Intrinsic value of BCE Inc. - BCE

Previous Close

$59.24

  Intrinsic Value

$36.45

stock screener

  Rating & Target

sell

-38%

Previous close

$59.24

 
Intrinsic value

$36.45

 
Up/down potential

-38%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BCE 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 2016), $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 53.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.95
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
Revenue, $m
  21,719
  23,174
  24,687
  26,262
  27,900
  29,607
  31,384
  33,237
  35,169
  37,185
  39,289
  41,486
  43,782
  46,181
  48,690
  51,314
  54,059
  56,932
  59,940
  63,090
  66,389
  69,846
  73,468
  77,265
  81,244
  85,417
  89,792
  94,380
  99,192
  104,240
  109,536
Variable operating expenses, $m
 
  18,132
  19,257
  20,428
  21,647
  22,916
  24,238
  25,616
  27,053
  28,552
  30,117
  30,856
  32,563
  34,347
  36,213
  38,165
  40,207
  42,343
  44,581
  46,924
  49,377
  51,948
  54,642
  57,466
  60,426
  63,529
  66,783
  70,196
  73,775
  77,529
  81,468
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
  16,594
  18,132
  19,257
  20,428
  21,647
  22,916
  24,238
  25,616
  27,053
  28,552
  30,117
  30,856
  32,563
  34,347
  36,213
  38,165
  40,207
  42,343
  44,581
  46,924
  49,377
  51,948
  54,642
  57,466
  60,426
  63,529
  66,783
  70,196
  73,775
  77,529
  81,468
Operating income, $m
  5,125
  5,042
  5,430
  5,834
  6,254
  6,691
  7,146
  7,621
  8,116
  8,633
  9,172
  10,631
  11,219
  11,834
  12,476
  13,149
  13,852
  14,589
  15,359
  16,166
  17,012
  17,898
  18,826
  19,799
  20,818
  21,888
  23,009
  24,184
  25,418
  26,711
  28,068
EBITDA, $m
  8,633
  8,924
  9,507
  10,113
  10,744
  11,401
  12,085
  12,799
  13,543
  14,319
  15,129
  15,975
  16,859
  17,783
  18,749
  19,760
  20,817
  21,923
  23,082
  24,295
  25,565
  26,896
  28,291
  29,753
  31,285
  32,892
  34,577
  36,344
  38,197
  40,141
  42,180
Interest expense (income), $m
  882
  865
  955
  1,048
  1,144
  1,245
  1,349
  1,458
  1,572
  1,690
  1,814
  1,943
  2,078
  2,219
  2,366
  2,520
  2,681
  2,849
  3,025
  3,210
  3,403
  3,605
  3,817
  4,039
  4,272
  4,516
  4,772
  5,041
  5,322
  5,617
  5,927
Earnings before tax, $m
  4,197
  4,177
  4,475
  4,786
  5,109
  5,446
  5,797
  6,163
  6,544
  6,942
  7,358
  8,687
  9,141
  9,615
  10,111
  10,629
  11,172
  11,740
  12,334
  12,957
  13,609
  14,292
  15,009
  15,759
  16,546
  17,371
  18,236
  19,144
  20,095
  21,094
  22,141
Tax expense, $m
  1,110
  1,128
  1,208
  1,292
  1,380
  1,470
  1,565
  1,664
  1,767
  1,874
  1,987
  2,346
  2,468
  2,596
  2,730
  2,870
  3,016
  3,170
  3,330
  3,498
  3,674
  3,859
  4,052
  4,255
  4,467
  4,690
  4,924
  5,169
  5,426
  5,695
  5,978
Net income, $m
  3,031
  3,049
  3,267
  3,494
  3,730
  3,976
  4,232
  4,499
  4,777
  5,068
  5,371
  6,342
  6,673
  7,019
  7,381
  7,759
  8,155
  8,570
  9,004
  9,458
  9,935
  10,433
  10,956
  11,504
  12,079
  12,681
  13,313
  13,975
  14,670
  15,398
  16,163

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  853
  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
  50,108
  52,549
  55,981
  59,550
  63,266
  67,135
  71,166
  75,367
  79,748
  84,319
  89,090
  94,073
  99,278
  104,719
  110,407
  116,357
  122,582
  129,098
  135,918
  143,061
  150,543
  158,381
  166,595
  175,203
  184,228
  193,689
  203,610
  214,014
  224,926
  236,372
  248,380
Adjusted assets (=assets-cash), $m
  49,255
  52,549
  55,981
  59,550
  63,266
  67,135
  71,166
  75,367
  79,748
  84,319
  89,090
  94,073
  99,278
  104,719
  110,407
  116,357
  122,582
  129,098
  135,918
  143,061
  150,543
  158,381
  166,595
  175,203
  184,228
  193,689
  203,610
  214,014
  224,926
  236,372
  248,380
Revenue / Adjusted assets
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
Average production assets, $m
  33,575
  35,827
  38,167
  40,601
  43,134
  45,772
  48,520
  51,384
  54,371
  57,488
  60,741
  64,138
  67,687
  71,396
  75,274
  79,331
  83,575
  88,017
  92,667
  97,537
  102,638
  107,982
  113,582
  119,451
  125,604
  132,054
  138,818
  145,912
  153,351
  161,155
  169,342
Working capital, $m
  -5,253
  -1,298
  -1,382
  -1,471
  -1,562
  -1,658
  -1,758
  -1,861
  -1,969
  -2,082
  -2,200
  -2,323
  -2,452
  -2,586
  -2,727
  -2,874
  -3,027
  -3,188
  -3,357
  -3,533
  -3,718
  -3,911
  -4,114
  -4,327
  -4,550
  -4,783
  -5,028
  -5,285
  -5,555
  -5,837
  -6,134
Total debt, $m
  21,459
  22,733
  24,943
  27,242
  29,634
  32,126
  34,722
  37,427
  40,249
  43,192
  46,265
  49,474
  52,826
  56,330
  59,993
  63,825
  67,834
  72,030
  76,423
  81,022
  85,841
  90,888
  96,178
  101,722
  107,534
  113,627
  120,016
  126,716
  133,743
  141,115
  148,848
Total liabilities, $m
  32,568
  33,842
  36,052
  38,351
  40,743
  43,235
  45,831
  48,536
  51,358
  54,301
  57,374
  60,583
  63,935
  67,439
  71,102
  74,934
  78,943
  83,139
  87,532
  92,131
  96,950
  101,997
  107,287
  112,831
  118,643
  124,736
  131,125
  137,825
  144,852
  152,224
  159,957
Total equity, $m
  17,540
  18,707
  19,929
  21,200
  22,523
  23,900
  25,335
  26,831
  28,390
  30,018
  31,716
  33,490
  35,343
  37,280
  39,305
  41,423
  43,639
  45,959
  48,387
  50,930
  53,593
  56,384
  59,308
  62,372
  65,585
  68,953
  72,485
  76,189
  80,074
  84,149
  88,423
Total liabilities and equity, $m
  50,108
  52,549
  55,981
  59,551
  63,266
  67,135
  71,166
  75,367
  79,748
  84,319
  89,090
  94,073
  99,278
  104,719
  110,407
  116,357
  122,582
  129,098
  135,919
  143,061
  150,543
  158,381
  166,595
  175,203
  184,228
  193,689
  203,610
  214,014
  224,926
  236,373
  248,380
Debt-to-equity ratio
  1.223
  1.220
  1.250
  1.280
  1.320
  1.340
  1.370
  1.390
  1.420
  1.440
  1.460
  1.480
  1.490
  1.510
  1.530
  1.540
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.660
  1.670
  1.680
  1.680
Adjusted equity ratio
  0.339
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,031
  3,049
  3,267
  3,494
  3,730
  3,976
  4,232
  4,499
  4,777
  5,068
  5,371
  6,342
  6,673
  7,019
  7,381
  7,759
  8,155
  8,570
  9,004
  9,458
  9,935
  10,433
  10,956
  11,504
  12,079
  12,681
  13,313
  13,975
  14,670
  15,398
  16,163
Depreciation, amort., depletion, $m
  3,508
  3,881
  4,076
  4,279
  4,490
  4,710
  4,939
  5,178
  5,427
  5,686
  5,958
  5,345
  5,641
  5,950
  6,273
  6,611
  6,965
  7,335
  7,722
  8,128
  8,553
  8,999
  9,465
  9,954
  10,467
  11,005
  11,568
  12,159
  12,779
  13,430
  14,112
Funds from operations, $m
  5,482
  6,931
  7,343
  7,773
  8,220
  8,686
  9,171
  9,677
  10,204
  10,754
  11,329
  11,687
  12,313
  12,969
  13,654
  14,370
  15,120
  15,905
  16,726
  17,587
  18,488
  19,432
  20,421
  21,458
  22,546
  23,686
  24,881
  26,134
  27,449
  28,828
  30,275
Change in working capital, $m
  -1,161
  -81
  -85
  -88
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -129
  -134
  -140
  -147
  -154
  -161
  -168
  -176
  -185
  -194
  -203
  -213
  -223
  -234
  -245
  -257
  -269
  -283
  -297
Cash from operations, $m
  6,643
  7,012
  7,428
  7,861
  8,312
  8,781
  9,270
  9,780
  10,312
  10,867
  11,446
  11,810
  12,442
  13,103
  13,794
  14,517
  15,274
  16,065
  16,895
  17,763
  18,673
  19,626
  20,624
  21,671
  22,769
  23,919
  25,126
  26,391
  27,718
  29,111
  30,571
Maintenance CAPEX, $m
  0
  -2,798
  -2,986
  -3,181
  -3,383
  -3,594
  -3,814
  -4,043
  -4,282
  -4,531
  -4,791
  -5,062
  -5,345
  -5,641
  -5,950
  -6,273
  -6,611
  -6,965
  -7,335
  -7,722
  -8,128
  -8,553
  -8,999
  -9,465
  -9,954
  -10,467
  -11,005
  -11,568
  -12,159
  -12,779
  -13,430
New CAPEX, $m
  -3,771
  -2,252
  -2,340
  -2,434
  -2,533
  -2,638
  -2,748
  -2,864
  -2,987
  -3,116
  -3,253
  -3,397
  -3,549
  -3,709
  -3,878
  -4,056
  -4,244
  -4,442
  -4,650
  -4,870
  -5,101
  -5,344
  -5,600
  -5,869
  -6,153
  -6,451
  -6,764
  -7,093
  -7,440
  -7,804
  -8,187
Cash from investing activities, $m
  -4,584
  -5,050
  -5,326
  -5,615
  -5,916
  -6,232
  -6,562
  -6,907
  -7,269
  -7,647
  -8,044
  -8,459
  -8,894
  -9,350
  -9,828
  -10,329
  -10,855
  -11,407
  -11,985
  -12,592
  -13,229
  -13,897
  -14,599
  -15,334
  -16,107
  -16,918
  -17,769
  -18,661
  -19,599
  -20,583
  -21,617
Free cash flow, $m
  2,059
  1,962
  2,103
  2,247
  2,395
  2,549
  2,708
  2,873
  3,043
  3,220
  3,403
  3,351
  3,548
  3,753
  3,966
  4,188
  4,419
  4,659
  4,909
  5,171
  5,444
  5,728
  6,026
  6,337
  6,662
  7,002
  7,357
  7,730
  8,119
  8,527
  8,955
Issuance/(repayment) of debt, $m
  719
  2,127
  2,210
  2,299
  2,393
  2,492
  2,596
  2,706
  2,821
  2,944
  3,073
  3,209
  3,352
  3,504
  3,663
  3,832
  4,009
  4,196
  4,393
  4,600
  4,818
  5,048
  5,290
  5,544
  5,812
  6,093
  6,389
  6,700
  7,027
  7,371
  7,733
Issuance/(repurchase) of shares, $m
  -7
  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 from financing (excl. dividends), $m  
  612
  2,127
  2,210
  2,299
  2,393
  2,492
  2,596
  2,706
  2,821
  2,944
  3,073
  3,209
  3,352
  3,504
  3,663
  3,832
  4,009
  4,196
  4,393
  4,600
  4,818
  5,048
  5,290
  5,544
  5,812
  6,093
  6,389
  6,700
  7,027
  7,371
  7,733
Total cash flow (excl. dividends), $m
  2,671
  4,089
  4,313
  4,546
  4,788
  5,041
  5,304
  5,578
  5,865
  6,163
  6,476
  6,560
  6,901
  7,257
  7,629
  8,019
  8,427
  8,855
  9,302
  9,771
  10,262
  10,776
  11,315
  11,881
  12,473
  13,095
  13,746
  14,430
  15,147
  15,899
  16,688
Retained Cash Flow (-), $m
  -517
  -1,167
  -1,222
  -1,271
  -1,323
  -1,377
  -1,435
  -1,496
  -1,560
  -1,627
  -1,699
  -1,774
  -1,853
  -1,937
  -2,025
  -2,118
  -2,216
  -2,319
  -2,428
  -2,543
  -2,663
  -2,790
  -2,924
  -3,065
  -3,213
  -3,368
  -3,532
  -3,704
  -3,885
  -4,075
  -4,275
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
 
  2,921
  3,091
  3,275
  3,465
  3,663
  3,869
  4,083
  4,305
  4,536
  4,777
  4,786
  5,047
  5,320
  5,604
  5,901
  6,211
  6,535
  6,874
  7,228
  7,598
  7,986
  8,391
  8,816
  9,261
  9,726
  10,215
  10,726
  11,262
  11,824
  12,413
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  2,735
  2,693
  2,636
  2,559
  2,463
  2,348
  2,217
  2,072
  1,916
  1,752
  1,507
  1,348
  1,190
  1,035
  887
  749
  622
  507
  406
  319
  245
  185
  136
  98
  68
  47
  31
  20
  12
  8
Current shareholders' claim on cash, %
  100
  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
  100.0

BCE Inc. is a communications company. The Company's segments include Bell Wireless, Bell Wireline and Bell Media. Its Bell Wireless segment provides wireless voice and data communications products and services to its residential, small and medium-sized business and large enterprise customers across Canada. Its Bell Wireline segment provides data, including Internet access and Internet protocol television (IPTV), local telephone, long distance, as well as other communications services and products to its residential, small and medium-sized business and large enterprise customers, primarily in Ontario, Quebec and the Atlantic provinces, while Satellite television (TV) service and connectivity to business customers are available nationally across Canada. Its Bell Media segment provides conventional, specialty and pay Television, digital media, and radio broadcasting services and out of home (OOH) advertising services to customers across Canada.

FINANCIAL RATIOS  of  BCE Inc. (BCE)

Valuation Ratios
P/E Ratio 17
Price to Sales 2.4
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 7.8
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4%
Cap. Spend. - 3 Yr. Gr. Rate 1.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 94.5%
Total Debt to Equity 122.3%
Interest Coverage 6
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 17.5%
Return On Equity - 3 Yr. Avg. 17%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 69.1%
Gross Margin - 3 Yr. Avg. 69.6%
EBITDA Margin 39.5%
EBITDA Margin - 3 Yr. Avg. 38.2%
Operating Margin 23.6%
Oper. Margin - 3 Yr. Avg. 22.2%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 17.9%
Net Profit Margin 14%
Net Profit Margin - 3 Yr. Avg. 12.8%
Effective Tax Rate 26.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.7%
Payout Ratio 80.2%

BCE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BCE stock intrinsic value calculation we used $21719 million for the last fiscal year's total revenue generated by BCE Inc.. The default revenue input number comes from 2016 income statement of BCE Inc.. 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 BCE stock valuation model: a) initial revenue growth rate of 6.7% 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 6.8%, whose default value for BCE is calculated based on our internal credit rating of BCE Inc., 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 BCE Inc..
    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 BCE stock the variable cost ratio is equal to 78.5%.

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 BCE 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 4.2% for BCE Inc..

Corporate tax rate of 27% is the nominal tax rate for BCE Inc.. 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 BCE 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 BCE are equal to 154.6%.

Life of production assets of 12 years is the average useful life of capital assets used in BCE Inc. 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 BCE is equal to -5.6%. 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 - $17540 million for BCE Inc. - 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 900.371 million for BCE Inc. 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 BCE Inc. at the current share price and the inputted number of shares is $53.3 billion.

RELATED COMPANIES Price Int.Val. Rating
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Financial statements of BCE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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