Intrinsic value of Rogers Communications Inc. Class B Non-v - RCI-B

Previous Close

$64.68

  Intrinsic Value

$29.31

stock screener

  Rating & Target

str. sell

-55%

Previous close

$64.68

 
Intrinsic value

$29.31

 
Up/down potential

-55%

 
Rating

str. sell

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

We calculate the intrinsic value of RCI-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 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 33.3

 

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, %
  2.15
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  13,702
  14,250
  14,834
  15,456
  16,116
  16,816
  17,558
  18,342
  19,172
  20,048
  20,972
  21,948
  22,976
  24,060
  25,202
  26,405
  27,670
  29,003
  30,404
  31,879
  33,430
  35,061
  36,775
  38,578
  40,473
  42,464
  44,557
  46,756
  49,066
  51,494
  54,044
Variable operating expenses, $m
 
  11,513
  11,969
  12,454
  12,969
  13,515
  14,094
  14,707
  15,354
  16,038
  16,759
  17,130
  17,933
  18,779
  19,670
  20,609
  21,597
  22,637
  23,731
  24,882
  26,092
  27,365
  28,703
  30,110
  31,589
  33,143
  34,777
  36,493
  38,296
  40,191
  42,182
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
  11,807
  11,513
  11,969
  12,454
  12,969
  13,515
  14,094
  14,707
  15,354
  16,038
  16,759
  17,130
  17,933
  18,779
  19,670
  20,609
  21,597
  22,637
  23,731
  24,882
  26,092
  27,365
  28,703
  30,110
  31,589
  33,143
  34,777
  36,493
  38,296
  40,191
  42,182
Operating income, $m
  1,895
  2,737
  2,866
  3,002
  3,147
  3,301
  3,463
  3,636
  3,818
  4,010
  4,213
  4,818
  5,043
  5,281
  5,532
  5,796
  6,074
  6,366
  6,674
  6,997
  7,338
  7,696
  8,072
  8,468
  8,884
  9,321
  9,780
  10,263
  10,770
  11,303
  11,863
EBITDA, $m
  4,242
  5,126
  5,336
  5,560
  5,797
  6,049
  6,316
  6,598
  6,896
  7,211
  7,544
  7,895
  8,265
  8,655
  9,065
  9,498
  9,953
  10,433
  10,937
  11,467
  12,025
  12,612
  13,229
  13,877
  14,559
  15,275
  16,028
  16,819
  17,650
  18,523
  19,440
Interest expense (income), $m
  756
  746
  787
  831
  877
  926
  978
  1,033
  1,091
  1,152
  1,217
  1,286
  1,358
  1,434
  1,515
  1,599
  1,689
  1,782
  1,881
  1,985
  2,095
  2,210
  2,330
  2,458
  2,591
  2,732
  2,879
  3,035
  3,198
  3,369
  3,549
Earnings before tax, $m
  1,159
  1,992
  2,078
  2,171
  2,270
  2,375
  2,486
  2,603
  2,727
  2,858
  2,996
  3,532
  3,685
  3,847
  4,017
  4,196
  4,385
  4,584
  4,792
  5,012
  5,243
  5,486
  5,742
  6,010
  6,292
  6,589
  6,901
  7,228
  7,572
  7,934
  8,314
Tax expense, $m
  324
  538
  561
  586
  613
  641
  671
  703
  736
  772
  809
  954
  995
  1,039
  1,085
  1,133
  1,184
  1,238
  1,294
  1,353
  1,416
  1,481
  1,550
  1,623
  1,699
  1,779
  1,863
  1,952
  2,045
  2,142
  2,245
Net income, $m
  835
  1,454
  1,517
  1,585
  1,657
  1,734
  1,815
  1,900
  1,991
  2,086
  2,187
  2,578
  2,690
  2,808
  2,932
  3,063
  3,201
  3,346
  3,499
  3,659
  3,828
  4,005
  4,191
  4,387
  4,593
  4,810
  5,038
  5,277
  5,528
  5,792
  6,069

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  28,342
  29,503
  30,713
  32,000
  33,366
  34,816
  36,351
  37,975
  39,693
  41,506
  43,421
  45,441
  47,570
  49,814
  52,178
  54,668
  57,289
  60,047
  62,949
  66,002
  69,213
  72,589
  76,140
  79,872
  83,794
  87,917
  92,250
  96,803
  101,587
  106,613
  111,893
Adjusted assets (=assets-cash), $m
  28,342
  29,503
  30,713
  32,000
  33,366
  34,816
  36,351
  37,975
  39,693
  41,506
  43,421
  45,441
  47,570
  49,814
  52,178
  54,668
  57,289
  60,047
  62,949
  66,002
  69,213
  72,589
  76,140
  79,872
  83,794
  87,917
  92,250
  96,803
  101,587
  106,613
  111,893
Revenue / Adjusted assets
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
Average production assets, $m
  18,060
  18,782
  19,552
  20,371
  21,241
  22,164
  23,141
  24,175
  25,268
  26,423
  27,641
  28,927
  30,283
  31,711
  33,216
  34,801
  36,470
  38,225
  40,073
  42,016
  44,061
  46,210
  48,470
  50,846
  53,343
  55,968
  58,726
  61,624
  64,669
  67,869
  71,231
Working capital, $m
  -2,543
  -955
  -994
  -1,036
  -1,080
  -1,127
  -1,176
  -1,229
  -1,284
  -1,343
  -1,405
  -1,471
  -1,539
  -1,612
  -1,689
  -1,769
  -1,854
  -1,943
  -2,037
  -2,136
  -2,240
  -2,349
  -2,464
  -2,585
  -2,712
  -2,845
  -2,985
  -3,133
  -3,287
  -3,450
  -3,621
Total debt, $m
  16,951
  17,894
  18,878
  19,926
  21,038
  22,218
  23,468
  24,790
  26,188
  27,664
  29,223
  30,867
  32,600
  34,427
  36,351
  38,378
  40,511
  42,756
  45,119
  47,604
  50,217
  52,966
  55,856
  58,893
  62,087
  65,443
  68,969
  72,675
  76,570
  80,661
  84,959
Total liabilities, $m
  23,073
  24,016
  25,000
  26,048
  27,160
  28,340
  29,590
  30,912
  32,310
  33,786
  35,345
  36,989
  38,722
  40,549
  42,473
  44,500
  46,633
  48,878
  51,241
  53,726
  56,339
  59,088
  61,978
  65,015
  68,209
  71,565
  75,091
  78,797
  82,692
  86,783
  91,081
Total equity, $m
  5,269
  5,488
  5,713
  5,952
  6,206
  6,476
  6,761
  7,063
  7,383
  7,720
  8,076
  8,452
  8,848
  9,265
  9,705
  10,168
  10,656
  11,169
  11,709
  12,276
  12,874
  13,502
  14,162
  14,856
  15,586
  16,353
  17,158
  18,005
  18,895
  19,830
  20,812
Total liabilities and equity, $m
  28,342
  29,504
  30,713
  32,000
  33,366
  34,816
  36,351
  37,975
  39,693
  41,506
  43,421
  45,441
  47,570
  49,814
  52,178
  54,668
  57,289
  60,047
  62,950
  66,002
  69,213
  72,590
  76,140
  79,871
  83,795
  87,918
  92,249
  96,802
  101,587
  106,613
  111,893
Debt-to-equity ratio
  3.217
  3.260
  3.300
  3.350
  3.390
  3.430
  3.470
  3.510
  3.550
  3.580
  3.620
  3.650
  3.680
  3.720
  3.750
  3.770
  3.800
  3.830
  3.850
  3.880
  3.900
  3.920
  3.940
  3.960
  3.980
  4.000
  4.020
  4.040
  4.050
  4.070
  4.080
Adjusted equity ratio
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  835
  1,454
  1,517
  1,585
  1,657
  1,734
  1,815
  1,900
  1,991
  2,086
  2,187
  2,578
  2,690
  2,808
  2,932
  3,063
  3,201
  3,346
  3,499
  3,659
  3,828
  4,005
  4,191
  4,387
  4,593
  4,810
  5,038
  5,277
  5,528
  5,792
  6,069
Depreciation, amort., depletion, $m
  2,347
  2,389
  2,470
  2,558
  2,650
  2,748
  2,852
  2,962
  3,079
  3,201
  3,331
  3,077
  3,222
  3,374
  3,534
  3,702
  3,880
  4,067
  4,263
  4,470
  4,687
  4,916
  5,156
  5,409
  5,675
  5,954
  6,247
  6,556
  6,880
  7,220
  7,578
Funds from operations, $m
  2,920
  3,842
  3,988
  4,143
  4,307
  4,482
  4,667
  4,863
  5,069
  5,288
  5,518
  5,656
  5,912
  6,182
  6,466
  6,766
  7,081
  7,413
  7,762
  8,129
  8,515
  8,921
  9,348
  9,797
  10,268
  10,764
  11,285
  11,832
  12,408
  13,012
  13,647
Change in working capital, $m
  -1,037
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -115
  -121
  -127
  -133
  -140
  -147
  -155
  -163
  -171
Cash from operations, $m
  3,957
  3,879
  4,027
  4,184
  4,352
  4,529
  4,717
  4,915
  5,125
  5,346
  5,580
  5,721
  5,981
  6,254
  6,543
  6,846
  7,166
  7,502
  7,856
  8,228
  8,619
  9,030
  9,463
  9,917
  10,395
  10,897
  11,425
  11,980
  12,562
  13,174
  13,818
Maintenance CAPEX, $m
  0
  -1,921
  -1,998
  -2,080
  -2,167
  -2,260
  -2,358
  -2,462
  -2,572
  -2,688
  -2,811
  -2,941
  -3,077
  -3,222
  -3,374
  -3,534
  -3,702
  -3,880
  -4,067
  -4,263
  -4,470
  -4,687
  -4,916
  -5,156
  -5,409
  -5,675
  -5,954
  -6,247
  -6,556
  -6,880
  -7,220
New CAPEX, $m
  -2,398
  -722
  -770
  -819
  -870
  -923
  -977
  -1,034
  -1,093
  -1,155
  -1,219
  -1,286
  -1,356
  -1,429
  -1,505
  -1,585
  -1,668
  -1,756
  -1,848
  -1,944
  -2,044
  -2,149
  -2,260
  -2,376
  -2,497
  -2,625
  -2,758
  -2,898
  -3,045
  -3,200
  -3,361
Cash from investing activities, $m
  -2,456
  -2,643
  -2,768
  -2,899
  -3,037
  -3,183
  -3,335
  -3,496
  -3,665
  -3,843
  -4,030
  -4,227
  -4,433
  -4,651
  -4,879
  -5,119
  -5,370
  -5,636
  -5,915
  -6,207
  -6,514
  -6,836
  -7,176
  -7,532
  -7,906
  -8,300
  -8,712
  -9,145
  -9,601
  -10,080
  -10,581
Free cash flow, $m
  1,501
  1,236
  1,259
  1,285
  1,315
  1,347
  1,381
  1,419
  1,460
  1,503
  1,550
  1,495
  1,548
  1,604
  1,664
  1,728
  1,795
  1,866
  1,941
  2,021
  2,105
  2,193
  2,287
  2,385
  2,489
  2,598
  2,713
  2,834
  2,961
  3,095
  3,236
Issuance/(repayment) of debt, $m
  -538
  943
  985
  1,048
  1,113
  1,180
  1,250
  1,322
  1,398
  1,476
  1,558
  1,644
  1,733
  1,827
  1,924
  2,026
  2,133
  2,245
  2,362
  2,485
  2,614
  2,748
  2,890
  3,038
  3,193
  3,356
  3,527
  3,706
  3,894
  4,091
  4,298
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  
  -595
  943
  985
  1,048
  1,113
  1,180
  1,250
  1,322
  1,398
  1,476
  1,558
  1,644
  1,733
  1,827
  1,924
  2,026
  2,133
  2,245
  2,362
  2,485
  2,614
  2,748
  2,890
  3,038
  3,193
  3,356
  3,527
  3,706
  3,894
  4,091
  4,298
Total cash flow (excl. dividends), $m
  906
  2,178
  2,243
  2,333
  2,427
  2,526
  2,631
  2,741
  2,858
  2,980
  3,109
  3,139
  3,281
  3,431
  3,588
  3,754
  3,928
  4,111
  4,304
  4,506
  4,719
  4,942
  5,177
  5,423
  5,682
  5,954
  6,240
  6,540
  6,855
  7,186
  7,534
Retained Cash Flow (-), $m
  367
  -219
  -225
  -239
  -254
  -270
  -286
  -302
  -319
  -337
  -356
  -376
  -396
  -417
  -440
  -463
  -487
  -513
  -540
  -568
  -597
  -628
  -660
  -694
  -730
  -767
  -806
  -847
  -890
  -935
  -982
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
 
  1,960
  2,018
  2,093
  2,173
  2,257
  2,346
  2,439
  2,538
  2,643
  2,753
  2,763
  2,885
  3,013
  3,149
  3,291
  3,441
  3,598
  3,764
  3,938
  4,121
  4,314
  4,516
  4,729
  4,952
  5,187
  5,434
  5,693
  5,965
  6,252
  6,552
Discount rate, %
 
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
 
  1,790
  1,669
  1,553
  1,431
  1,307
  1,180
  1,054
  930
  810
  696
  568
  474
  389
  314
  248
  192
  146
  109
  79
  56
  38
  26
  17
  11
  7
  4
  2
  1
  1
  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

Rogers Communications Inc. is a communications and media company. The Company provides wireless communications services, and cable television, Internet, information technology (IT) and telephony services to consumers and businesses. Its segments include Wireless, Cable, Business Solutions and Media. The Wireless segment is engaged in wireless telecommunications operations for Canadian consumers and businesses. The Cable segment include cable telecommunications operations, including Internet, television and telephony (phone) services for Canadian consumers and businesses. The Business Solutions segment is engaged in network connectivity through its fiber network and data center assets to support a range of voice, data, networking, hosting, and cloud-based services for the enterprise, public sector and carrier wholesale markets. The Media segment has a portfolio of media properties, including sports media and entertainment, multi-platform shopping, digital media and publishing.

FINANCIAL RATIOS  of  Rogers Communications Inc. Class B Non-v (RCI-B)

Valuation Ratios
P/E Ratio 39.9
Price to Sales 2.4
Price to Book 6.3
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 21.4
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 290.9%
Total Debt to Equity 321.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 15.3%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 51.8%
Gross Margin - 3 Yr. Avg. 52.5%
EBITDA Margin 31.1%
EBITDA Margin - 3 Yr. Avg. 35.2%
Operating Margin 13.8%
Oper. Margin - 3 Yr. Avg. 17.8%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 8.8%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 27.2%
Payout Ratio 118.3%

RCI-B stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RCI-B stock intrinsic value calculation we used $13702 million for the last fiscal year's total revenue generated by Rogers Communications Inc. Class B Non-v. The default revenue input number comes from 2016 income statement of Rogers Communications Inc. Class B Non-v. 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 RCI-B stock valuation model: a) initial revenue growth rate of 4% 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 9.5%, whose default value for RCI-B is calculated based on our internal credit rating of Rogers Communications Inc. Class B Non-v, 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 Rogers Communications Inc. Class B Non-v.
    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 RCI-B stock the variable cost ratio is equal to 80.9%.

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 RCI-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 4.4% for Rogers Communications Inc. Class B Non-v.

Corporate tax rate of 27% is the nominal tax rate for Rogers Communications Inc. Class B Non-v. 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 RCI-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 RCI-B are equal to 131.8%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Rogers Communications Inc. Class B Non-v 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 RCI-B is equal to -6.7%. 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 - $5269 million for Rogers Communications Inc. Class B Non-v - 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 515.306 million for Rogers Communications Inc. Class B Non-v 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 Rogers Communications Inc. Class B Non-v at the current share price and the inputted number of shares is $33.3 billion.

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Financial statements of RCI-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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