Intrinsic value of Superior Energy Services - SPN

Previous Close

$9.00

  Intrinsic Value

$0.82

stock screener

  Rating & Target

str. sell

-91%

Previous close

$9.00

 
Intrinsic value

$0.82

 
Up/down potential

-91%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SPN 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 2016), $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 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -47.75
  32.00
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
Revenue, $m
  1,450
  1,914
  2,475
  3,140
  3,915
  4,804
  5,810
  6,934
  8,177
  9,536
  11,010
  12,597
  14,294
  16,099
  18,009
  20,021
  22,135
  24,350
  26,664
  29,077
  31,592
  34,208
  36,929
  39,758
  42,697
  45,752
  48,926
  52,226
  55,657
  59,226
  62,941
Variable operating expenses, $m
 
  3,222
  4,143
  5,235
  6,507
  7,966
  9,618
  11,463
  13,503
  15,734
  18,154
  20,679
  23,465
  26,427
  29,562
  32,866
  36,337
  39,971
  43,770
  47,732
  51,860
  56,155
  60,622
  65,265
  70,090
  75,103
  80,314
  85,731
  91,364
  97,223
  103,321
Fixed operating expenses, $m
 
  22
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
Total operating expenses, $m
  2,480
  3,244
  4,165
  5,258
  6,530
  7,990
  9,642
  11,488
  13,529
  15,760
  18,181
  20,707
  23,493
  26,456
  29,592
  32,896
  36,368
  40,003
  43,803
  47,766
  51,894
  56,190
  60,658
  65,302
  70,128
  75,142
  80,354
  85,772
  91,406
  97,266
  103,365
Operating income, $m
  -1,030
  -1,330
  -1,690
  -2,117
  -2,615
  -3,186
  -3,832
  -4,554
  -5,352
  -6,224
  -7,171
  -8,109
  -9,199
  -10,357
  -11,583
  -12,875
  -14,232
  -15,654
  -17,139
  -18,688
  -20,302
  -21,982
  -23,728
  -25,544
  -27,430
  -29,391
  -31,428
  -33,546
  -35,749
  -38,040
  -40,424
EBITDA, $m
  -520
  -795
  -1,022
  -1,291
  -1,604
  -1,964
  -2,371
  -2,826
  -3,328
  -3,878
  -4,474
  -5,116
  -5,802
  -6,532
  -7,304
  -8,118
  -8,972
  -9,867
  -10,803
  -11,779
  -12,795
  -13,853
  -14,953
  -16,096
  -17,284
  -18,519
  -19,802
  -21,136
  -22,523
  -23,966
  -25,467
Interest expense (income), $m
  93
  82
  127
  180
  244
  318
  403
  499
  606
  725
  855
  996
  1,147
  1,310
  1,482
  1,665
  1,857
  2,059
  2,271
  2,492
  2,722
  2,963
  3,213
  3,473
  3,743
  4,024
  4,316
  4,619
  4,935
  5,263
  5,604
Earnings before tax, $m
  -1,100
  -1,412
  -1,817
  -2,297
  -2,859
  -3,504
  -4,235
  -5,053
  -5,958
  -6,949
  -8,026
  -9,105
  -10,346
  -11,667
  -13,065
  -14,540
  -16,089
  -17,713
  -19,409
  -21,180
  -23,025
  -24,944
  -26,941
  -29,017
  -31,173
  -33,415
  -35,744
  -38,166
  -40,683
  -43,302
  -46,027
Tax expense, $m
  -267
  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
  -887
  -1,412
  -1,817
  -2,297
  -2,859
  -3,504
  -4,235
  -5,053
  -5,958
  -6,949
  -8,026
  -9,105
  -10,346
  -11,667
  -13,065
  -14,540
  -16,089
  -17,713
  -19,409
  -21,180
  -23,025
  -24,944
  -26,941
  -29,017
  -31,173
  -33,415
  -35,744
  -38,166
  -40,683
  -43,302
  -46,027

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  188
  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
  3,470
  4,330
  5,599
  7,104
  8,857
  10,869
  13,145
  15,688
  18,499
  21,574
  24,909
  28,500
  32,340
  36,423
  40,743
  45,297
  50,080
  55,090
  60,325
  65,786
  71,475
  77,395
  83,551
  89,950
  96,600
  103,510
  110,692
  118,158
  125,921
  133,996
  142,400
Adjusted assets (=assets-cash), $m
  3,282
  4,330
  5,599
  7,104
  8,857
  10,869
  13,145
  15,688
  18,499
  21,574
  24,909
  28,500
  32,340
  36,423
  40,743
  45,297
  50,080
  55,090
  60,325
  65,786
  71,475
  77,395
  83,551
  89,950
  96,600
  103,510
  110,692
  118,158
  125,921
  133,996
  142,400
Revenue / Adjusted assets
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
Average production assets, $m
  2,034
  2,683
  3,470
  4,402
  5,489
  6,735
  8,146
  9,722
  11,463
  13,369
  15,436
  17,661
  20,040
  22,571
  25,248
  28,070
  31,034
  34,138
  37,382
  40,766
  44,292
  47,960
  51,775
  55,740
  59,861
  64,144
  68,594
  73,220
  78,031
  83,035
  88,243
Working capital, $m
  437
  329
  426
  540
  673
  826
  999
  1,193
  1,406
  1,640
  1,894
  2,167
  2,459
  2,769
  3,097
  3,444
  3,807
  4,188
  4,586
  5,001
  5,434
  5,884
  6,352
  6,838
  7,344
  7,869
  8,415
  8,983
  9,573
  10,187
  10,826
Total debt, $m
  1,285
  1,977
  2,814
  3,807
  4,965
  6,292
  7,795
  9,473
  11,328
  13,358
  15,559
  17,929
  20,463
  23,158
  26,010
  29,015
  32,172
  35,478
  38,933
  42,538
  46,292
  50,199
  54,262
  58,486
  62,875
  67,436
  72,176
  77,103
  82,227
  87,556
  93,103
Total liabilities, $m
  2,166
  2,858
  3,695
  4,688
  5,846
  7,173
  8,676
  10,354
  12,209
  14,239
  16,440
  18,810
  21,344
  24,039
  26,891
  29,896
  33,053
  36,359
  39,814
  43,419
  47,173
  51,080
  55,143
  59,367
  63,756
  68,317
  73,057
  77,984
  83,108
  88,437
  93,984
Total equity, $m
  1,304
  1,472
  1,904
  2,415
  3,011
  3,695
  4,469
  5,334
  6,290
  7,335
  8,469
  9,690
  10,995
  12,384
  13,853
  15,401
  17,027
  18,731
  20,510
  22,367
  24,301
  26,314
  28,407
  30,583
  32,844
  35,193
  37,635
  40,174
  42,813
  45,559
  48,416
Total liabilities and equity, $m
  3,470
  4,330
  5,599
  7,103
  8,857
  10,868
  13,145
  15,688
  18,499
  21,574
  24,909
  28,500
  32,339
  36,423
  40,744
  45,297
  50,080
  55,090
  60,324
  65,786
  71,474
  77,394
  83,550
  89,950
  96,600
  103,510
  110,692
  118,158
  125,921
  133,996
  142,400
Debt-to-equity ratio
  0.985
  1.340
  1.480
  1.580
  1.650
  1.700
  1.740
  1.780
  1.800
  1.820
  1.840
  1.850
  1.860
  1.870
  1.880
  1.880
  1.890
  1.890
  1.900
  1.900
  1.900
  1.910
  1.910
  1.910
  1.910
  1.920
  1.920
  1.920
  1.920
  1.920
  1.920
Adjusted equity ratio
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -887
  -1,412
  -1,817
  -2,297
  -2,859
  -3,504
  -4,235
  -5,053
  -5,958
  -6,949
  -8,026
  -9,105
  -10,346
  -11,667
  -13,065
  -14,540
  -16,089
  -17,713
  -19,409
  -21,180
  -23,025
  -24,944
  -26,941
  -29,017
  -31,173
  -33,415
  -35,744
  -38,166
  -40,683
  -43,302
  -46,027
Depreciation, amort., depletion, $m
  510
  535
  668
  826
  1,011
  1,222
  1,461
  1,728
  2,023
  2,346
  2,697
  2,993
  3,397
  3,826
  4,279
  4,758
  5,260
  5,786
  6,336
  6,910
  7,507
  8,129
  8,775
  9,448
  10,146
  10,872
  11,626
  12,410
  13,226
  14,074
  14,956
Funds from operations, $m
  37
  -877
  -1,148
  -1,471
  -1,848
  -2,282
  -2,774
  -3,325
  -3,935
  -4,603
  -5,329
  -6,112
  -6,949
  -7,841
  -8,786
  -9,782
  -10,829
  -11,926
  -13,073
  -14,270
  -15,518
  -16,816
  -18,166
  -19,569
  -21,027
  -22,543
  -24,118
  -25,755
  -27,458
  -29,228
  -31,071
Change in working capital, $m
  -24
  80
  96
  114
  133
  153
  173
  193
  214
  234
  254
  273
  292
  310
  328
  346
  364
  381
  398
  415
  432
  450
  468
  486
  506
  525
  546
  568
  590
  614
  639
Cash from operations, $m
  61
  -957
  -1,245
  -1,585
  -1,981
  -2,435
  -2,947
  -3,518
  -4,148
  -4,837
  -5,583
  -6,385
  -7,241
  -8,152
  -9,114
  -10,128
  -11,193
  -12,307
  -13,471
  -14,686
  -15,950
  -17,266
  -18,634
  -20,055
  -21,533
  -23,068
  -24,664
  -26,323
  -28,048
  -29,842
  -31,710
Maintenance CAPEX, $m
  0
  -345
  -455
  -588
  -746
  -930
  -1,142
  -1,381
  -1,648
  -1,943
  -2,266
  -2,616
  -2,993
  -3,397
  -3,826
  -4,279
  -4,758
  -5,260
  -5,786
  -6,336
  -6,910
  -7,507
  -8,129
  -8,775
  -9,448
  -10,146
  -10,872
  -11,626
  -12,410
  -13,226
  -14,074
New CAPEX, $m
  -81
  -650
  -786
  -932
  -1,087
  -1,247
  -1,411
  -1,576
  -1,742
  -1,906
  -2,067
  -2,225
  -2,379
  -2,530
  -2,678
  -2,822
  -2,964
  -3,104
  -3,244
  -3,384
  -3,525
  -3,668
  -3,815
  -3,965
  -4,121
  -4,282
  -4,450
  -4,626
  -4,811
  -5,004
  -5,208
Cash from investing activities, $m
  -74
  -995
  -1,241
  -1,520
  -1,833
  -2,177
  -2,553
  -2,957
  -3,390
  -3,849
  -4,333
  -4,841
  -5,372
  -5,927
  -6,504
  -7,101
  -7,722
  -8,364
  -9,030
  -9,720
  -10,435
  -11,175
  -11,944
  -12,740
  -13,569
  -14,428
  -15,322
  -16,252
  -17,221
  -18,230
  -19,282
Free cash flow, $m
  -13
  -1,951
  -2,486
  -3,106
  -3,814
  -4,612
  -5,499
  -6,475
  -7,538
  -8,685
  -9,915
  -11,226
  -12,614
  -14,079
  -15,617
  -17,230
  -18,914
  -20,672
  -22,502
  -24,406
  -26,385
  -28,441
  -30,577
  -32,796
  -35,101
  -37,497
  -39,986
  -42,575
  -45,269
  -48,072
  -50,991
Issuance/(repayment) of debt, $m
  -338
  692
  837
  993
  1,157
  1,328
  1,502
  1,679
  1,855
  2,030
  2,201
  2,370
  2,534
  2,695
  2,852
  3,006
  3,157
  3,306
  3,455
  3,604
  3,755
  3,907
  4,063
  4,223
  4,389
  4,561
  4,740
  4,927
  5,124
  5,330
  5,547
Issuance/(repurchase) of shares, $m
  0
  1,768
  2,248
  2,809
  3,455
  4,188
  5,009
  5,918
  6,913
  7,995
  9,160
  10,326
  11,652
  13,055
  14,534
  16,088
  17,715
  19,416
  21,189
  23,037
  24,959
  26,957
  29,034
  31,192
  33,434
  35,764
  38,186
  40,704
  43,323
  46,048
  48,885
Cash from financing (excl. dividends), $m  
  -343
  2,460
  3,085
  3,802
  4,612
  5,516
  6,511
  7,597
  8,768
  10,025
  11,361
  12,696
  14,186
  15,750
  17,386
  19,094
  20,872
  22,722
  24,644
  26,641
  28,714
  30,864
  33,097
  35,415
  37,823
  40,325
  42,926
  45,631
  48,447
  51,378
  54,432
Total cash flow (excl. dividends), $m
  -364
  509
  600
  696
  798
  904
  1,012
  1,121
  1,231
  1,339
  1,446
  1,470
  1,572
  1,671
  1,769
  1,864
  1,958
  2,051
  2,143
  2,235
  2,329
  2,423
  2,520
  2,619
  2,722
  2,829
  2,940
  3,056
  3,178
  3,305
  3,440
Retained Cash Flow (-), $m
  907
  -1,768
  -2,248
  -2,809
  -3,455
  -4,188
  -5,009
  -5,918
  -6,913
  -7,995
  -9,160
  -10,326
  -11,652
  -13,055
  -14,534
  -16,088
  -17,715
  -19,416
  -21,189
  -23,037
  -24,959
  -26,957
  -29,034
  -31,192
  -33,434
  -35,764
  -38,186
  -40,704
  -43,323
  -46,048
  -48,885
Prev. year cash balance distribution, $m
 
  188
  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
 
  -1,071
  -1,648
  -2,113
  -2,657
  -3,284
  -3,997
  -4,796
  -5,683
  -6,656
  -7,714
  -8,856
  -10,080
  -11,384
  -12,766
  -14,224
  -15,758
  -17,365
  -19,047
  -20,801
  -22,630
  -24,534
  -26,514
  -28,573
  -30,712
  -32,936
  -35,246
  -37,648
  -40,145
  -42,742
  -45,445
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
 
  -988
  -1,392
  -1,620
  -1,833
  -2,020
  -2,169
  -2,273
  -2,325
  -2,322
  -2,266
  -2,161
  -2,013
  -1,832
  -1,629
  -1,415
  -1,200
  -992
  -801
  -629
  -482
  -359
  -260
  -183
  -124
  -82
  -53
  -32
  -19
  -11
  -6
Current shareholders' claim on cash, %
  100
  39.9
  16.3
  6.8
  2.9
  1.2
  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

Superior Energy Services, Inc. provides a range of services and products to the energy industry related to the exploration, development and production of oil and natural gas. The Company's segments include Drilling Products and Services, which rents and sells bottom hole assemblies, drill pipe, tubulars and specialized equipment for use with onshore and offshore oil and gas well drilling, production and workover activities; Onshore Completion and Workover Services, which provides pressure pumping services used to complete and stimulate production in new oil and gas wells, fluid handling services and well servicing rigs that provide a range of well completion and maintenance services; Production Services, which provides intervention services, such as coiled tubing, cased hole and mechanical wireline, hydraulic workover and snubbing, and remedial pumping services, and Technical Solutions, which provides services requiring specialized engineering, manufacturing or project planning.

FINANCIAL RATIOS  of  Superior Energy Services (SPN)

Valuation Ratios
P/E Ratio -1.5
Price to Sales 0.9
Price to Book 1
Price to Tangible Book
Price to Cash Flow 22.4
Price to Free Cash Flow -68.3
Growth Rates
Sales Growth Rate -47.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -80%
Cap. Spend. - 3 Yr. Gr. Rate -33.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 98.5%
Total Debt to Equity 98.5%
Interest Coverage -11
Management Effectiveness
Return On Assets -19.5%
Ret/ On Assets - 3 Yr. Avg. -14.7%
Return On Total Capital -27.6%
Ret/ On T. Cap. - 3 Yr. Avg. -20.7%
Return On Equity -50.5%
Return On Equity - 3 Yr. Avg. -34.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 22.6%
Gross Margin - 3 Yr. Avg. 31.8%
EBITDA Margin -34.3%
EBITDA Margin - 3 Yr. Avg. -18.9%
Operating Margin -71%
Oper. Margin - 3 Yr. Avg. -43.1%
Pre-Tax Margin -75.9%
Pre-Tax Margin - 3 Yr. Avg. -46.8%
Net Profit Margin -61.2%
Net Profit Margin - 3 Yr. Avg. -40.8%
Effective Tax Rate 24.3%
Eff/ Tax Rate - 3 Yr. Avg. 24.3%
Payout Ratio -1.4%

SPN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPN stock intrinsic value calculation we used $1450 million for the last fiscal year's total revenue generated by Superior Energy Services. The default revenue input number comes from 2016 income statement of Superior Energy Services. 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 SPN stock valuation model: a) initial revenue growth rate of 32% 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 SPN is calculated based on our internal credit rating of Superior Energy Services, 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 Superior Energy Services.
    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 SPN stock the variable cost ratio is equal to 169.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $21 million in the base year in the intrinsic value calculation for SPN 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 Superior Energy Services.

Corporate tax rate of 27% is the nominal tax rate for Superior Energy Services. 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 SPN 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 SPN are equal to 140.2%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Superior Energy Services 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 SPN is equal to 17.2%. 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 - $1304 million for Superior Energy Services - 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 152.542 million for Superior Energy Services 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 Superior Energy Services at the current share price and the inputted number of shares is $1.4 billion.

RELATED COMPANIES Price Int.Val. Rating
HAL Halliburton 44.76 118.92  str.buy
SLB Schlumberger 63.30 91.05  buy
NOV National Oilwe 32.59 5.18  str.sell
TTI Tetra Technolo 4.05 0.49  str.sell
PES Pioneer Energy 2.20 0.90  str.sell

COMPANY NEWS

▶ Best Sectors to Sell Short in 2017   [Dec-07-17 12:21PM  Investopedia]
▶ Oilfield Services Gainers: BAS, SPN, BHGE, IO, and NOV   [Nov-08-17 02:40PM  Market Realist]
▶ WFT, FMSA, and SPN: Returns and Outlook after 3Q17   [Nov-07-17 10:30AM  Market Realist]
▶ Why Weatherfords 3Q17 Earnings Beat Estimates   [09:03AM  Market Realist]
▶ Superior Energy reports 3Q loss   [Oct-23-17 04:47PM  Associated Press]
▶ Gauging Short Interest in SPN, HAL, NOV, FMSA, and PTEN   [Aug-29-17 10:39AM  Market Realist]
▶ Why Superior Energy Services Free Cash Growth Beats Peers   [Aug-28-17 05:35PM  Market Realist]
▶ Analyzing Fairmount Santrols 2Q17 Segmental Performance   [Aug-04-17 03:05PM  Market Realist]
▶ Basic Energy Services 2Q17 Earnings Beat Estimates   [Aug-02-17 06:05PM  Market Realist]
▶ Superior Energy reports 2Q loss   [Jul-25-17 10:32PM  Associated Press]
▶ SESI, L.L.C. -- Moody's downgrades SESI to B2   [Jul-19-17 03:06PM  Moody's]
▶ What Affected Basic Energy Services Earnings in 1Q17?   [May-10-17 09:07AM  Market Realist]
▶ Weekly CEO Buys Highlight   [May-08-17 01:40PM  GuruFocus.com]
▶ Superior Energy reports 1Q loss   [Apr-25-17 04:46PM  Associated Press]
▶ Inside Superior Energys Stock Forecast for the Next 7 Days   [Apr-13-17 10:36AM  Market Realist]
▶ What Happened to Superior Energy in 4Q16?   [07:38AM  Market Realist]
▶ Superior Energys 1Q17 Earnings: What the Analysts Expect   [Apr-12-17 05:35PM  Market Realist]
▶ [$$] Three Energy Picks Post Earnings   [Mar-02-17 10:54AM  at Barrons.com]
▶ Superior Energy reports 4Q loss   [Feb-21-17 05:42PM  Associated Press]
Financial statements of SPN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.