Stock Analysis on Net
Stock Analysis on Net

Expand Energy Corp. (NASDAQ:EXE) 

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Expand Energy Corp., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 10.05%
01 FCFE0 -2
1 FCFE1 — = -2 × (1 + 0.00%) —
2 FCFE2 — = — × (1 + 0.00%) —
3 FCFE3 — = — × (1 + 0.00%) —
4 FCFE4 — = — × (1 + 0.00%) —
5 FCFE5 — = — × (1 + 0.00%) —
5 Terminal value (TV5) — = — × (1 + 0.00%) ÷ (10.05% – 0.00%) —
Intrinsic value of Expand Energy Corp. common stock —
 
Intrinsic value of Expand Energy Corp. common stock (per share) $—
Current share price $103.42

Based on: 10-K (reporting date: 2024-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.90%
Expected rate of return on market portfolio2 E(RM) 14.97%
Systematic risk of Expand Energy Corp. common stock βEXE 0.51
 
Required rate of return on Expand Energy Corp. common stock3 rEXE 10.05%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rEXE = RF + βEXE [E(RM) – RF]
= 4.90% + 0.51 [14.97% – 4.90%]
= 10.05%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Expand Energy Corp., PRAT model

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Average Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in millions)
Dividends on common stock 384 487 1,222 120
Net income (loss) (714) 2,419 4,936 6,328
Revenues 4,259 6,047 14,123 7,301
Total assets 27,894 14,376 15,468 11,009
Stockholders’ equity 17,565 10,729 9,124 5,671
Financial Ratios
Retention rate1 — 0.80 0.75 0.98
Profit margin2 -16.76% 40.00% 34.95% 86.67%
Asset turnover3 0.15 0.42 0.91 0.66
Financial leverage4 1.59 1.34 1.70 1.94
Averages
Retention rate 0.84
Profit margin 36.22%
Asset turnover 0.54
Financial leverage 1.64
 
FCFE growth rate (g)5 0.00%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

2024 Calculations

1 Retention rate = (Net income (loss) – Dividends on common stock) ÷ Net income (loss)
= (-714 – 384) ÷ -714
= —

2 Profit margin = 100 × Net income (loss) ÷ Revenues
= 100 × -714 ÷ 4,259
= -16.76%

3 Asset turnover = Revenues ÷ Total assets
= 4,259 ÷ 27,894
= 0.15

4 Financial leverage = Total assets ÷ Stockholders’ equity
= 27,894 ÷ 17,565
= 1.59

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.84 × 36.22% × 0.54 × 1.64
= 0.00%

FCFE growth rate (g) forecast

Expand Energy Corp., H-model

Microsoft Excel
Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%