Intrinsic value of QEP Resources - QEP

Previous Close

$10.94

  Intrinsic Value

$4.01

stock screener

  Rating & Target

str. sell

-63%

Previous close

$10.94

 
Intrinsic value

$4.01

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of QEP 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 2.6

 

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, %
  38.80
  35.42
  32.38
  29.64
  27.18
  24.96
  22.96
  21.17
  19.55
  18.09
  16.79
  15.61
  14.55
  13.59
  12.73
  11.96
  11.26
  10.64
  10.07
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.18
  6.97
  6.77
  6.59
Revenue, $m
  2,253
  3,050
  4,038
  5,235
  6,658
  8,319
  10,230
  12,395
  14,818
  17,500
  20,437
  23,626
  27,063
  30,741
  34,656
  38,800
  43,170
  47,762
  52,573
  57,602
  62,850
  68,317
  74,006
  79,924
  86,075
  92,467
  99,110
  106,013
  113,189
  120,650
Variable operating expenses, $m
  4,872
  6,598
  8,734
  11,323
  14,401
  17,995
  22,127
  26,810
  32,052
  37,852
  44,205
  51,104
  58,538
  66,494
  74,960
  83,925
  93,377
  103,310
  113,716
  124,594
  135,944
  147,769
  160,076
  172,875
  186,179
  200,006
  214,374
  229,306
  244,828
  260,967
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
  4,872
  6,598
  8,734
  11,323
  14,401
  17,995
  22,127
  26,810
  32,052
  37,852
  44,205
  51,104
  58,538
  66,494
  74,960
  83,925
  93,377
  103,310
  113,716
  124,594
  135,944
  147,769
  160,076
  172,875
  186,179
  200,006
  214,374
  229,306
  244,828
  260,967
Operating income, $m
  -2,620
  -3,548
  -4,696
  -6,088
  -7,743
  -9,675
  -11,897
  -14,415
  -17,234
  -20,352
  -23,768
  -27,478
  -31,474
  -35,752
  -40,304
  -45,125
  -50,207
  -55,547
  -61,143
  -66,992
  -73,094
  -79,452
  -86,069
  -92,951
  -100,105
  -107,539
  -115,264
  -123,293
  -131,639
  -140,316
EBITDA, $m
  -1,576
  -2,134
  -2,825
  -3,663
  -4,658
  -5,821
  -7,157
  -8,672
  -10,368
  -12,244
  -14,299
  -16,531
  -18,935
  -21,509
  -24,247
  -27,147
  -30,205
  -33,418
  -36,784
  -40,303
  -43,974
  -47,799
  -51,780
  -55,920
  -60,224
  -64,696
  -69,344
  -74,174
  -79,195
  -84,415
Interest expense (income), $m
  139
  141
  231
  344
  484
  654
  856
  1,092
  1,364
  1,671
  2,015
  2,396
  2,814
  3,267
  3,755
  4,277
  4,833
  5,422
  6,042
  6,694
  7,378
  8,092
  8,837
  9,614
  10,422
  11,262
  12,136
  13,044
  13,987
  14,968
  15,987
Earnings before tax, $m
  -2,761
  -3,779
  -5,040
  -6,573
  -8,397
  -10,532
  -12,990
  -15,779
  -18,905
  -22,367
  -26,164
  -30,291
  -34,741
  -39,507
  -44,581
  -49,957
  -55,629
  -61,590
  -67,837
  -74,369
  -81,186
  -88,289
  -95,683
  -103,373
  -111,367
  -119,675
  -128,308
  -137,280
  -146,606
  -156,303
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
  -2,761
  -3,779
  -5,040
  -6,573
  -8,397
  -10,532
  -12,990
  -15,779
  -18,905
  -22,367
  -26,164
  -30,291
  -34,741
  -39,507
  -44,581
  -49,957
  -55,629
  -61,590
  -67,837
  -74,369
  -81,186
  -88,289
  -95,683
  -103,373
  -111,367
  -119,675
  -128,308
  -137,280
  -146,606
  -156,303

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
  10,286
  13,929
  18,439
  23,904
  30,401
  37,988
  46,711
  56,598
  67,663
  79,907
  93,319
  107,883
  123,576
  140,372
  158,245
  177,169
  197,124
  218,092
  240,061
  263,025
  286,985
  311,948
  337,928
  364,948
  393,035
  422,223
  452,555
  484,078
  516,845
  550,915
Adjusted assets (=assets-cash), $m
  10,286
  13,929
  18,439
  23,904
  30,401
  37,988
  46,711
  56,598
  67,663
  79,907
  93,319
  107,883
  123,576
  140,372
  158,245
  177,169
  197,124
  218,092
  240,061
  263,025
  286,985
  311,948
  337,928
  364,948
  393,035
  422,223
  452,555
  484,078
  516,845
  550,915
Revenue / Adjusted assets
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
Average production assets, $m
  9,080
  12,296
  16,278
  21,102
  26,837
  33,535
  41,236
  49,964
  59,732
  70,541
  82,381
  95,238
  109,092
  123,919
  139,697
  156,403
  174,019
  192,529
  211,923
  232,196
  253,347
  275,384
  298,319
  322,172
  346,967
  372,734
  399,511
  427,339
  456,265
  486,342
Working capital, $m
  -505
  -683
  -905
  -1,173
  -1,491
  -1,864
  -2,291
  -2,776
  -3,319
  -3,920
  -4,578
  -5,292
  -6,062
  -6,886
  -7,763
  -8,691
  -9,670
  -10,699
  -11,776
  -12,903
  -14,078
  -15,303
  -16,577
  -17,903
  -19,281
  -20,713
  -22,201
  -23,747
  -25,354
  -27,026
Total debt, $m
  3,607
  5,377
  7,569
  10,225
  13,383
  17,070
  21,310
  26,115
  31,492
  37,443
  43,961
  51,039
  58,666
  66,829
  75,515
  84,712
  94,410
  104,601
  115,278
  126,438
  138,082
  150,214
  162,841
  175,973
  189,623
  203,808
  218,550
  233,870
  249,794
  266,353
Total liabilities, $m
  4,999
  6,769
  8,961
  11,617
  14,775
  18,462
  22,702
  27,507
  32,884
  38,835
  45,353
  52,431
  60,058
  68,221
  76,907
  86,104
  95,802
  105,993
  116,670
  127,830
  139,475
  151,607
  164,233
  177,365
  191,015
  205,201
  219,942
  235,262
  251,187
  267,745
Total equity, $m
  5,287
  7,160
  9,478
  12,287
  15,626
  19,526
  24,010
  29,091
  34,779
  41,072
  47,966
  55,452
  63,518
  72,151
  81,338
  91,065
  101,322
  112,099
  123,391
  135,195
  147,510
  160,341
  173,695
  187,583
  202,020
  217,023
  232,613
  248,816
  265,658
  283,170
Total liabilities and equity, $m
  10,286
  13,929
  18,439
  23,904
  30,401
  37,988
  46,712
  56,598
  67,663
  79,907
  93,319
  107,883
  123,576
  140,372
  158,245
  177,169
  197,124
  218,092
  240,061
  263,025
  286,985
  311,948
  337,928
  364,948
  393,035
  422,224
  452,555
  484,078
  516,845
  550,915
Debt-to-equity ratio
  0.680
  0.750
  0.800
  0.830
  0.860
  0.870
  0.890
  0.900
  0.910
  0.910
  0.920
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
Adjusted equity ratio
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,761
  -3,779
  -5,040
  -6,573
  -8,397
  -10,532
  -12,990
  -15,779
  -18,905
  -22,367
  -26,164
  -30,291
  -34,741
  -39,507
  -44,581
  -49,957
  -55,629
  -61,590
  -67,837
  -74,369
  -81,186
  -88,289
  -95,683
  -103,373
  -111,367
  -119,675
  -128,308
  -137,280
  -146,606
  -156,303
Depreciation, amort., depletion, $m
  1,044
  1,413
  1,871
  2,426
  3,085
  3,855
  4,740
  5,743
  6,866
  8,108
  9,469
  10,947
  12,539
  14,244
  16,057
  17,977
  20,002
  22,130
  24,359
  26,689
  29,120
  31,653
  34,290
  37,031
  39,881
  42,843
  45,921
  49,119
  52,444
  55,901
Funds from operations, $m
  -1,717
  -2,365
  -3,169
  -4,147
  -5,313
  -6,677
  -8,250
  -10,036
  -12,039
  -14,259
  -16,695
  -19,344
  -22,202
  -25,263
  -28,524
  -31,980
  -35,626
  -39,460
  -43,478
  -47,680
  -52,066
  -56,636
  -61,393
  -66,342
  -71,486
  -76,832
  -82,387
  -88,161
  -94,162
  -100,402
Change in working capital, $m
  -141
  -179
  -221
  -268
  -319
  -372
  -428
  -485
  -543
  -601
  -658
  -714
  -770
  -824
  -877
  -928
  -979
  -1,029
  -1,078
  -1,127
  -1,175
  -1,225
  -1,275
  -1,325
  -1,378
  -1,432
  -1,488
  -1,546
  -1,607
  -1,671
Cash from operations, $m
  -1,576
  -2,186
  -2,948
  -3,879
  -4,994
  -6,305
  -7,822
  -9,551
  -11,496
  -13,659
  -16,037
  -18,630
  -21,432
  -24,439
  -27,648
  -31,052
  -34,647
  -38,431
  -42,401
  -46,554
  -50,890
  -55,412
  -60,119
  -65,016
  -70,108
  -75,400
  -80,899
  -86,615
  -92,555
  -98,731
Maintenance CAPEX, $m
  -752
  -1,044
  -1,413
  -1,871
  -2,426
  -3,085
  -3,855
  -4,740
  -5,743
  -6,866
  -8,108
  -9,469
  -10,947
  -12,539
  -14,244
  -16,057
  -17,977
  -20,002
  -22,130
  -24,359
  -26,689
  -29,120
  -31,653
  -34,290
  -37,031
  -39,881
  -42,843
  -45,921
  -49,119
  -52,444
New CAPEX, $m
  -2,538
  -3,216
  -3,981
  -4,825
  -5,735
  -6,698
  -7,701
  -8,728
  -9,768
  -10,808
  -11,840
  -12,857
  -13,853
  -14,827
  -15,778
  -16,706
  -17,616
  -18,510
  -19,394
  -20,272
  -21,151
  -22,037
  -22,935
  -23,853
  -24,795
  -25,767
  -26,777
  -27,828
  -28,926
  -30,077
Cash from investing activities, $m
  -3,290
  -4,260
  -5,394
  -6,696
  -8,161
  -9,783
  -11,556
  -13,468
  -15,511
  -17,674
  -19,948
  -22,326
  -24,800
  -27,366
  -30,022
  -32,763
  -35,593
  -38,512
  -41,524
  -44,631
  -47,840
  -51,157
  -54,588
  -58,143
  -61,826
  -65,648
  -69,620
  -73,749
  -78,045
  -82,521
Free cash flow, $m
  -4,867
  -6,446
  -8,343
  -10,575
  -13,154
  -16,088
  -19,377
  -23,019
  -27,007
  -31,333
  -35,986
  -40,956
  -46,232
  -51,806
  -57,669
  -63,815
  -70,241
  -76,944
  -83,924
  -91,185
  -98,731
  -106,569
  -114,708
  -123,158
  -131,934
  -141,049
  -150,519
  -160,363
  -170,600
  -181,252
Issuance/(repayment) of debt, $m
  1,402
  1,771
  2,192
  2,656
  3,157
  3,688
  4,239
  4,805
  5,378
  5,950
  6,519
  7,078
  7,627
  8,163
  8,686
  9,197
  9,698
  10,190
  10,677
  11,160
  11,644
  12,132
  12,627
  13,132
  13,650
  14,186
  14,741
  15,320
  15,925
  16,558
Issuance/(repurchase) of shares, $m
  4,250
  5,651
  7,359
  9,382
  11,736
  14,432
  17,473
  20,861
  24,592
  28,661
  33,059
  37,777
  42,807
  48,140
  53,768
  59,685
  65,885
  72,367
  79,129
  86,173
  93,501
  101,120
  109,037
  117,261
  125,804
  134,678
  143,899
  153,483
  163,449
  173,816
Cash from financing (excl. dividends), $m  
  5,652
  7,422
  9,551
  12,038
  14,893
  18,120
  21,712
  25,666
  29,970
  34,611
  39,578
  44,855
  50,434
  56,303
  62,454
  68,882
  75,583
  82,557
  89,806
  97,333
  105,145
  113,252
  121,664
  130,393
  139,454
  148,864
  158,640
  168,803
  179,374
  190,374
Total cash flow (excl. dividends), $m
  785
  975
  1,207
  1,463
  1,739
  2,031
  2,335
  2,647
  2,962
  3,278
  3,591
  3,899
  4,202
  4,497
  4,785
  5,067
  5,343
  5,614
  5,882
  6,148
  6,415
  6,684
  6,956
  7,234
  7,520
  7,815
  8,121
  8,440
  8,773
  9,122
Retained Cash Flow (-), $m
  -4,250
  -5,651
  -7,359
  -9,382
  -11,736
  -14,432
  -17,473
  -20,861
  -24,592
  -28,661
  -33,059
  -37,777
  -42,807
  -48,140
  -53,768
  -59,685
  -65,885
  -72,367
  -79,129
  -86,173
  -93,501
  -101,120
  -109,037
  -117,261
  -125,804
  -134,678
  -143,899
  -153,483
  -163,449
  -173,816
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
  -3,465
  -4,676
  -6,151
  -7,919
  -9,997
  -12,400
  -15,138
  -18,214
  -21,630
  -25,383
  -29,467
  -33,878
  -38,606
  -43,643
  -48,983
  -54,618
  -60,543
  -66,753
  -73,247
  -80,025
  -87,087
  -94,437
  -102,081
  -110,027
  -118,284
  -126,863
  -135,778
  -145,043
  -154,676
  -164,694
Discount rate, %
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
  -3,262
  -4,122
  -5,044
  -6,001
  -6,952
  -7,852
  -8,658
  -9,328
  -9,828
  -10,132
  -10,226
  -10,108
  -9,786
  -9,282
  -8,625
  -7,850
  -6,997
  -6,106
  -5,214
  -4,355
  -3,556
  -2,837
  -2,209
  -1,677
  -1,241
  -894
  -626
  -426
  -281
  -180
Current shareholders' claim on cash, %
  38.5
  15.2
  6.2
  2.6
  1.1
  0.5
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

QEP Resources, Inc. is an independent crude oil and natural gas exploration and production company. The Company focuses on two regions of the United States: the Northern Region (primarily in North Dakota, Wyoming and Utah) and the Southern Region (primarily in Texas and Louisiana). The Company conducts exploration and production activities in North America's hydrocarbon resource plays. The Company has an inventory of developed and undeveloped drilling locations in the Permian Basin in western Texas, the Williston Basin in North Dakota, Haynesville/Cotton Valley in northwestern Louisiana, the Uinta Basin in eastern Utah and other properties in Wyoming, Utah and Colorado. It sells gas volumes to wholesale marketers, industrial users, local distribution companies and utilities. It sells oil and natural gas liquid (NGL) volumes to refiners, marketers and other companies.

FINANCIAL RATIOS  of  QEP Resources (QEP)

Valuation Ratios
P/E Ratio -2.1
Price to Sales 1.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow -4.8
Growth Rates
Sales Growth Rate -31.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.5%
Cap. Spend. - 3 Yr. Gr. Rate -5.5%
Financial Strength
Quick Ratio 37
Current Ratio 0
LT Debt to Equity 57.7%
Total Debt to Equity 58%
Interest Coverage -13
Management Effectiveness
Return On Assets -14.8%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital -21.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.8%
Return On Equity -33.4%
Return On Equity - 3 Yr. Avg. -5.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -68.5%
EBITDA Margin - 3 Yr. Avg. -4.5%
Operating Margin -116.4%
Oper. Margin - 3 Yr. Avg. -53.3%
Pre-Tax Margin -141.8%
Pre-Tax Margin - 3 Yr. Avg. -57.6%
Net Profit Margin -90.4%
Net Profit Margin - 3 Yr. Avg. -24.9%
Effective Tax Rate 36.3%
Eff/ Tax Rate - 3 Yr. Avg. 37%
Payout Ratio 0%

QEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the QEP stock intrinsic value calculation we used $1622.9 million for the last fiscal year's total revenue generated by QEP Resources. The default revenue input number comes from 0001 income statement of QEP Resources. 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 QEP stock valuation model: a) initial revenue growth rate of 38.8% 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 6.2%, whose default value for QEP is calculated based on our internal credit rating of QEP Resources, 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 QEP Resources.
    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 QEP stock the variable cost ratio is equal to 216.3%.

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 QEP 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 6.4% for QEP Resources.

Corporate tax rate of 27% is the nominal tax rate for QEP Resources. 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 QEP 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 QEP are equal to 403.1%.

Life of production assets of 8.7 years is the average useful life of capital assets used in QEP Resources 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 QEP is equal to -22.4%. 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 - $3797.9 million for QEP Resources - 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 237 million for QEP Resources 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 QEP Resources at the current share price and the inputted number of shares is $2.6 billion.

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COMPANY NEWS

▶ Why QEP Resources Inc's Stock Is Plunging Today   [Jul-26-18 11:41AM  Motley Fool]
▶ Stock Market News For Jul 11, 2018   [Jul-11-18 10:02AM  Zacks]
▶ Who Just Ramped Up Their Shares In QEP Resources And More?   [Jun-06-18 09:02AM  Simply Wall St.]
▶ Insiders Are Ramping Up Their Shareholdings In These Companies   [May-02-18 09:02AM  Simply Wall St.]
▶ 3 Stocks That Could Put Alibaba's Returns to Shame   [Apr-28-18 08:40AM  Motley Fool]
▶ QEP Resources, Inc. to Host Earnings Call   [Apr-26-18 07:30AM  ACCESSWIRE]
▶ QEP Resources: 1Q Earnings Snapshot   [Apr-25-18 05:22PM  Associated Press]
▶ Edited Transcript of QEP presentation 7-Mar-17 2:50pm GMT   [Apr-10-18 02:30PM  Thomson Reuters StreetEvents]
▶ QEP Resources tops Street 4Q forecasts   [05:03PM  Associated Press]
▶ Paul Singer's Top 5 New Buys   [Feb-20-18 02:08PM  GuruFocus.com]
▶ 4 Energy Stocks With Soaring Estimates Ahead of Q4 Earnings   [Jan-19-18 10:55AM  InvestorPlace]
▶ 7 Top Picks For 2018 And Their Corresponding ETFs   [Jan-05-18 01:37PM  Benzinga]
▶ Are Hedge Funds Turning Bullish on WTI Crude Oil?   [Dec-06-17 11:45AM  Market Realist]
▶ 9 Stocks Arnold Schneider Keeps Buying   [Nov-24-17 11:43AM  GuruFocus.com]
▶ Tellurian Leads Upstream Gainers This Week   [08:06AM  Market Realist]
▶ How US Distillate Inventory Levels Affect Oil Prices   [Nov-23-17 03:15PM  Market Realist]
▶ US Crude Oil Futures Hit July 2015 Highs   [Nov-22-17 10:45AM  Market Realist]
▶ QEP Resources Announces Early Results of Tender Offers   [Nov-21-17 08:55AM  GlobeNewswire]
▶ US Gasoline Inventories Are above the 5-Year Average   [Nov-16-17 11:55AM  Market Realist]
▶ QEP Resources Announces Pricing of Senior Notes   [Nov-06-17 04:05PM  GlobeNewswire]
▶ These 16 Stocks Look Ready to Reverse   [02:30PM  TheStreet.com]
▶ QEP Resources reports 3Q loss   [Oct-25-17 05:23PM  Associated Press]
▶ Surprise Build in US Gasoline Inventories: Impact on Prices   [Oct-13-17 05:06PM  Market Realist]
▶ Are Shorts Losing Interest in Energy?   [Oct-12-17 12:24PM  Barrons.com]

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