Intrinsic value of Corus Entertainment Inc. Class B Non-Vot - CJR-B

Previous Close

$11.54

  Intrinsic Value

$14.84

stock screener

  Rating & Target

buy

+29%

Previous close

$11.54

 
Intrinsic value

$14.84

 
Up/down potential

+29%

 
Rating

buy

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

We calculate the intrinsic value of CJR-B 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 2017), $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 2.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  43.38
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,679
  1,713
  1,752
  1,797
  1,848
  1,904
  1,965
  2,032
  2,104
  2,182
  2,266
  2,356
  2,451
  2,553
  2,661
  2,776
  2,898
  3,027
  3,163
  3,307
  3,459
  3,619
  3,788
  3,966
  4,154
  4,352
  4,560
  4,779
  5,010
  5,252
  5,508
Variable operating expenses, $m
 
  1,297
  1,321
  1,349
  1,380
  1,415
  1,453
  1,494
  1,539
  1,587
  1,639
  1,455
  1,514
  1,577
  1,644
  1,715
  1,790
  1,870
  1,954
  2,043
  2,137
  2,236
  2,340
  2,450
  2,566
  2,688
  2,817
  2,952
  3,095
  3,245
  3,402
Fixed operating expenses, $m
 
  100
  103
  106
  108
  111
  114
  116
  119
  122
  125
  129
  132
  135
  138
  142
  145
  149
  153
  157
  161
  165
  169
  173
  177
  182
  186
  191
  196
  201
  206
Total operating expenses, $m
  1,372
  1,397
  1,424
  1,455
  1,488
  1,526
  1,567
  1,610
  1,658
  1,709
  1,764
  1,584
  1,646
  1,712
  1,782
  1,857
  1,935
  2,019
  2,107
  2,200
  2,298
  2,401
  2,509
  2,623
  2,743
  2,870
  3,003
  3,143
  3,291
  3,446
  3,608
Operating income, $m
  307
  315
  328
  343
  359
  378
  399
  421
  446
  473
  502
  772
  805
  841
  879
  919
  962
  1,008
  1,056
  1,107
  1,161
  1,219
  1,279
  1,343
  1,411
  1,482
  1,557
  1,636
  1,719
  1,807
  1,900
EBITDA, $m
  934
  899
  919
  943
  970
  1,000
  1,033
  1,069
  1,108
  1,151
  1,196
  1,246
  1,298
  1,354
  1,414
  1,477
  1,545
  1,616
  1,692
  1,772
  1,857
  1,946
  2,041
  2,141
  2,246
  2,357
  2,474
  2,597
  2,727
  2,863
  3,007
Interest expense (income), $m
  106
  98
  101
  105
  110
  115
  121
  127
  134
  142
  150
  158
  168
  177
  188
  199
  211
  223
  237
  251
  266
  281
  298
  315
  334
  353
  373
  395
  417
  441
  466
Earnings before tax, $m
  307
  217
  227
  237
  249
  263
  278
  294
  312
  331
  352
  614
  638
  663
  691
  720
  751
  784
  819
  857
  896
  937
  981
  1,028
  1,077
  1,129
  1,183
  1,241
  1,302
  1,366
  1,434
Tax expense, $m
  83
  59
  61
  64
  67
  71
  75
  79
  84
  89
  95
  166
  172
  179
  187
  194
  203
  212
  221
  231
  242
  253
  265
  278
  291
  305
  320
  335
  352
  369
  387
Net income, $m
  192
  159
  165
  173
  182
  192
  203
  215
  228
  242
  257
  448
  465
  484
  504
  526
  548
  573
  598
  625
  654
  684
  716
  750
  786
  824
  864
  906
  950
  997
  1,046

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  94
  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
  6,068
  6,095
  6,235
  6,395
  6,575
  6,774
  6,993
  7,231
  7,489
  7,767
  8,065
  8,384
  8,724
  9,086
  9,471
  9,880
  10,313
  10,771
  11,256
  11,768
  12,308
  12,879
  13,481
  14,115
  14,783
  15,487
  16,228
  17,008
  17,828
  18,692
  19,600
Adjusted assets (=assets-cash), $m
  5,974
  6,095
  6,235
  6,395
  6,575
  6,774
  6,993
  7,231
  7,489
  7,767
  8,065
  8,384
  8,724
  9,086
  9,471
  9,880
  10,313
  10,771
  11,256
  11,768
  12,308
  12,879
  13,481
  14,115
  14,783
  15,487
  16,228
  17,008
  17,828
  18,692
  19,600
Revenue / Adjusted assets
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
  0.281
Average production assets, $m
  2,770
  2,824
  2,889
  2,963
  3,047
  3,139
  3,240
  3,351
  3,470
  3,599
  3,737
  3,885
  4,042
  4,210
  4,389
  4,578
  4,779
  4,991
  5,215
  5,453
  5,703
  5,968
  6,246
  6,540
  6,850
  7,176
  7,519
  7,881
  8,261
  8,661
  9,082
Working capital, $m
  -79
  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 debt, $m
  2,092
  2,067
  2,150
  2,244
  2,351
  2,469
  2,598
  2,739
  2,891
  3,055
  3,231
  3,420
  3,621
  3,835
  4,062
  4,304
  4,560
  4,831
  5,117
  5,420
  5,739
  6,076
  6,432
  6,807
  7,202
  7,618
  8,056
  8,517
  9,002
  9,512
  10,049
Total liabilities, $m
  3,627
  3,602
  3,685
  3,779
  3,886
  4,004
  4,133
  4,274
  4,426
  4,590
  4,766
  4,955
  5,156
  5,370
  5,597
  5,839
  6,095
  6,366
  6,652
  6,955
  7,274
  7,611
  7,967
  8,342
  8,737
  9,153
  9,591
  10,052
  10,537
  11,047
  11,584
Total equity, $m
  2,441
  2,493
  2,550
  2,616
  2,689
  2,771
  2,860
  2,958
  3,063
  3,177
  3,298
  3,429
  3,568
  3,716
  3,874
  4,041
  4,218
  4,405
  4,604
  4,813
  5,034
  5,267
  5,514
  5,773
  6,046
  6,334
  6,637
  6,956
  7,292
  7,645
  8,016
Total liabilities and equity, $m
  6,068
  6,095
  6,235
  6,395
  6,575
  6,775
  6,993
  7,232
  7,489
  7,767
  8,064
  8,384
  8,724
  9,086
  9,471
  9,880
  10,313
  10,771
  11,256
  11,768
  12,308
  12,878
  13,481
  14,115
  14,783
  15,487
  16,228
  17,008
  17,829
  18,692
  19,600
Debt-to-equity ratio
  0.857
  0.830
  0.840
  0.860
  0.870
  0.890
  0.910
  0.930
  0.940
  0.960
  0.980
  1.000
  1.010
  1.030
  1.050
  1.070
  1.080
  1.100
  1.110
  1.130
  1.140
  1.150
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
  1.240
  1.250
Adjusted equity ratio
  0.393
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  192
  159
  165
  173
  182
  192
  203
  215
  228
  242
  257
  448
  465
  484
  504
  526
  548
  573
  598
  625
  654
  684
  716
  750
  786
  824
  864
  906
  950
  997
  1,046
Depreciation, amort., depletion, $m
  627
  583
  591
  600
  610
  622
  634
  647
  662
  678
  695
  474
  493
  513
  535
  558
  583
  609
  636
  665
  696
  728
  762
  798
  835
  875
  917
  961
  1,007
  1,056
  1,108
Funds from operations, $m
  178
  742
  757
  773
  792
  813
  837
  862
  890
  920
  952
  922
  958
  998
  1,040
  1,084
  1,131
  1,181
  1,234
  1,290
  1,349
  1,412
  1,478
  1,548
  1,622
  1,699
  1,781
  1,867
  1,958
  2,053
  2,154
Change in working capital, $m
  -120
  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 operations, $m
  298
  742
  757
  773
  792
  813
  837
  862
  890
  920
  952
  922
  958
  998
  1,040
  1,084
  1,131
  1,181
  1,234
  1,290
  1,349
  1,412
  1,478
  1,548
  1,622
  1,699
  1,781
  1,867
  1,958
  2,053
  2,154
Maintenance CAPEX, $m
  0
  -338
  -344
  -352
  -361
  -372
  -383
  -395
  -409
  -423
  -439
  -456
  -474
  -493
  -513
  -535
  -558
  -583
  -609
  -636
  -665
  -696
  -728
  -762
  -798
  -835
  -875
  -917
  -961
  -1,007
  -1,056
New CAPEX, $m
  -27
  -55
  -65
  -74
  -83
  -92
  -101
  -110
  -119
  -129
  -138
  -148
  -158
  -168
  -178
  -189
  -201
  -212
  -225
  -237
  -251
  -264
  -279
  -294
  -310
  -326
  -343
  -361
  -380
  -400
  -421
Cash from investing activities, $m
  -21
  -393
  -409
  -426
  -444
  -464
  -484
  -505
  -528
  -552
  -577
  -604
  -632
  -661
  -691
  -724
  -759
  -795
  -834
  -873
  -916
  -960
  -1,007
  -1,056
  -1,108
  -1,161
  -1,218
  -1,278
  -1,341
  -1,407
  -1,477
Free cash flow, $m
  277
  350
  347
  347
  348
  349
  353
  357
  362
  368
  375
  318
  327
  337
  348
  359
  372
  386
  401
  417
  434
  452
  472
  492
  514
  538
  562
  589
  616
  646
  677
Issuance/(repayment) of debt, $m
  -111
  69
  83
  95
  106
  118
  129
  141
  152
  164
  176
  188
  201
  214
  228
  241
  256
  271
  286
  303
  320
  337
  356
  375
  395
  416
  438
  461
  485
  510
  537
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -149
  69
  83
  95
  106
  118
  129
  141
  152
  164
  176
  188
  201
  214
  228
  241
  256
  271
  286
  303
  320
  337
  356
  375
  395
  416
  438
  461
  485
  510
  537
Total cash flow (excl. dividends), $m
  128
  419
  430
  441
  454
  467
  482
  497
  514
  532
  551
  507
  528
  551
  575
  601
  628
  657
  687
  720
  754
  789
  827
  867
  909
  954
  1,000
  1,050
  1,102
  1,156
  1,214
Retained Cash Flow (-), $m
  -123
  -52
  -57
  -66
  -74
  -82
  -89
  -97
  -105
  -114
  -122
  -130
  -139
  -148
  -157
  -167
  -177
  -187
  -198
  -209
  -221
  -233
  -246
  -259
  -273
  -288
  -303
  -319
  -336
  -353
  -371
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
 
  367
  373
  376
  380
  386
  392
  400
  409
  418
  429
  376
  389
  403
  418
  434
  451
  469
  489
  510
  532
  556
  581
  608
  636
  666
  697
  731
  766
  803
  842
Discount rate, %
 
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
 
  342
  321
  297
  274
  251
  228
  206
  185
  164
  145
  108
  93
  80
  67
  56
  46
  37
  29
  23
  17
  13
  9
  7
  5
  3
  2
  1
  1
  0
  0
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

Corus Entertainment Inc. is a media and content company. The Company creates and delivers quality brands and content across platforms for audiences around the world. The Company’s portfolio of multimedia offerings encompasses 45 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children’s book publishing, animation software, technology and media services. Corus’ roster of premium brands includes Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, HISTORY, Showcase, National Geographic Channel, Q107, CKNW, Fresh Radio, Disney Channel Canada, YTV and Nickelodeon Canada.

FINANCIAL RATIOS  of  Corus Entertainment Inc. Class B Non-Vot (CJR-B)

Valuation Ratios
P/E Ratio 12.4
Price to Sales 1.4
Price to Book 1
Price to Tangible Book
Price to Cash Flow 8
Price to Free Cash Flow 8.8
Growth Rates
Sales Growth Rate 43.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.4%
Cap. Spend. - 3 Yr. Gr. Rate 17.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 78.6%
Total Debt to Equity 85.7%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 1.7%
Return On Total Capital 4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.3%
Return On Equity 8.1%
Return On Equity - 3 Yr. Avg. 4.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 66.5%
Gross Margin - 3 Yr. Avg. 67.8%
EBITDA Margin 61.9%
EBITDA Margin - 3 Yr. Avg. 52.3%
Operating Margin 18.3%
Oper. Margin - 3 Yr. Avg. 11.8%
Pre-Tax Margin 18.3%
Pre-Tax Margin - 3 Yr. Avg. 11.8%
Net Profit Margin 11.4%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 27%
Eff/ Tax Rate - 3 Yr. Avg. 110.3%
Payout Ratio 55.2%

CJR-B stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CJR-B stock intrinsic value calculation we used $1679 million for the last fiscal year's total revenue generated by Corus Entertainment Inc. Class B Non-Vot. The default revenue input number comes from 2017 income statement of Corus Entertainment Inc. Class B Non-Vot. 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 CJR-B stock valuation model: a) initial revenue growth rate of 2% 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 7.4%, whose default value for CJR-B is calculated based on our internal credit rating of Corus Entertainment Inc. Class B Non-Vot, 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 Corus Entertainment Inc. Class B Non-Vot.
    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 CJR-B stock the variable cost ratio is equal to 76%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $98 million in the base year in the intrinsic value calculation for CJR-B 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 4.9% for Corus Entertainment Inc. Class B Non-Vot.

Corporate tax rate of 27% is the nominal tax rate for Corus Entertainment Inc. Class B Non-Vot. 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 CJR-B 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 CJR-B are equal to 164.9%.

Life of production assets of 8.2 years is the average useful life of capital assets used in Corus Entertainment Inc. Class B Non-Vot 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 CJR-B is equal to 0%. 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 - $2441 million for Corus Entertainment Inc. Class B Non-Vot - 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 202.874 million for Corus Entertainment Inc. Class B Non-Vot 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 Corus Entertainment Inc. Class B Non-Vot at the current share price and the inputted number of shares is $2.3 billion.

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Financial statements of CJR-B
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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