Working capital, $m
  -253
  -392
  -586
  -850
  -1,199
  -1,648
  -2,212
  -2,905
  -3,738
  -4,721
  -5,862
  -7,167
  -8,639
  -10,278
  -12,086
  -14,058
  -16,194
  -18,489
  -20,940
  -23,543
  -26,294
  -29,191
  -32,232
  -35,415
  -38,739
  -42,205
  -45,816
  -49,572
  -53,477
  -57,536
Total debt, $m
  2,361
  3,904
  6,070
  9,019
  12,918
  17,934
  24,234
  31,967
  41,268
  52,248
  64,994
  79,565
  95,999
  114,309
  134,490
  156,520
  180,370
  205,999
  233,367
  262,432
  293,156
  325,508
  359,462
  395,004
  432,128
  470,838
  511,152
  553,096
  596,708
  642,037
Total liabilities, $m
  2,830
  4,373
  6,539
  9,488
  13,386
  18,403
  24,702
  32,436
  41,737
  52,717
  65,463
  80,034
  96,468
  114,778
  134,959
  156,989
  180,838
  206,468
  233,835
  262,900
  293,625
  325,976
  359,931
  395,473
  432,596
  471,307
  511,621
  553,564
  597,177
  642,506
Total equity, $m
  2,708
  4,184
  6,258
  9,080
  12,810
  17,611
  23,639
  31,039
  39,940
  50,447
  62,644
  76,588
  92,315
  109,836
  129,148
  150,230
  173,053
  197,579
  223,768
  251,582
  280,983
  311,942
  344,435
  378,446
  413,972
  451,016
  489,594
  529,732
  571,466
  614,844
Total liabilities and equity, $m
  5,538
  8,557
  12,797
  18,568
  26,196
  36,014
  48,341
  63,475
  81,677
  103,164
  128,107
  156,622
  188,783
  224,614
  264,107
  307,219
  353,891
  404,047
  457,603
  514,482
  574,608
  637,918
  704,366
  773,919
  846,568
  922,323
  1,001,215
  1,083,296
  1,168,643
  1,257,350
Debt-to-equity ratio
  0.870
  0.930
  0.970
  0.990
  1.010
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
Adjusted equity ratio
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  435
  717
  1,112
  1,648
  2,355
  3,261
  4,394
  5,780
  7,441
  9,396
  11,659
  14,238
  17,140
  20,365
  23,913
  27,778
  31,955
  36,438
  41,218
  46,289
  51,644
  57,279
  63,188
  69,370
  75,825
  82,553
  89,557
  96,844
  104,419
  112,292
Depreciation, amort., depletion, $m
  426
  658
  984
  1,428
  2,014
  2,769
  3,717
  4,881
  6,280
  7,933
  9,851
  12,043
  14,516
  17,271
  20,308
  23,623
  27,212
  31,069
  35,187
  39,560
  44,184
  49,052
  54,161
  59,509
  65,096
  70,921
  76,987
  83,299
  89,861
  96,682
Funds from operations, $m
  860
  1,375
  2,096
  3,076
  4,369
  6,030
  8,111
  10,661
  13,722
  17,329
  21,509
  26,282
  31,656
  37,637
  44,221
  51,401
  59,167
  67,506
  76,405
  85,849
  95,828
  106,330
  117,349
  128,880
  140,920
  153,473
  166,544
  180,142
  194,280
  208,974
Change in working capital, $m
  -95
  -138
  -194
  -264
  -349
  -449
  -564
  -693
  -833
  -983
  -1,141
  -1,305
  -1,472
  -1,640
  -1,807
  -1,973
  -2,136
  -2,295
  -2,451
  -2,603
  -2,751
  -2,897
  -3,041
  -3,183
  -3,324
  -3,467
  -3,610
  -3,756
  -3,905
  -4,059
Cash from operations, $m
  956
  1,513
  2,290
  3,340
  4,718
  6,479
  8,675
  11,353
  14,555
  18,312
  22,651
  27,586
  33,128
  39,276
  46,028
  53,374
  61,303
  69,801
  78,856
  88,452
  98,579
  109,228
  120,390
  132,062
  144,245
  156,940
  170,154
  183,898
  198,186
  213,034
Maintenance CAPEX, $m
  -266
  -426
  -658
  -984
  -1,428
  -2,014
  -2,769
  -3,717
  -4,881
  -6,280
  -7,933
  -9,851
  -12,043
  -14,516
  -17,271
  -20,308
  -23,623
  -27,212
  -31,069
  -35,187
  -39,560
  -44,184
  -49,052
  -54,161
  -59,509
  -65,096
  -70,921
  -76,987
  -83,299
  -89,861
New CAPEX, $m
  -1,501
  -2,182
  -3,065
  -4,171
  -5,514
  -7,096
  -8,910
  -10,939
  -13,156
  -15,531
  -18,028
  -20,611
  -23,245
  -25,899
  -28,545
  -31,162
  -33,734
  -36,252
  -38,711
  -41,112
  -43,459
  -45,761
  -48,028
  -50,273
  -52,511
  -54,755
  -57,023
  -59,329
  -61,688
  -64,117
Cash from investing activities, $m
  -1,767
  -2,608
  -3,723
  -5,155
  -6,942
  -9,110
  -11,679
  -14,656
  -18,037
  -21,811
  -25,961
  -30,462
  -35,288
  -40,415
  -45,816
  -51,470
  -57,357
  -63,464
  -69,780
  -76,299
  -83,019
  -89,945
  -97,080
  -104,434
  -112,020
  -119,851
  -127,944
  -136,316
  -144,987
  -153,978
Free cash flow, $m
  -812
  -1,095
  -1,432
  -1,815
  -2,223
  -2,631
  -3,005
  -3,303
  -3,483
  -3,499
  -3,310
  -2,876
  -2,161
  -1,139
  212
  1,904
  3,946
  6,337
  9,076
  12,153
  15,560
  19,283
  23,310
  27,628
  32,225
  37,089
  42,211
  47,583
  53,199
  59,055
Issuance/(repayment) of debt, $m
  1,064
  1,542
  2,167
  2,949
  3,898
  5,017
  6,299
  7,733
  9,301
  10,980
  12,746
  14,572
  16,434
  18,310
  20,181
  22,031
  23,849
  25,629
  27,368
  29,065
  30,724
  32,352
  33,954
  35,542
  37,124
  38,711
  40,314
  41,944
  43,612
  45,329
Issuance/(repurchase) of shares, $m
  585
  759
  961
  1,173
  1,376
  1,540
  1,634
  1,621
  1,460
  1,111
  538
  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  
  1,649
  2,301
  3,128
  4,122
  5,274
  6,557
  7,933
  9,354
  10,761
  12,091
  13,284
  14,572
  16,434
  18,310
  20,181
  22,031
  23,849
  25,629
  27,368
  29,065
  30,724
  32,352
  33,954
  35,542
  37,124
  38,711
  40,314
  41,944
  43,612
  45,329
Total cash flow (excl. dividends), $m
  837
  1,207
  1,695
  2,307
  3,050
  3,926
  4,929
  6,051
  7,278
  8,592
  9,973
  11,696
  14,273
  17,171
  20,392
  23,935
  27,795
  31,967
  36,444
  41,218
  46,284
  51,635
  57,264
  63,170
  69,348
  75,799
  82,524
  89,527
  96,811
  104,384
Retained Cash Flow (-), $m
  -1,019
  -1,476
  -2,073
  -2,822
  -3,730
  -4,801
  -6,028
  -7,400
  -8,901
  -10,507
  -12,197
  -13,944
  -15,726
  -17,522
  -19,312
  -21,082
  -22,822
  -24,526
  -26,189
  -27,814
  -29,402
  -30,959
  -32,493
  -34,012
  -35,525
  -37,044
  -38,578
  -40,138
  -41,734
  -43,378
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
  -183
  -269
  -378
  -514
  -680
  -875
  -1,099
  -1,349
  -1,623
  -1,916
  -2,224
  -2,248
  -1,453
  -350
  1,080
  2,853
  4,972
  7,441
  10,254
  13,405
  16,883
  20,676
  24,772
  29,158
  33,823
  38,755
  43,946
  49,388
  55,076
  61,007
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  -174
  -243
  -323
  -413
  -509
  -608
  -704
  -791
  -865
  -921
  -955
  -856
  -486
  -102
  269
  604
  884
  1,095
  1,233
  1,298
  1,296
  1,238
  1,137
  1,008
  863
  716
  575
  447
  337
  246
Current shareholders' claim on cash, %
  80.7
  67.6
  58.3
  51.6
  46.7
  43.2
  40.6
  38.7
  37.5
  36.8
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5
  36.5

Matador Resources Company is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company's segments include exploration and production, and midstream. The Company's operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, the Company conducts midstream operations primarily, as of February 17, 2017, through its midstream joint venture, San Mateo Midstream, LLC (San Mateo or the Joint Venture).

FINANCIAL RATIOS  of  Matador Resources Company (MTDR)

Valuation Ratios
P/E Ratio -21.5
Price to Sales 8.2
Price to Book 3
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow -6.5
Growth Rates
Sales Growth Rate 5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 83.2%
Total Debt to Equity 83.2%
Interest Coverage -3
Management Effectiveness
Return On Assets -5.4%
Ret/ On Assets - 3 Yr. Avg. -15.8%
Return On Total Capital -9.1%
Ret/ On T. Cap. - 3 Yr. Avg. -21%
Return On Equity -16.5%
Return On Equity - 3 Yr. Avg. -33.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 59.2%
Gross Margin - 3 Yr. Avg. 66.8%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. -56.1%
Operating Margin -69.4%
Oper. Margin - 3 Yr. Avg. -120.7%
Pre-Tax Margin -38.4%
Pre-Tax Margin - 3 Yr. Avg. -113.5%
Net Profit Margin -38%
Net Profit Margin - 3 Yr. Avg. -98%
Effective Tax Rate 1%
Eff/ Tax Rate - 3 Yr. Avg. 18.5%
Payout Ratio 0%

MTDR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTDR stock intrinsic value calculation we used $900 million for the last fiscal year's total revenue generated by Matador Resources Company. The default revenue input number comes from 0001 income statement of Matador Resources Company. 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 MTDR 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 4.9%, whose default value for MTDR is calculated based on our internal credit rating of Matador Resources Company, 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 Matador Resources Company.
    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 MTDR stock the variable cost ratio is equal to 43%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $152 million in the base year in the intrinsic value calculation for MTDR 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 Matador Resources Company.

Corporate tax rate of 27% is the nominal tax rate for Matador Resources Company. 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 MTDR 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 MTDR are equal to 278%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Matador Resources Company 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 MTDR is equal to -17.6%. 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 - $1688.88 million for Matador Resources Company - 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 116.640 million for Matador Resources Company 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 Matador Resources Company at the current share price and the inputted number of shares is $2.4 billion.

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