Intrinsic value of Ultra Petroleum Corp. - UPL

Previous Close

$0.17

  Intrinsic Value

$2.39

stock screener

  Rating & Target

str. buy

+999%

Previous close

$0.17

 
Intrinsic value

$2.39

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of UPL 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 0.0

 

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, %
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.94
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
Revenue, $m
  1,012
  1,140
  1,276
  1,419
  1,569
  1,726
  1,890
  2,062
  2,240
  2,426
  2,619
  2,820
  3,029
  3,246
  3,471
  3,706
  3,949
  4,203
  4,466
  4,741
  5,027
  5,325
  5,636
  5,960
  6,299
  6,652
  7,021
  7,407
  7,810
  8,232
Variable operating expenses, $m
  561
  632
  707
  786
  869
  956
  1,047
  1,142
  1,241
  1,344
  1,451
  1,562
  1,678
  1,798
  1,923
  2,053
  2,188
  2,328
  2,474
  2,627
  2,785
  2,950
  3,122
  3,302
  3,489
  3,685
  3,890
  4,103
  4,327
  4,561
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
  561
  632
  707
  786
  869
  956
  1,047
  1,142
  1,241
  1,344
  1,451
  1,562
  1,678
  1,798
  1,923
  2,053
  2,188
  2,328
  2,474
  2,627
  2,785
  2,950
  3,122
  3,302
  3,489
  3,685
  3,890
  4,103
  4,327
  4,561
Operating income, $m
  452
  509
  569
  633
  700
  770
  843
  920
  999
  1,082
  1,168
  1,258
  1,351
  1,448
  1,548
  1,653
  1,761
  1,874
  1,992
  2,114
  2,242
  2,375
  2,514
  2,658
  2,809
  2,967
  3,131
  3,303
  3,483
  3,671
EBITDA, $m
  682
  768
  860
  956
  1,057
  1,163
  1,274
  1,389
  1,509
  1,635
  1,765
  1,900
  2,041
  2,187
  2,339
  2,496
  2,661
  2,831
  3,009
  3,194
  3,387
  3,588
  3,797
  4,016
  4,244
  4,482
  4,730
  4,990
  5,262
  5,546
Interest expense (income), $m
  0
  151
  82
  97
  113
  130
  148
  167
  186
  207
  228
  250
  273
  297
  321
  347
  374
  402
  431
  461
  492
  525
  559
  594
  631
  670
  710
  752
  796
  842
  890
Earnings before tax, $m
  301
  427
  472
  520
  570
  622
  677
  733
  793
  854
  918
  985
  1,054
  1,126
  1,201
  1,279
  1,360
  1,444
  1,531
  1,622
  1,717
  1,816
  1,919
  2,027
  2,139
  2,257
  2,379
  2,508
  2,642
  2,782
Tax expense, $m
  81
  115
  127
  140
  154
  168
  183
  198
  214
  231
  248
  266
  285
  304
  324
  345
  367
  390
  413
  438
  464
  490
  518
  547
  578
  609
  642
  677
  713
  751
Net income, $m
  220
  312
  345
  379
  416
  454
  494
  535
  579
  624
  670
  719
  770
  822
  877
  933
  992
  1,054
  1,118
  1,184
  1,254
  1,326
  1,401
  1,480
  1,562
  1,647
  1,737
  1,831
  1,928
  2,031

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
  1,966
  2,215
  2,478
  2,755
  3,047
  3,352
  3,671
  4,004
  4,350
  4,711
  5,086
  5,476
  5,881
  6,303
  6,740
  7,195
  7,668
  8,160
  8,673
  9,206
  9,761
  10,340
  10,944
  11,573
  12,230
  12,917
  13,633
  14,382
  15,166
  15,985
Adjusted assets (=assets-cash), $m
  1,966
  2,215
  2,478
  2,755
  3,047
  3,352
  3,671
  4,004
  4,350
  4,711
  5,086
  5,476
  5,881
  6,303
  6,740
  7,195
  7,668
  8,160
  8,673
  9,206
  9,761
  10,340
  10,944
  11,573
  12,230
  12,917
  13,633
  14,382
  15,166
  15,985
Revenue / Adjusted assets
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
Average production assets, $m
  1,614
  1,818
  2,034
  2,262
  2,501
  2,752
  3,013
  3,287
  3,571
  3,867
  4,175
  4,495
  4,828
  5,174
  5,533
  5,907
  6,295
  6,699
  7,119
  7,557
  8,013
  8,488
  8,984
  9,501
  10,040
  10,603
  11,192
  11,807
  12,450
  13,122
Working capital, $m
  -99
  -112
  -125
  -139
  -154
  -169
  -185
  -202
  -220
  -238
  -257
  -276
  -297
  -318
  -340
  -363
  -387
  -412
  -438
  -465
  -493
  -522
  -552
  -584
  -617
  -652
  -688
  -726
  -765
  -807
Total debt, $m
  1,203
  1,427
  1,664
  1,913
  2,175
  2,450
  2,737
  3,037
  3,349
  3,674
  4,011
  4,362
  4,727
  5,106
  5,500
  5,909
  6,335
  6,778
  7,239
  7,719
  8,219
  8,740
  9,283
  9,850
  10,441
  11,059
  11,704
  12,378
  13,083
  13,820
Total liabilities, $m
  1,769
  1,993
  2,230
  2,480
  2,742
  3,017
  3,304
  3,603
  3,915
  4,240
  4,578
  4,929
  5,293
  5,672
  6,066
  6,476
  6,902
  7,344
  7,805
  8,285
  8,785
  9,306
  9,849
  10,416
  11,007
  11,625
  12,270
  12,944
  13,649
  14,386
Total equity, $m
  197
  221
  248
  276
  305
  335
  367
  400
  435
  471
  509
  548
  588
  630
  674
  720
  767
  816
  867
  921
  976
  1,034
  1,094
  1,157
  1,223
  1,292
  1,363
  1,438
  1,517
  1,598
Total liabilities and equity, $m
  1,966
  2,214
  2,478
  2,756
  3,047
  3,352
  3,671
  4,003
  4,350
  4,711
  5,087
  5,477
  5,881
  6,302
  6,740
  7,196
  7,669
  8,160
  8,672
  9,206
  9,761
  10,340
  10,943
  11,573
  12,230
  12,917
  13,633
  14,382
  15,166
  15,984
Debt-to-equity ratio
  6.120
  6.440
  6.710
  6.940
  7.140
  7.310
  7.460
  7.590
  7.700
  7.800
  7.890
  7.970
  8.040
  8.100
  8.160
  8.210
  8.260
  8.310
  8.350
  8.380
  8.420
  8.450
  8.480
  8.510
  8.540
  8.560
  8.580
  8.610
  8.630
  8.650
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  220
  312
  345
  379
  416
  454
  494
  535
  579
  624
  670
  719
  770
  822
  877
  933
  992
  1,054
  1,118
  1,184
  1,254
  1,326
  1,401
  1,480
  1,562
  1,647
  1,737
  1,831
  1,928
  2,031
Depreciation, amort., depletion, $m
  231
  260
  291
  323
  357
  393
  430
  470
  510
  552
  596
  642
  690
  739
  790
  844
  899
  957
  1,017
  1,080
  1,145
  1,213
  1,283
  1,357
  1,434
  1,515
  1,599
  1,687
  1,779
  1,875
Funds from operations, $m
  450
  571
  635
  702
  773
  847
  924
  1,005
  1,089
  1,176
  1,267
  1,361
  1,459
  1,561
  1,667
  1,777
  1,892
  2,011
  2,135
  2,264
  2,398
  2,538
  2,685
  2,837
  2,996
  3,162
  3,336
  3,517
  3,707
  3,905
Change in working capital, $m
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -41
Cash from operations, $m
  462
  584
  648
  716
  788
  863
  940
  1,022
  1,106
  1,194
  1,286
  1,381
  1,480
  1,583
  1,689
  1,800
  1,916
  2,036
  2,161
  2,291
  2,426
  2,568
  2,715
  2,869
  3,029
  3,197
  3,372
  3,555
  3,746
  3,947
Maintenance CAPEX, $m
  -203
  -231
  -260
  -291
  -323
  -357
  -393
  -430
  -470
  -510
  -552
  -596
  -642
  -690
  -739
  -790
  -844
  -899
  -957
  -1,017
  -1,080
  -1,145
  -1,213
  -1,283
  -1,357
  -1,434
  -1,515
  -1,599
  -1,687
  -1,779
New CAPEX, $m
  -192
  -204
  -216
  -228
  -239
  -251
  -262
  -273
  -285
  -296
  -308
  -320
  -333
  -346
  -359
  -373
  -388
  -404
  -420
  -438
  -456
  -475
  -495
  -517
  -539
  -563
  -588
  -615
  -643
  -672
Cash from investing activities, $m
  -395
  -435
  -476
  -519
  -562
  -608
  -655
  -703
  -755
  -806
  -860
  -916
  -975
  -1,036
  -1,098
  -1,163
  -1,232
  -1,303
  -1,377
  -1,455
  -1,536
  -1,620
  -1,708
  -1,800
  -1,896
  -1,997
  -2,103
  -2,214
  -2,330
  -2,451
Free cash flow, $m
  67
  149
  173
  198
  226
  255
  286
  318
  352
  388
  425
  464
  505
  547
  591
  636
  683
  732
  783
  836
  891
  948
  1,007
  1,068
  1,133
  1,199
  1,269
  1,341
  1,417
  1,496
Issuance/(repayment) of debt, $m
  -1,013
  224
  237
  250
  262
  275
  287
  300
  312
  325
  338
  351
  365
  379
  394
  409
  426
  443
  461
  480
  500
  521
  543
  567
  591
  618
  645
  674
  705
  737
Issuance/(repurchase) of shares, $m
  1,026
  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 from financing (excl. dividends), $m  
  13
  224
  237
  250
  262
  275
  287
  300
  312
  325
  338
  351
  365
  379
  394
  409
  426
  443
  461
  480
  500
  521
  543
  567
  591
  618
  645
  674
  705
  737
Total cash flow (excl. dividends), $m
  80
  373
  410
  448
  488
  529
  573
  618
  664
  713
  763
  815
  870
  926
  985
  1,046
  1,109
  1,175
  1,244
  1,316
  1,391
  1,469
  1,550
  1,635
  1,724
  1,817
  1,914
  2,015
  2,122
  2,233
Retained Cash Flow (-), $m
  -1,245
  -25
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -82
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
  -1,165
  348
  383
  420
  459
  499
  541
  584
  630
  677
  726
  776
  829
  884
  941
  1,000
  1,062
  1,126
  1,193
  1,263
  1,335
  1,411
  1,490
  1,572
  1,658
  1,748
  1,842
  1,941
  2,043
  2,151
Discount rate, %
  13.80
  14.49
  15.21
  15.98
  16.77
  17.61
  18.49
  19.42
  20.39
  21.41
  22.48
  23.60
  24.78
  26.02
  27.32
  28.69
  30.12
  31.63
  33.21
  34.87
  36.62
  38.45
  40.37
  42.39
  44.51
  46.73
  49.07
  51.52
  54.10
  56.80
PV of cash for distribution, $m
  -1,024
  266
  251
  232
  211
  188
  165
  141
  119
  97
  78
  61
  47
  35
  25
  18
  12
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

FINANCIAL RATIOS  of  Ultra Petroleum Corp. (UPL)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

UPL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UPL stock intrinsic value calculation we used $892 million for the last fiscal year's total revenue generated by Ultra Petroleum Corp.. The default revenue input number comes from 0001 income statement of Ultra Petroleum Corp.. 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 UPL stock valuation model: a) initial revenue growth rate of 13.5% 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 13.8%, whose default value for UPL is calculated based on our internal credit rating of Ultra Petroleum Corp., 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 Ultra Petroleum Corp..
    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 UPL stock the variable cost ratio is equal to 55.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for UPL 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 6.8% for Ultra Petroleum Corp..

Corporate tax rate of 27% is the nominal tax rate for Ultra Petroleum Corp.. 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 UPL 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 UPL are equal to 159.4%.

Life of production assets of 7 years is the average useful life of capital assets used in Ultra Petroleum Corp. 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 UPL is equal to -9.8%. 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 - $-1048.622 million for Ultra Petroleum Corp. - 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 197.389 million for Ultra Petroleum Corp. 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 Ultra Petroleum Corp. at the current share price and the inputted number of shares is $0.0 billion.

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