Intrinsic value of Rosehill Resources Inc. - ROSE

Previous Close

$1.41

  Intrinsic Value

$15.20

stock screener

  Rating & Target

str. buy

+978%

Previous close

$1.41

 
Intrinsic value

$15.20

 
Up/down potential

+978%

 
Rating

str. buy

We calculate the intrinsic value of ROSE 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 0.1

 

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
  122
  188
  281
  408
  575
  791
  1,061
  1,394
  1,793
  2,265
  2,813
  3,439
  4,145
  4,932
  5,799
  6,745
  7,770
  8,871
  10,047
  11,296
  12,616
  14,006
  15,465
  16,992
  18,587
  20,250
  21,982
  23,784
  25,658
  27,606
Variable operating expenses, $m
  70
  109
  163
  236
  333
  458
  615
  807
  1,038
  1,311
  1,629
  1,991
  2,400
  2,855
  3,357
  3,905
  4,499
  5,136
  5,817
  6,540
  7,305
  8,109
  8,954
  9,838
  10,762
  11,725
  12,728
  13,771
  14,856
  15,984
Fixed operating expenses, $m
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
  43
  44
  45
  46
Total operating expenses, $m
  95
  134
  189
  262
  360
  485
  643
  836
  1,067
  1,341
  1,659
  2,022
  2,432
  2,888
  3,390
  3,939
  4,534
  5,172
  5,853
  6,577
  7,343
  8,148
  8,994
  9,878
  10,803
  11,767
  12,771
  13,815
  14,901
  16,030
Operating income, $m
  27
  54
  93
  145
  215
  306
  419
  558
  726
  924
  1,154
  1,417
  1,713
  2,044
  2,408
  2,806
  3,236
  3,699
  4,193
  4,718
  5,273
  5,858
  6,471
  7,113
  7,784
  8,483
  9,211
  9,969
  10,757
  11,576
EBITDA, $m
  84
  143
  226
  339
  489
  681
  923
  1,220
  1,578
  2,000
  2,490
  3,050
  3,682
  4,386
  5,163
  6,010
  6,928
  7,914
  8,966
  10,085
  11,267
  12,511
  13,818
  15,185
  16,614
  18,103
  19,654
  21,268
  22,946
  24,690
Interest expense (income), $m
  0
  5
  17
  34
  59
  92
  135
  191
  262
  349
  453
  576
  719
  882
  1,066
  1,272
  1,498
  1,745
  2,012
  2,299
  2,606
  2,932
  3,276
  3,638
  4,019
  4,417
  4,833
  5,267
  5,719
  6,189
  6,678
Earnings before tax, $m
  22
  37
  58
  87
  124
  170
  227
  296
  377
  471
  578
  698
  831
  977
  1,136
  1,308
  1,492
  1,687
  1,894
  2,113
  2,342
  2,582
  2,833
  3,094
  3,366
  3,650
  3,944
  4,250
  4,568
  4,898
Tax expense, $m
  6
  10
  16
  23
  33
  46
  61
  80
  102
  127
  156
  188
  224
  264
  307
  353
  403
  456
  511
  570
  632
  697
  765
  835
  909
  985
  1,065
  1,148
  1,233
  1,323
Net income, $m
  16
  27
  43
  63
  90
  124
  166
  216
  275
  344
  422
  509
  607
  713
  830
  955
  1,089
  1,232
  1,383
  1,542
  1,710
  1,885
  2,068
  2,259
  2,458
  2,664
  2,879
  3,103
  3,335
  3,576

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
  765
  1,182
  1,767
  2,564
  3,617
  4,973
  6,675
  8,765
  11,278
  14,245
  17,690
  21,627
  26,068
  31,016
  36,469
  42,422
  48,867
  55,793
  63,188
  71,042
  79,345
  88,087
  97,263
  106,867
  116,899
  127,359
  138,253
  149,587
  161,372
  173,621
Adjusted assets (=assets-cash), $m
  765
  1,182
  1,767
  2,564
  3,617
  4,973
  6,675
  8,765
  11,278
  14,245
  17,690
  21,627
  26,068
  31,016
  36,469
  42,422
  48,867
  55,793
  63,188
  71,042
  79,345
  88,087
  97,263
  106,867
  116,899
  127,359
  138,253
  149,587
  161,372
  173,621
Revenue / Adjusted assets
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
  0.159
Average production assets, $m
  445
  687
  1,028
  1,491
  2,104
  2,892
  3,882
  5,098
  6,560
  8,285
  10,289
  12,579
  15,162
  18,040
  21,211
  24,674
  28,422
  32,450
  36,752
  41,320
  46,149
  51,233
  56,570
  62,156
  67,991
  74,075
  80,411
  87,003
  93,858
  100,982
Working capital, $m
  -135
  -209
  -312
  -453
  -640
  -879
  -1,180
  -1,550
  -1,994
  -2,519
  -3,128
  -3,824
  -4,609
  -5,484
  -6,448
  -7,501
  -8,640
  -9,865
  -11,172
  -12,561
  -14,029
  -15,575
  -17,197
  -18,895
  -20,669
  -22,518
  -24,444
  -26,448
  -28,532
  -30,698
Total debt, $m
  314
  634
  1,084
  1,696
  2,505
  3,546
  4,853
  6,458
  8,389
  10,667
  13,312
  16,337
  19,747
  23,547
  27,735
  32,307
  37,257
  42,576
  48,255
  54,287
  60,664
  67,378
  74,424
  81,801
  89,505
  97,539
  105,905
  114,610
  123,661
  133,068
Total liabilities, $m
  587
  907
  1,357
  1,969
  2,778
  3,819
  5,127
  6,731
  8,662
  10,941
  13,586
  16,610
  20,020
  23,820
  28,008
  32,580
  37,530
  42,849
  48,529
  54,561
  60,937
  67,651
  74,698
  82,074
  89,778
  97,812
  106,178
  114,883
  123,934
  133,341
Total equity, $m
  177
  274
  410
  595
  839
  1,154
  1,549
  2,033
  2,617
  3,305
  4,104
  5,018
  6,048
  7,196
  8,461
  9,842
  11,337
  12,944
  14,660
  16,482
  18,408
  20,436
  22,565
  24,793
  27,120
  29,547
  32,075
  34,704
  37,438
  40,280
Total liabilities and equity, $m
  764
  1,181
  1,767
  2,564
  3,617
  4,973
  6,676
  8,764
  11,279
  14,246
  17,690
  21,628
  26,068
  31,016
  36,469
  42,422
  48,867
  55,793
  63,189
  71,043
  79,345
  88,087
  97,263
  106,867
  116,898
  127,359
  138,253
  149,587
  161,372
  173,621
Debt-to-equity ratio
  1.770
  2.310
  2.640
  2.850
  2.980
  3.070
  3.130
  3.180
  3.210
  3.230
  3.240
  3.260
  3.270
  3.270
  3.280
  3.280
  3.290
  3.290
  3.290
  3.290
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
Adjusted equity ratio
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16
  27
  43
  63
  90
  124
  166
  216
  275
  344
  422
  509
  607
  713
  830
  955
  1,089
  1,232
  1,383
  1,542
  1,710
  1,885
  2,068
  2,259
  2,458
  2,664
  2,879
  3,103
  3,335
  3,576
Depreciation, amort., depletion, $m
  58
  89
  133
  194
  273
  376
  504
  662
  852
  1,076
  1,336
  1,634
  1,969
  2,343
  2,755
  3,204
  3,691
  4,214
  4,773
  5,366
  5,993
  6,654
  7,347
  8,072
  8,830
  9,620
  10,443
  11,299
  12,189
  13,115
Funds from operations, $m
  74
  116
  176
  257
  364
  500
  670
  878
  1,127
  1,420
  1,758
  2,143
  2,576
  3,056
  3,584
  4,159
  4,780
  5,446
  6,156
  6,908
  7,703
  8,538
  9,415
  10,331
  11,288
  12,284
  13,322
  14,402
  15,524
  16,690
Change in working capital, $m
  -51
  -74
  -104
  -141
  -186
  -240
  -301
  -369
  -444
  -525
  -609
  -696
  -785
  -875
  -964
  -1,053
  -1,139
  -1,225
  -1,308
  -1,389
  -1,468
  -1,546
  -1,622
  -1,698
  -1,774
  -1,850
  -1,926
  -2,004
  -2,084
  -2,166
Cash from operations, $m
  124
  190
  280
  398
  550
  740
  971
  1,248
  1,572
  1,944
  2,367
  2,839
  3,361
  3,931
  4,548
  5,212
  5,920
  6,671
  7,463
  8,297
  9,171
  10,084
  11,037
  12,029
  13,061
  14,134
  15,248
  16,406
  17,608
  18,856
Maintenance CAPEX, $m
  -36
  -58
  -89
  -133
  -194
  -273
  -376
  -504
  -662
  -852
  -1,076
  -1,336
  -1,634
  -1,969
  -2,343
  -2,755
  -3,204
  -3,691
  -4,214
  -4,773
  -5,366
  -5,993
  -6,654
  -7,347
  -8,072
  -8,830
  -9,620
  -10,443
  -11,299
  -12,189
New CAPEX, $m
  -167
  -242
  -341
  -463
  -613
  -788
  -990
  -1,215
  -1,462
  -1,726
  -2,003
  -2,290
  -2,583
  -2,878
  -3,172
  -3,463
  -3,748
  -4,028
  -4,301
  -4,568
  -4,829
  -5,085
  -5,337
  -5,586
  -5,835
  -6,084
  -6,336
  -6,592
  -6,854
  -7,124
Cash from investing activities, $m
  -203
  -300
  -430
  -596
  -807
  -1,061
  -1,366
  -1,719
  -2,124
  -2,578
  -3,079
  -3,626
  -4,217
  -4,847
  -5,515
  -6,218
  -6,952
  -7,719
  -8,515
  -9,341
  -10,195
  -11,078
  -11,991
  -12,933
  -13,907
  -14,914
  -15,956
  -17,035
  -18,153
  -19,313
Free cash flow, $m
  -79
  -110
  -150
  -199
  -256
  -322
  -395
  -472
  -552
  -633
  -712
  -787
  -856
  -916
  -966
  -1,005
  -1,033
  -1,049
  -1,052
  -1,044
  -1,024
  -994
  -953
  -904
  -846
  -780
  -708
  -629
  -546
  -458
Issuance/(repayment) of debt, $m
  221
  320
  450
  612
  809
  1,041
  1,307
  1,605
  1,930
  2,279
  2,645
  3,024
  3,411
  3,800
  4,188
  4,572
  4,949
  5,319
  5,680
  6,032
  6,376
  6,714
  7,047
  7,376
  7,704
  8,034
  8,366
  8,705
  9,051
  9,407
Issuance/(repurchase) of shares, $m
  51
  70
  93
  121
  154
  190
  229
  269
  308
  345
  377
  404
  424
  434
  436
  426
  406
  375
  333
  280
  217
  143
  61
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  272
  390
  543
  733
  963
  1,231
  1,536
  1,874
  2,238
  2,624
  3,022
  3,428
  3,835
  4,234
  4,624
  4,998
  5,355
  5,694
  6,013
  6,312
  6,593
  6,857
  7,108
  7,376
  7,704
  8,034
  8,366
  8,705
  9,051
  9,407
Total cash flow (excl. dividends), $m
  193
  280
  393
  534
  707
  909
  1,142
  1,402
  1,686
  1,990
  2,310
  2,641
  2,979
  3,319
  3,658
  3,993
  4,323
  4,645
  4,960
  5,268
  5,569
  5,864
  6,154
  6,472
  6,859
  7,254
  7,659
  8,075
  8,505
  8,950
Retained Cash Flow (-), $m
  -67
  -97
  -136
  -185
  -244
  -315
  -395
  -485
  -583
  -688
  -799
  -914
  -1,030
  -1,148
  -1,265
  -1,381
  -1,495
  -1,607
  -1,716
  -1,822
  -1,926
  -2,028
  -2,129
  -2,228
  -2,327
  -2,427
  -2,527
  -2,630
  -2,734
  -2,842
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
  127
  183
  257
  350
  462
  595
  747
  917
  1,103
  1,302
  1,511
  1,728
  1,948
  2,171
  2,392
  2,612
  2,827
  3,038
  3,245
  3,446
  3,642
  3,835
  4,025
  4,244
  4,531
  4,827
  5,131
  5,446
  5,771
  6,108
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  121
  167
  222
  285
  354
  425
  496
  561
  618
  663
  694
  710
  709
  694
  665
  624
  575
  519
  460
  400
  341
  285
  234
  190
  153
  121
  93
  70
  52
  37
Current shareholders' claim on cash, %
  60.3
  38.6
  26.0
  18.3
  13.3
  10.1
  7.8
  6.3
  5.2
  4.4
  3.7
  3.3
  2.9
  2.7
  2.4
  2.3
  2.2
  2.1
  2.0
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9
  1.9

Rosehill Resources Inc., formerly KLR Energy Acquisition Corp., is an oil and gas exploration company. The Company is focused on the Delaware Basin portion of the Permian Basin. It has nearly 5,000 net acres with approximately 80% held by production and drilling locations. Its drilling locations are located across ten distinct benches.

FINANCIAL RATIOS  of  Rosehill Resources Inc. (ROSE)

Valuation Ratios
P/E Ratio -14.4
Price to Sales 0
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow -14.4
Price to Free Cash Flow -14.4
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 0
LT Debt to Equity 84.6%
Total Debt to Equity 84.6%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.4%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital -1.7%
Ret/ On T. Cap. - 3 Yr. Avg. -0.6%
Return On Equity -3.1%
Return On Equity - 3 Yr. Avg. -1%
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%

ROSE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ROSE stock intrinsic value calculation we used $76 million for the last fiscal year's total revenue generated by Rosehill Resources Inc.. The default revenue input number comes from 0001 income statement of Rosehill Resources Inc.. 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 ROSE 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 4.5%, whose default value for ROSE is calculated based on our internal credit rating of Rosehill Resources Inc., 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 Rosehill Resources Inc..
    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 ROSE stock the variable cost ratio is equal to 57.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $24 million in the base year in the intrinsic value calculation for ROSE 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 Rosehill Resources Inc..

Corporate tax rate of 27% is the nominal tax rate for Rosehill Resources Inc.. 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 ROSE 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 ROSE are equal to 365.8%.

Life of production assets of 7.7 years is the average useful life of capital assets used in Rosehill Resources Inc. 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 ROSE is equal to -111.2%. 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 - $110.61 million for Rosehill Resources Inc. - 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 43.541 million for Rosehill Resources Inc. 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 Rosehill Resources Inc. at the current share price and the inputted number of shares is $0.1 billion.

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