Discounted Cash Flow Calculation for DB:2PG using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
Note: Free cash flow to equity valuations ignore the company's cash or debt.
DB:2PG DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
ProPetro Holding's share price is below the future cash flow value, and at a moderate discount (> 20%).
ProPetro Holding's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
ProPetro Holding's earnings available for a low price, and how does
this compare to other companies in the same industry?
ProPetro Holding's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
ProPetro Holding's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
ProPetro Holding's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
ProPetro Holding's finances.
The net worth of a company is the difference between its assets and liabilities.
ProPetro Holding is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
ProPetro Holding's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
ProPetro Holding's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 2.9x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Phillip A. Gobe serves as Chief Executive Officer at ProPetro Holding Corp. since March 16, 2020. He is Executive Chairman at ProPetro Holding Corp. and served as Principal Executive Officer since October 3, 2019. Mr. Gobe had been Chairman of the Board at ProPetro Holding Corp. since July 11, 2019. until October 3, 2019. Mr. Gobe served as a director of Pioneer Natural Resources Company (“Pioneer”) since July 2014.Mr. Gobe also serves as a director of Pantheon Resources plc and previously served as a director of Pioneer Southwest Energy Partners L.P. Mr. Gobe joined Energy Partners, Ltd. as Chief Operating Officer in December 2004 and became President in May 2005, and served in those capacities until his retirement in September 2007. Mr. Gobe also served as a director of Energy Partners, Ltd. from November 2005 until May 2008. Mr. Gobe served as Chief Operating Officer of Nuevo Energy Company from February 2001 until its acquisition by Plains Exploration & Production Company in May 2004. He held numerous operations and human resources positions with Vastar Resources, Inc. and Atlantic Richfield Company and its subsidiaries. Mr. Gobe’s extensive experience in the energy industry, including service as a director to public corporations in the industry, make him well suited to serves as Executive Chairman. Mr. Gobe has a Bachelor of Arts degree from the University of Texas and a Master of Business Administration degree from the University of Louisiana in Lafayette.
Insufficient data for Phillip to compare compensation growth.
Insufficient data for Phillip to establish whether their remuneration is reasonable compared to companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the ProPetro Holding management team is less than 2 years, this suggests a new team.
Chief Operating Officer
CEO & Executive Chairman
Interim Chief Financial Officer
Chief Accounting Officer
Chief Strategy & Administrative Officer
General Counsel & Corporate Secretary
Senior Vice President of Operations
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the ProPetro Holding board of directors is less than 3 years, this suggests a new board.
Board of Directors
CEO & Executive Chairman
Lead Independent Director
Who owns this company?
Recent Insider Trading
No 3 month open market individual insider trading information.
ProPetro Holding Corp., an oilfield services company, provides pressure pumping and other related services. The company offers hydraulic fracturing services; and a suite of well completion and production services, including cementing, acidizing, coiled tubing, flowback, surface air drilling, and drilling services. It serves the upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources in the Permian Basin. As of December 31, 2018, the company’s fleet comprised 20 hydraulic fracturing units with 905,000 hydraulic horsepower. ProPetro Holding Corp. was founded in 2007 and is headquartered in Midland, Texas.
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