Intrinsic value of Noble Corporation - NE

Previous Close

$1.75

  Intrinsic Value

$4.28

stock screener

  Rating & Target

str. buy

+144%

Previous close

$1.75

 
Intrinsic value

$4.28

 
Up/down potential

+144%

 
Rating

str. buy

We calculate the intrinsic value of NE 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 0.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,105
  1,130
  1,159
  1,192
  1,228
  1,267
  1,311
  1,357
  1,408
  1,462
  1,520
  1,581
  1,647
  1,717
  1,791
  1,869
  1,952
  2,040
  2,133
  2,231
  2,334
  2,443
  2,558
  2,679
  2,807
  2,941
  3,083
  3,231
  3,388
  3,553
Variable operating expenses, $m
  1,253
  1,281
  1,314
  1,351
  1,392
  1,437
  1,486
  1,539
  1,596
  1,658
  1,723
  1,793
  1,868
  1,947
  2,031
  2,120
  2,214
  2,313
  2,419
  2,530
  2,647
  2,771
  2,901
  3,038
  3,183
  3,335
  3,496
  3,664
  3,842
  4,029
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
  1,253
  1,281
  1,314
  1,351
  1,392
  1,437
  1,486
  1,539
  1,596
  1,658
  1,723
  1,793
  1,868
  1,947
  2,031
  2,120
  2,214
  2,313
  2,419
  2,530
  2,647
  2,771
  2,901
  3,038
  3,183
  3,335
  3,496
  3,664
  3,842
  4,029
Operating income, $m
  -148
  -151
  -155
  -160
  -165
  -170
  -176
  -182
  -189
  -196
  -204
  -212
  -221
  -230
  -240
  -250
  -262
  -273
  -286
  -299
  -313
  -327
  -343
  -359
  -376
  -394
  -413
  -433
  -454
  -476
EBITDA, $m
  347
  355
  364
  375
  386
  399
  412
  427
  443
  460
  478
  497
  518
  540
  563
  588
  614
  641
  671
  701
  734
  768
  804
  843
  883
  925
  969
  1,016
  1,065
  1,117
Interest expense (income), $m
  0
  291
  299
  308
  318
  329
  342
  355
  370
  387
  404
  423
  443
  464
  487
  511
  537
  564
  593
  624
  656
  690
  726
  764
  804
  846
  890
  937
  986
  1,038
  1,092
Earnings before tax, $m
  -439
  -450
  -463
  -477
  -493
  -511
  -531
  -552
  -575
  -600
  -626
  -655
  -685
  -717
  -751
  -788
  -826
  -867
  -910
  -955
  -1,003
  -1,053
  -1,107
  -1,163
  -1,222
  -1,284
  -1,350
  -1,419
  -1,492
  -1,568
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
  -439
  -450
  -463
  -477
  -493
  -511
  -531
  -552
  -575
  -600
  -626
  -655
  -685
  -717
  -751
  -788
  -826
  -867
  -910
  -955
  -1,003
  -1,053
  -1,107
  -1,163
  -1,222
  -1,284
  -1,350
  -1,419
  -1,492
  -1,568

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
  9,442
  9,659
  9,907
  10,186
  10,494
  10,833
  11,202
  11,602
  12,032
  12,494
  12,988
  13,515
  14,076
  14,672
  15,305
  15,976
  16,686
  17,437
  18,230
  19,068
  19,952
  20,884
  21,866
  22,901
  23,992
  25,139
  26,348
  27,619
  28,957
  30,364
Adjusted assets (=assets-cash), $m
  9,442
  9,659
  9,907
  10,186
  10,494
  10,833
  11,202
  11,602
  12,032
  12,494
  12,988
  13,515
  14,076
  14,672
  15,305
  15,976
  16,686
  17,437
  18,230
  19,068
  19,952
  20,884
  21,866
  22,901
  23,992
  25,139
  26,348
  27,619
  28,957
  30,364
Revenue / Adjusted assets
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
Average production assets, $m
  9,164
  9,375
  9,616
  9,886
  10,186
  10,515
  10,873
  11,261
  11,678
  12,127
  12,606
  13,118
  13,662
  14,241
  14,856
  15,507
  16,196
  16,925
  17,695
  18,508
  19,366
  20,270
  21,224
  22,229
  23,287
  24,401
  25,574
  26,808
  28,106
  29,472
Working capital, $m
  -83
  -85
  -87
  -89
  -92
  -95
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -146
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -231
  -242
  -254
  -266
Total debt, $m
  3,983
  4,101
  4,235
  4,386
  4,554
  4,737
  4,937
  5,154
  5,387
  5,637
  5,905
  6,191
  6,495
  6,818
  7,161
  7,525
  7,909
  8,316
  8,746
  9,200
  9,679
  10,185
  10,717
  11,278
  11,869
  12,491
  13,146
  13,835
  14,560
  15,323
Total liabilities, $m
  5,117
  5,235
  5,370
  5,521
  5,688
  5,872
  6,072
  6,288
  6,521
  6,771
  7,039
  7,325
  7,629
  7,952
  8,295
  8,659
  9,044
  9,451
  9,881
  10,335
  10,814
  11,319
  11,851
  12,412
  13,003
  13,626
  14,280
  14,970
  15,695
  16,457
Total equity, $m
  4,324
  4,424
  4,537
  4,665
  4,806
  4,962
  5,131
  5,314
  5,511
  5,722
  5,948
  6,190
  6,447
  6,720
  7,010
  7,317
  7,642
  7,986
  8,349
  8,733
  9,138
  9,565
  10,015
  10,489
  10,988
  11,514
  12,067
  12,650
  13,262
  13,907
Total liabilities and equity, $m
  9,441
  9,659
  9,907
  10,186
  10,494
  10,834
  11,203
  11,602
  12,032
  12,493
  12,987
  13,515
  14,076
  14,672
  15,305
  15,976
  16,686
  17,437
  18,230
  19,068
  19,952
  20,884
  21,866
  22,901
  23,991
  25,140
  26,347
  27,620
  28,957
  30,364
Debt-to-equity ratio
  0.920
  0.930
  0.930
  0.940
  0.950
  0.950
  0.960
  0.970
  0.980
  0.990
  0.990
  1.000
  1.010
  1.010
  1.020
  1.030
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
  1.080
  1.080
  1.080
  1.090
  1.090
  1.100
  1.100
Adjusted equity ratio
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -439
  -450
  -463
  -477
  -493
  -511
  -531
  -552
  -575
  -600
  -626
  -655
  -685
  -717
  -751
  -788
  -826
  -867
  -910
  -955
  -1,003
  -1,053
  -1,107
  -1,163
  -1,222
  -1,284
  -1,350
  -1,419
  -1,492
  -1,568
Depreciation, amort., depletion, $m
  495
  507
  520
  534
  551
  568
  588
  609
  631
  655
  681
  709
  739
  770
  803
  838
  875
  915
  956
  1,000
  1,047
  1,096
  1,147
  1,202
  1,259
  1,319
  1,382
  1,449
  1,519
  1,593
Funds from operations, $m
  57
  57
  57
  57
  57
  57
  57
  57
  56
  56
  55
  54
  54
  53
  52
  51
  50
  48
  47
  45
  44
  42
  41
  39
  37
  35
  32
  30
  28
  25
Change in working capital, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
Cash from operations, $m
  58
  59
  59
  60
  60
  60
  60
  60
  60
  60
  59
  59
  58
  58
  57
  57
  56
  55
  54
  53
  52
  51
  49
  48
  46
  45
  43
  41
  39
  37
Maintenance CAPEX, $m
  -486
  -495
  -507
  -520
  -534
  -551
  -568
  -588
  -609
  -631
  -655
  -681
  -709
  -739
  -770
  -803
  -838
  -875
  -915
  -956
  -1,000
  -1,047
  -1,096
  -1,147
  -1,202
  -1,259
  -1,319
  -1,382
  -1,449
  -1,519
New CAPEX, $m
  -179
  -211
  -241
  -270
  -300
  -329
  -358
  -388
  -418
  -448
  -479
  -512
  -545
  -579
  -614
  -651
  -689
  -729
  -770
  -813
  -858
  -905
  -954
  -1,005
  -1,058
  -1,114
  -1,173
  -1,234
  -1,298
  -1,366
Cash from investing activities, $m
  -665
  -706
  -748
  -790
  -834
  -880
  -926
  -976
  -1,027
  -1,079
  -1,134
  -1,193
  -1,254
  -1,318
  -1,384
  -1,454
  -1,527
  -1,604
  -1,685
  -1,769
  -1,858
  -1,952
  -2,050
  -2,152
  -2,260
  -2,373
  -2,492
  -2,616
  -2,747
  -2,885
Free cash flow, $m
  -607
  -648
  -689
  -731
  -774
  -819
  -866
  -915
  -966
  -1,020
  -1,076
  -1,134
  -1,195
  -1,260
  -1,327
  -1,398
  -1,472
  -1,549
  -1,631
  -1,717
  -1,807
  -1,901
  -2,000
  -2,104
  -2,213
  -2,328
  -2,449
  -2,575
  -2,708
  -2,847
Issuance/(repayment) of debt, $m
  106
  118
  135
  151
  167
  184
  200
  216
  233
  250
  268
  286
  304
  323
  343
  364
  385
  407
  430
  454
  479
  505
  533
  561
  591
  622
  655
  689
  725
  763
Issuance/(repurchase) of shares, $m
  520
  550
  577
  605
  635
  667
  700
  735
  772
  811
  853
  896
  942
  990
  1,041
  1,095
  1,151
  1,210
  1,273
  1,339
  1,408
  1,480
  1,557
  1,637
  1,721
  1,810
  1,903
  2,001
  2,104
  2,212
Cash from financing (excl. dividends), $m  
  626
  668
  712
  756
  802
  851
  900
  951
  1,005
  1,061
  1,121
  1,182
  1,246
  1,313
  1,384
  1,459
  1,536
  1,617
  1,703
  1,793
  1,887
  1,985
  2,090
  2,198
  2,312
  2,432
  2,558
  2,690
  2,829
  2,975
Total cash flow (excl. dividends), $m
  18
  20
  22
  25
  28
  31
  33
  36
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121
  127
Retained Cash Flow (-), $m
  -520
  -550
  -577
  -605
  -635
  -667
  -700
  -735
  -772
  -811
  -853
  -896
  -942
  -990
  -1,041
  -1,095
  -1,151
  -1,210
  -1,273
  -1,339
  -1,408
  -1,480
  -1,557
  -1,637
  -1,721
  -1,810
  -1,903
  -2,001
  -2,104
  -2,212
Prev. year cash balance distribution, $m
  10
  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
  -491
  -530
  -554
  -580
  -607
  -636
  -666
  -699
  -733
  -770
  -808
  -848
  -891
  -936
  -984
  -1,034
  -1,087
  -1,142
  -1,201
  -1,263
  -1,328
  -1,396
  -1,468
  -1,543
  -1,623
  -1,706
  -1,794
  -1,886
  -1,983
  -2,085
Discount rate, %
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
  -453
  -448
  -425
  -400
  -373
  -345
  -316
  -286
  -256
  -226
  -197
  -169
  -143
  -120
  -98
  -79
  -62
  -48
  -36
  -27
  -19
  -14
  -9
  -6
  -4
  -3
  -2
  -1
  -1
  0
Current shareholders' claim on cash, %
  85.1
  72.0
  60.7
  51.0
  42.7
  35.6
  29.7
  24.6
  20.4
  16.8
  13.9
  11.4
  9.4
  7.7
  6.3
  5.2
  4.2
  3.4
  2.8
  2.3
  1.8
  1.5
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3

Noble Corporation plc operates as an offshore drilling contractor for the oil and gas industry worldwide. It owns and operates a fleet of mobile offshore drilling units. As of February 23, 2017, the company operated a fleet of 28 offshore drilling units consisted of 14 drill ships, and semisubmersibles and 14 jack ups. Noble Corporation plc was founded in 1921 and is headquartered in London, the United Kingdom.

FINANCIAL RATIOS  of  Noble Corporation (NE)

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%

NE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NE stock intrinsic value calculation we used $1083 million for the last fiscal year's total revenue generated by Noble Corporation. The default revenue input number comes from 0001 income statement of Noble 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 NE stock valuation model: a) initial revenue growth rate of 2% 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 8.4%, whose default value for NE is calculated based on our internal credit rating of Noble 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 Noble 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 NE stock the variable cost ratio is equal to 113.4%.

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 NE 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 7.5% for Noble Corporation.

Corporate tax rate of 27% is the nominal tax rate for Noble 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 NE 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 NE are equal to 829.6%.

Life of production assets of 18.5 years is the average useful life of capital assets used in Noble 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 NE is equal to -7.5%. 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 - $4253.171 million for Noble 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 248.706 million for Noble 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 Noble Corporation at the current share price and the inputted number of shares is $0.4 billion.

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