Stock Analysis on Net
Stock Analysis on Net

Pioneer Natural Resources Co. (NYSE:PXD)

This company has been moved to the archive! The financial data has not been updated since February 22, 2024.

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)

Pioneer Natural Resources Co., 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 16.68%
01 FCFE0 3,219
1 FCFE1 3,366 = 3,219 × (1 + 4.58%) 2,885
2 FCFE2 3,568 = 3,366 × (1 + 5.98%) 2,620
3 FCFE3 3,831 = 3,568 × (1 + 7.38%) 2,412
4 FCFE4 4,168 = 3,831 × (1 + 8.79%) 2,248
5 FCFE5 4,593 = 4,168 × (1 + 10.19%) 2,123
5 Terminal value (TV5) 77,970 = 4,593 × (1 + 10.19%) ÷ (16.68% – 10.19%) 36,049
Intrinsic value of Pioneer Natural Resources Co. common stock 48,338
 
Intrinsic value of Pioneer Natural Resources Co. common stock (per share) $206.90
Current share price $233.92

Based on: 10-K (reporting date: 2023-12-31).

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 4.79%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of Pioneer Natural Resources Co. common stock βPXD 1.32
 
Required rate of return on Pioneer Natural Resources Co. common stock3 rPXD 16.68%

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 rPXD = RF + βPXD [E(RM) – RF]
= 4.79% + 1.32 [13.79% – 4.79%]
= 16.68%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Pioneer Natural Resources Co., PRAT model

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Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Dividends declared 3,299 6,120 1,658 364 201
Net income (loss) attributable to common stockholders 4,894 7,845 2,118 (200) 756
Revenue from contracts with purchasers 19,374 24,384 17,870 7,024 9,671
Total assets 36,613 35,740 36,811 19,229 19,067
Equity 23,171 22,541 22,837 11,569 12,119
Financial Ratios
Retention rate1 0.33 0.22 0.22 — 0.73
Profit margin2 25.26% 32.17% 11.85% -2.85% 7.82%
Asset turnover3 0.53 0.68 0.49 0.37 0.51
Financial leverage4 1.58 1.59 1.61 1.66 1.57
Averages
Retention rate 0.37
Profit margin 14.85%
Asset turnover 0.51
Financial leverage 1.60
 
FCFE growth rate (g)5 4.58%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net income (loss) attributable to common stockholders – Dividends declared) ÷ Net income (loss) attributable to common stockholders
= (4,894 – 3,299) ÷ 4,894
= 0.33

2 Profit margin = 100 × Net income (loss) attributable to common stockholders ÷ Revenue from contracts with purchasers
= 100 × 4,894 ÷ 19,374
= 25.26%

3 Asset turnover = Revenue from contracts with purchasers ÷ Total assets
= 19,374 ÷ 36,613
= 0.53

4 Financial leverage = Total assets ÷ Equity
= 36,613 ÷ 23,171
= 1.58

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.37 × 14.85% × 0.51 × 1.60
= 4.58%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (54,649 × 16.68% – 3,219) ÷ (54,649 + 3,219)
= 10.19%

where:
Equity market value0 = current market value of Pioneer Natural Resources Co. common stock (US$ in millions)
FCFE0 = the last year Pioneer Natural Resources Co. free cash flow to equity (US$ in millions)
r = required rate of return on Pioneer Natural Resources Co. common stock

FCFE growth rate (g) forecast

Pioneer Natural Resources Co., H-model

Microsoft Excel
Year Value gt
1 g1 4.58%
2 g2 5.98%
3 g3 7.38%
4 g4 8.79%
5 and thereafter g5 10.19%

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

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 4.58% + (10.19% – 4.58%) × (2 – 1) ÷ (5 – 1)
= 5.98%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 4.58% + (10.19% – 4.58%) × (3 – 1) ÷ (5 – 1)
= 7.38%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 4.58% + (10.19% – 4.58%) × (4 – 1) ÷ (5 – 1)
= 8.79%