Intrinsic value of QEP Resources - QEP

Previous Close

$12.15

  Intrinsic Value

$3.94

stock screener

  Rating & Target

str. sell

-68%

Previous close

$12.15

 
Intrinsic value

$3.94

 
Up/down potential

-68%

 
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 2017), $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 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  1,914
  2,231
  2,576
  2,947
  3,344
  3,766
  4,212
  4,683
  5,177
  5,695
  6,235
  6,800
  7,387
  7,999
  8,635
  9,296
  9,983
  10,697
  11,439
  12,210
  13,012
  13,847
  14,715
  15,619
  16,560
  17,542
  18,565
  19,633
  20,747
  21,910
Variable operating expenses, $m
  4,137
  4,824
  5,569
  6,372
  7,230
  8,142
  9,107
  10,124
  11,193
  12,312
  13,481
  14,701
  15,971
  17,294
  18,669
  20,098
  21,583
  23,127
  24,731
  26,399
  28,133
  29,936
  31,813
  33,768
  35,804
  37,925
  40,138
  42,446
  44,854
  47,370
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
  4,137
  4,824
  5,569
  6,372
  7,230
  8,142
  9,107
  10,124
  11,193
  12,312
  13,481
  14,701
  15,971
  17,294
  18,669
  20,098
  21,583
  23,127
  24,731
  26,399
  28,133
  29,936
  31,813
  33,768
  35,804
  37,925
  40,138
  42,446
  44,854
  47,370
Operating income, $m
  -2,224
  -2,593
  -2,993
  -3,425
  -3,886
  -4,376
  -4,895
  -5,441
  -6,016
  -6,617
  -7,246
  -7,901
  -8,584
  -9,295
  -10,034
  -10,802
  -11,600
  -12,430
  -13,292
  -14,188
  -15,120
  -16,090
  -17,099
  -18,149
  -19,243
  -20,384
  -21,573
  -22,813
  -24,108
  -25,460
EBITDA, $m
  -1,416
  -1,651
  -1,906
  -2,181
  -2,475
  -2,787
  -3,117
  -3,465
  -3,831
  -4,214
  -4,614
  -5,032
  -5,467
  -5,919
  -6,390
  -6,879
  -7,387
  -7,916
  -8,465
  -9,036
  -9,629
  -10,246
  -10,889
  -11,558
  -12,255
  -12,981
  -13,738
  -14,528
  -15,353
  -16,214
Interest expense (income), $m
  139
  141
  183
  228
  277
  329
  386
  446
  509
  576
  646
  720
  797
  877
  960
  1,047
  1,137
  1,231
  1,329
  1,430
  1,536
  1,645
  1,759
  1,877
  2,001
  2,129
  2,263
  2,402
  2,548
  2,699
  2,858
Earnings before tax, $m
  -2,365
  -2,776
  -3,221
  -3,701
  -4,215
  -4,762
  -5,340
  -5,951
  -6,592
  -7,263
  -7,965
  -8,698
  -9,461
  -10,255
  -11,081
  -11,939
  -12,832
  -13,759
  -14,722
  -15,724
  -16,765
  -17,849
  -18,976
  -20,150
  -21,372
  -22,646
  -23,975
  -25,361
  -26,807
  -28,317
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
  -2,365
  -2,776
  -3,221
  -3,701
  -4,215
  -4,762
  -5,340
  -5,951
  -6,592
  -7,263
  -7,965
  -8,698
  -9,461
  -10,255
  -11,081
  -11,939
  -12,832
  -13,759
  -14,722
  -15,724
  -16,765
  -17,849
  -18,976
  -20,150
  -21,372
  -22,646
  -23,975
  -25,361
  -26,807
  -28,317

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
  8,738
  10,189
  11,763
  13,457
  15,269
  17,196
  19,234
  21,383
  23,639
  26,003
  28,472
  31,049
  33,732
  36,525
  39,429
  42,448
  45,585
  48,845
  52,233
  55,755
  59,417
  63,226
  67,191
  71,318
  75,618
  80,099
  84,772
  89,647
  94,734
  100,046
Adjusted assets (=assets-cash), $m
  8,738
  10,189
  11,763
  13,457
  15,269
  17,196
  19,234
  21,383
  23,639
  26,003
  28,472
  31,049
  33,732
  36,525
  39,429
  42,448
  45,585
  48,845
  52,233
  55,755
  59,417
  63,226
  67,191
  71,318
  75,618
  80,099
  84,772
  89,647
  94,734
  100,046
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
  8,075
  9,416
  10,871
  12,437
  14,111
  15,892
  17,776
  19,761
  21,847
  24,031
  26,314
  28,694
  31,175
  33,756
  36,440
  39,229
  42,129
  45,141
  48,272
  51,527
  54,912
  58,432
  62,096
  65,911
  69,885
  74,026
  78,345
  82,850
  87,551
  92,461
Working capital, $m
  -434
  -507
  -585
  -669
  -759
  -855
  -956
  -1,063
  -1,175
  -1,293
  -1,415
  -1,544
  -1,677
  -1,816
  -1,960
  -2,110
  -2,266
  -2,428
  -2,597
  -2,772
  -2,954
  -3,143
  -3,340
  -3,545
  -3,759
  -3,982
  -4,214
  -4,457
  -4,710
  -4,974
Total debt, $m
  2,854
  3,560
  4,325
  5,148
  6,029
  6,965
  7,956
  9,000
  10,097
  11,245
  12,446
  13,698
  15,002
  16,359
  17,771
  19,238
  20,762
  22,347
  23,993
  25,705
  27,485
  29,336
  31,263
  33,269
  35,358
  37,536
  39,807
  42,176
  44,649
  47,231
Total liabilities, $m
  4,246
  4,952
  5,717
  6,540
  7,421
  8,357
  9,348
  10,392
  11,489
  12,637
  13,838
  15,090
  16,394
  17,751
  19,163
  20,630
  22,154
  23,739
  25,385
  27,097
  28,877
  30,728
  32,655
  34,661
  36,750
  38,928
  41,199
  43,568
  46,041
  48,623
Total equity, $m
  4,491
  5,237
  6,046
  6,917
  7,848
  8,839
  9,886
  10,991
  12,151
  13,365
  14,635
  15,959
  17,338
  18,774
  20,267
  21,818
  23,431
  25,106
  26,848
  28,658
  30,540
  32,498
  34,536
  36,658
  38,868
  41,171
  43,573
  46,078
  48,693
  51,424
Total liabilities and equity, $m
  8,737
  10,189
  11,763
  13,457
  15,269
  17,196
  19,234
  21,383
  23,640
  26,002
  28,473
  31,049
  33,732
  36,525
  39,430
  42,448
  45,585
  48,845
  52,233
  55,755
  59,417
  63,226
  67,191
  71,319
  75,618
  80,099
  84,772
  89,646
  94,734
  100,047
Debt-to-equity ratio
  0.640
  0.680
  0.720
  0.740
  0.770
  0.790
  0.800
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.910
  0.920
  0.920
  0.920
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
  -2,365
  -2,776
  -3,221
  -3,701
  -4,215
  -4,762
  -5,340
  -5,951
  -6,592
  -7,263
  -7,965
  -8,698
  -9,461
  -10,255
  -11,081
  -11,939
  -12,832
  -13,759
  -14,722
  -15,724
  -16,765
  -17,849
  -18,976
  -20,150
  -21,372
  -22,646
  -23,975
  -25,361
  -26,807
  -28,317
Depreciation, amort., depletion, $m
  808
  942
  1,087
  1,244
  1,411
  1,589
  1,778
  1,976
  2,185
  2,403
  2,631
  2,869
  3,117
  3,376
  3,644
  3,923
  4,213
  4,514
  4,827
  5,153
  5,491
  5,843
  6,210
  6,591
  6,988
  7,403
  7,834
  8,285
  8,755
  9,246
Funds from operations, $m
  -1,557
  -1,834
  -2,134
  -2,458
  -2,804
  -3,173
  -3,563
  -3,974
  -4,407
  -4,860
  -5,334
  -5,828
  -6,343
  -6,879
  -7,437
  -8,016
  -8,619
  -9,245
  -9,895
  -10,571
  -11,274
  -12,005
  -12,766
  -13,559
  -14,384
  -15,244
  -16,140
  -17,076
  -18,052
  -19,071
Change in working capital, $m
  -66
  -72
  -78
  -84
  -90
  -96
  -101
  -107
  -112
  -117
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -162
  -168
  -175
  -182
  -189
  -197
  -205
  -214
  -223
  -232
  -242
  -253
  -264
Cash from operations, $m
  -1,491
  -1,762
  -2,056
  -2,373
  -2,714
  -3,077
  -3,462
  -3,868
  -4,295
  -4,743
  -5,211
  -5,700
  -6,210
  -6,741
  -7,292
  -7,866
  -8,463
  -9,082
  -9,727
  -10,396
  -11,092
  -11,816
  -12,569
  -13,353
  -14,170
  -15,021
  -15,908
  -16,833
  -17,799
  -18,807
Maintenance CAPEX, $m
  -685
  -808
  -942
  -1,087
  -1,244
  -1,411
  -1,589
  -1,778
  -1,976
  -2,185
  -2,403
  -2,631
  -2,869
  -3,117
  -3,376
  -3,644
  -3,923
  -4,213
  -4,514
  -4,827
  -5,153
  -5,491
  -5,843
  -6,210
  -6,591
  -6,988
  -7,403
  -7,834
  -8,285
  -8,755
New CAPEX, $m
  -1,227
  -1,341
  -1,455
  -1,566
  -1,674
  -1,780
  -1,884
  -1,986
  -2,085
  -2,184
  -2,282
  -2,381
  -2,480
  -2,581
  -2,684
  -2,790
  -2,899
  -3,013
  -3,131
  -3,255
  -3,384
  -3,521
  -3,664
  -3,815
  -3,974
  -4,141
  -4,318
  -4,505
  -4,702
  -4,910
Cash from investing activities, $m
  -1,912
  -2,149
  -2,397
  -2,653
  -2,918
  -3,191
  -3,473
  -3,764
  -4,061
  -4,369
  -4,685
  -5,012
  -5,349
  -5,698
  -6,060
  -6,434
  -6,822
  -7,226
  -7,645
  -8,082
  -8,537
  -9,012
  -9,507
  -10,025
  -10,565
  -11,129
  -11,721
  -12,339
  -12,987
  -13,665
Free cash flow, $m
  -3,403
  -3,911
  -4,452
  -5,026
  -5,632
  -6,268
  -6,935
  -7,631
  -8,356
  -9,112
  -9,897
  -10,712
  -11,559
  -12,439
  -13,352
  -14,300
  -15,285
  -16,308
  -17,372
  -18,478
  -19,629
  -20,828
  -22,076
  -23,378
  -24,735
  -26,151
  -27,629
  -29,173
  -30,786
  -32,472
Issuance/(repayment) of debt, $m
  650
  705
  765
  823
  881
  936
  991
  1,044
  1,097
  1,149
  1,200
  1,252
  1,304
  1,357
  1,411
  1,467
  1,525
  1,584
  1,647
  1,712
  1,780
  1,851
  1,927
  2,006
  2,090
  2,178
  2,271
  2,369
  2,473
  2,582
Issuance/(repurchase) of shares, $m
  3,058
  3,521
  4,030
  4,572
  5,146
  5,752
  6,388
  7,055
  7,752
  8,478
  9,235
  10,022
  10,840
  11,690
  12,574
  13,491
  14,444
  15,434
  16,464
  17,534
  18,648
  19,807
  21,014
  22,271
  23,582
  24,950
  26,377
  27,866
  29,422
  31,048
Cash from financing (excl. dividends), $m  
  3,708
  4,226
  4,795
  5,395
  6,027
  6,688
  7,379
  8,099
  8,849
  9,627
  10,435
  11,274
  12,144
  13,047
  13,985
  14,958
  15,969
  17,018
  18,111
  19,246
  20,428
  21,658
  22,941
  24,277
  25,672
  27,128
  28,648
  30,235
  31,895
  33,630
Total cash flow (excl. dividends), $m
  304
  316
  343
  369
  395
  420
  444
  468
  492
  515
  538
  561
  585
  609
  633
  658
  684
  711
  738
  768
  798
  830
  864
  900
  937
  977
  1,018
  1,062
  1,109
  1,158
Retained Cash Flow (-), $m
  -3,058
  -3,521
  -4,030
  -4,572
  -5,146
  -5,752
  -6,388
  -7,055
  -7,752
  -8,478
  -9,235
  -10,022
  -10,840
  -11,690
  -12,574
  -13,491
  -14,444
  -15,434
  -16,464
  -17,534
  -18,648
  -19,807
  -21,014
  -22,271
  -23,582
  -24,950
  -26,377
  -27,866
  -29,422
  -31,048
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
  23
  27
  31
  36
  41
  47
  53
  59
  66
  72
  80
  87
  95
  103
  112
  121
  130
  140
  150
  160
  171
  182
  194
  206
  219
  232
  246
  260
  275
  290
Cash available for distribution, $m
  -2,753
  -3,205
  -3,687
  -4,203
  -4,752
  -5,332
  -5,944
  -6,587
  -7,260
  -7,963
  -8,696
  -9,460
  -10,255
  -11,082
  -11,941
  -12,833
  -13,760
  -14,724
  -15,725
  -16,767
  -17,850
  -18,976
  -20,150
  -21,372
  -22,645
  -23,973
  -25,358
  -26,804
  -28,313
  -29,890
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  -2,600
  -2,842
  -3,052
  -3,227
  -3,361
  -3,449
  -3,489
  -3,480
  -3,422
  -3,317
  -3,169
  -2,985
  -2,769
  -2,531
  -2,277
  -2,015
  -1,755
  -1,501
  -1,262
  -1,041
  -842
  -667
  -517
  -393
  -291
  -210
  -148
  -102
  -68
  -44
Current shareholders' claim on cash, %
  48.9
  24.3
  12.1
  6.1
  3.1
  1.6
  0.8
  0.4
  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
  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 -2.3
Price to Sales 2.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 4.4
Price to Free Cash Flow -5.4
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 $1623 million for the last fiscal year's total revenue generated by QEP Resources. The default revenue input number comes from 2017 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 17.9% 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 5.9%, 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 216.2%.

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 1.4%.

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 422%.

Life of production assets of 10 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 -22.7%. 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 - $3798 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 241 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 $2.9 billion.

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COMPANY NEWS

▶ 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]
▶ US Crude Oil Production Hit July 2015 High   [Oct-05-17 10:59AM  Market Realist]
▶ Here's Why QEP Resources Inc.'s Stock Is Sinking Today   [Sep-26-17 03:45PM  Motley Fool]
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