Laredo Petroleum, Inc., an independent energy company, engages in the acquisition, exploration, and development of oil and natural gas properties in the Permian Basin of West Texas, the United States.
The last earnings update was 47 days ago.
Discounted Cash Flow Calculation for DB:8LP 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.
DB:8LP 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.
Laredo Petroleum's share price is below the future cash flow value, and at a moderate discount (> 20%).
Laredo Petroleum'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
Laredo Petroleum's earnings available for a low price, and how does
this compare to other companies in the same industry?
Laredo Petroleum's earnings are expected to grow by 0.9% yearly, however this is not considered high growth (20% yearly).
Laredo Petroleum'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.
Laredo Petroleum'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
Oil and Gas
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
Laredo Petroleum's finances.
The net worth of a company is the difference between its assets and liabilities.
Laredo Petroleum's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Laredo Petroleum's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Laredo Petroleum'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 not covered by short term assets, assets are 0.2x 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. Randy A. Foutch founded Laredo Petroleum, Inc. in October 2006 and has been its Chairman of the Board and Chief Executive Officer since then. He founded and served in executive roles with Pogo Producing Company and Lariat Petroleum, Inc. Mr. Foutch has an experience in the oil and gas industry. Mr. Foutch is serving on the Board of Directors of Helmerich & Payne, Inc. since 2007 and served on the Board of Directors of Bill Barrett Corporation from 2006 to August 2011. From 2013 to June 2015, he served as a Director of Cheniere Energy, Inc. From 2006 to 2008, he served as a Director of MacroSolve, Inc. Mr. Foutch also serves on several nonprofit and private industry boards. Mr. Foutch is a Member of the National Petroleum Council, America’s Natural Gas Alliance and the Advisory Council of the Energy Institute at the University of Texas, Austin. He holds a Bachelor of Science in Geology from the University of Texas and a Master of Science in Petroleum Engineering from the University of Houston. As a result of Mr. Foutch's service as the Chief Executive Officer and in other executive positions and as a director of several oil and gas exploration and development companies, he provides valuable business, leadership and management experience and insights into many aspects of the oil, natural gas and contract drilling industries to the Company.
Randy's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
Randy's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Laredo Petroleum management team is less than 2 years, this suggests a new team.
Senior VP & COO
President & Director
Senior VP & CFO
Vice President of Investor Relations
Vice President of Midstream & Marketing
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Laredo Petroleum board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Laredo Petroleum, Inc., an independent energy company, engages in the acquisition, exploration, and development of oil and natural gas properties in the Permian Basin of West Texas, the United States. The company also provides midstream and marketing services comprising transportation and marketing of oil and natural gas; and natural gas lift systems, crude oil and natural gas gathering, and water delivery and takeaway services. As of December 31, 2018, it had assembled 120,617 net acres in the Permian Basin; and had total proved reserves of 238,167 thousand barrels of oil equivalent. The company was formerly known as Laredo Petroleum Holdings, Inc. and changed its name to Laredo Petroleum, Inc. in December 2013. Laredo Petroleum, Inc. was founded in 2006 and is headquartered in Tulsa, Oklahoma.
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