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

Previous Close

$13.16

  Intrinsic Value

$115.91

stock screener

  Rating & Target

str. buy

+781%

  Value-price divergence*

+973%

Previous close

$13.16

 
Intrinsic value

$115.91

 
Up/down potential

+781%

 
Rating

str. buy

 
Value-price divergence*

+973%

*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 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 2.6

 

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, %
  43.68
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,171
  1,874
  2,895
  4,329
  6,281
  8,862
  12,183
  16,353
  21,473
  27,630
  34,899
  43,337
  52,984
  63,863
  75,985
  89,344
  103,929
  119,717
  136,684
  154,802
  174,044
  194,384
  215,801
  238,279
  261,808
  286,385
  312,012
  338,700
  366,467
  395,339
  425,347
Variable operating expenses, $m
 
  816
  1,130
  1,572
  2,173
  2,967
  3,989
  5,273
  6,849
  8,744
  10,982
  13,340
  16,309
  19,658
  23,389
  27,502
  31,991
  36,851
  42,074
  47,650
  53,573
  59,834
  66,427
  73,346
  80,589
  88,154
  96,042
  104,257
  112,804
  121,691
  130,929
Fixed operating expenses, $m
 
  407
  417
  428
  438
  449
  460
  472
  484
  496
  508
  521
  534
  547
  561
  575
  589
  604
  619
  635
  651
  667
  683
  701
  718
  736
  754
  773
  793
  812
  833
Total operating expenses, $m
  986
  1,223
  1,547
  2,000
  2,611
  3,416
  4,449
  5,745
  7,333
  9,240
  11,490
  13,861
  16,843
  20,205
  23,950
  28,077
  32,580
  37,455
  42,693
  48,285
  54,224
  60,501
  67,110
  74,047
  81,307
  88,890
  96,796
  105,030
  113,597
  122,503
  131,762
Operating income, $m
  185
  651
  1,347
  2,330
  3,670
  5,446
  7,733
  10,608
  14,140
  18,390
  23,409
  29,476
  36,141
  43,658
  52,034
  61,268
  71,349
  82,262
  93,992
  106,517
  119,820
  133,882
  148,690
  164,233
  180,502
  197,495
  215,215
  233,669
  252,870
  272,835
  293,586
EBITDA, $m
  595
  1,257
  2,154
  3,417
  5,141
  7,422
  10,360
  14,053
  18,588
  24,045
  30,489
  37,970
  46,525
  56,175
  66,927
  78,779
  91,719
  105,727
  120,782
  136,858
  153,932
  171,982
  190,987
  210,935
  231,816
  253,626
  276,369
  300,055
  324,698
  350,321
  376,954
Interest expense (income), $m
  67
  96
  196
  342
  547
  825
  1,193
  1,667
  2,262
  2,992
  3,871
  4,907
  6,111
  7,487
  9,039
  10,768
  12,674
  14,755
  17,007
  19,428
  22,012
  24,757
  27,659
  30,714
  33,921
  37,277
  40,783
  44,439
  48,246
  52,207
  56,326
Earnings before tax, $m
  185
  555
  1,151
  1,988
  3,124
  4,621
  6,540
  8,942
  11,879
  15,398
  19,539
  24,569
  30,029
  36,171
  42,995
  50,499
  58,674
  67,508
  76,984
  87,089
  97,808
  109,125
  121,032
  133,519
  146,581
  160,218
  174,432
  189,231
  204,624
  220,628
  237,260
Tax expense, $m
  41
  150
  311
  537
  843
  1,248
  1,766
  2,414
  3,207
  4,158
  5,276
  6,634
  8,108
  9,766
  11,609
  13,635
  15,842
  18,227
  20,786
  23,514
  26,408
  29,464
  32,679
  36,050
  39,577
  43,259
  47,097
  51,092
  55,249
  59,570
  64,060
Net income, $m
  126
  405
  840
  1,451
  2,280
  3,373
  4,774
  6,527
  8,671
  11,241
  14,263
  17,935
  21,921
  26,404
  31,386
  36,864
  42,832
  49,281
  56,199
  63,575
  71,399
  79,662
  88,353
  97,469
  107,004
  116,959
  127,335
  138,138
  149,376
  161,058
  173,200

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  71
  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
  6,093
  9,658
  14,921
  22,315
  32,377
  45,680
  62,799
  84,295
  110,685
  142,424
  179,893
  223,387
  273,112
  329,192
  391,673
  460,538
  535,716
  617,100
  704,558
  797,949
  897,132
  1,001,977
  1,112,375
  1,228,243
  1,349,527
  1,476,209
  1,608,307
  1,745,875
  1,889,006
  2,037,830
  2,192,512
Adjusted assets (=assets-cash), $m
  6,022
  9,658
  14,921
  22,315
  32,377
  45,680
  62,799
  84,295
  110,685
  142,424
  179,893
  223,387
  273,112
  329,192
  391,673
  460,538
  535,716
  617,100
  704,558
  797,949
  897,132
  1,001,977
  1,112,375
  1,228,243
  1,349,527
  1,476,209
  1,608,307
  1,745,875
  1,889,006
  2,037,830
  2,192,512
Revenue / Adjusted assets
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
Average production assets, $m
  2,066
  3,305
  5,106
  7,636
  11,080
  15,632
  21,491
  28,847
  37,878
  48,740
  61,562
  76,447
  93,463
  112,655
  134,037
  157,603
  183,331
  211,182
  241,111
  273,071
  307,013
  342,893
  380,673
  420,324
  461,830
  505,182
  550,388
  597,466
  646,448
  697,378
  750,313
Working capital, $m
  -62
  -28
  -43
  -65
  -94
  -133
  -183
  -245
  -322
  -414
  -523
  -650
  -795
  -958
  -1,140
  -1,340
  -1,559
  -1,796
  -2,050
  -2,322
  -2,611
  -2,916
  -3,237
  -3,574
  -3,927
  -4,296
  -4,680
  -5,080
  -5,497
  -5,930
  -6,380
Total debt, $m
  2,196
  4,361
  7,598
  12,145
  18,333
  26,514
  37,043
  50,262
  66,492
  86,012
  109,055
  135,804
  166,385
  200,874
  239,300
  281,652
  327,886
  377,938
  431,724
  489,160
  550,157
  614,637
  682,532
  753,790
  828,380
  906,290
  987,530
  1,072,134
  1,160,160
  1,251,686
  1,346,816
Total liabilities, $m
  3,775
  5,940
  9,177
  13,724
  19,912
  28,093
  38,622
  51,841
  68,071
  87,591
  110,634
  137,383
  167,964
  202,453
  240,879
  283,231
  329,465
  379,517
  433,303
  490,739
  551,736
  616,216
  684,111
  755,369
  829,959
  907,869
  989,109
  1,073,713
  1,161,739
  1,253,265
  1,348,395
Total equity, $m
  2,318
  3,718
  5,745
  8,591
  12,465
  17,587
  24,178
  32,454
  42,614
  54,833
  69,259
  86,004
  105,148
  126,739
  150,794
  177,307
  206,251
  237,584
  271,255
  307,210
  345,396
  385,761
  428,264
  472,873
  519,568
  568,341
  619,198
  672,162
  727,267
  784,564
  844,117
Total liabilities and equity, $m
  6,093
  9,658
  14,922
  22,315
  32,377
  45,680
  62,800
  84,295
  110,685
  142,424
  179,893
  223,387
  273,112
  329,192
  391,673
  460,538
  535,716
  617,101
  704,558
  797,949
  897,132
  1,001,977
  1,112,375
  1,228,242
  1,349,527
  1,476,210
  1,608,307
  1,745,875
  1,889,006
  2,037,829
  2,192,512
Debt-to-equity ratio
  0.947
  1.170
  1.320
  1.410
  1.470
  1.510
  1.530
  1.550
  1.560
  1.570
  1.570
  1.580
  1.580
  1.580
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.590
  1.600
  1.600
  1.600
  1.600
Adjusted equity ratio
  0.373
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  126
  405
  840
  1,451
  2,280
  3,373
  4,774
  6,527
  8,671
  11,241
  14,263
  17,935
  21,921
  26,404
  31,386
  36,864
  42,832
  49,281
  56,199
  63,575
  71,399
  79,662
  88,353
  97,469
  107,004
  116,959
  127,335
  138,138
  149,376
  161,058
  173,200
Depreciation, amort., depletion, $m
  410
  606
  806
  1,088
  1,470
  1,976
  2,627
  3,444
  4,448
  5,655
  7,079
  8,494
  10,385
  12,517
  14,893
  17,511
  20,370
  23,465
  26,790
  30,341
  34,113
  38,099
  42,297
  46,703
  51,314
  56,131
  61,154
  66,385
  71,828
  77,486
  83,368
Funds from operations, $m
  -157
  1,012
  1,647
  2,539
  3,751
  5,349
  7,401
  9,972
  13,119
  16,895
  21,343
  26,429
  32,306
  38,922
  46,279
  54,376
  63,202
  72,745
  82,989
  93,916
  105,512
  117,761
  130,650
  144,171
  158,319
  173,090
  188,490
  204,523
  221,203
  238,545
  256,568
Change in working capital, $m
  -357
  -11
  -15
  -22
  -29
  -39
  -50
  -63
  -77
  -92
  -109
  -127
  -145
  -163
  -182
  -200
  -219
  -237
  -255
  -272
  -289
  -305
  -321
  -337
  -353
  -369
  -384
  -400
  -417
  -433
  -450
Cash from operations, $m
  200
  1,022
  1,662
  2,560
  3,780
  5,388
  7,451
  10,034
  13,196
  16,988
  21,452
  26,556
  32,451
  39,085
  46,461
  54,576
  63,421
  72,982
  83,243
  94,188
  105,801
  118,066
  130,971
  144,508
  158,671
  173,459
  188,874
  204,924
  221,620
  238,978
  257,018
Maintenance CAPEX, $m
  0
  -230
  -367
  -567
  -848
  -1,231
  -1,737
  -2,388
  -3,205
  -4,209
  -5,416
  -6,840
  -8,494
  -10,385
  -12,517
  -14,893
  -17,511
  -20,370
  -23,465
  -26,790
  -30,341
  -34,113
  -38,099
  -42,297
  -46,703
  -51,314
  -56,131
  -61,154
  -66,385
  -71,828
  -77,486
New CAPEX, $m
  -23
  -1,240
  -1,801
  -2,530
  -3,444
  -4,552
  -5,859
  -7,356
  -9,031
  -10,862
  -12,823
  -14,884
  -17,017
  -19,191
  -21,382
  -23,567
  -25,727
  -27,851
  -29,930
  -31,960
  -33,942
  -35,880
  -37,780
  -39,652
  -41,505
  -43,353
  -45,206
  -47,078
  -48,982
  -50,930
  -52,935
Cash from investing activities, $m
  -1,658
  -1,470
  -2,168
  -3,097
  -4,292
  -5,783
  -7,596
  -9,744
  -12,236
  -15,071
  -18,239
  -21,724
  -25,511
  -29,576
  -33,899
  -38,460
  -43,238
  -48,221
  -53,395
  -58,750
  -64,283
  -69,993
  -75,879
  -81,949
  -88,208
  -94,667
  -101,337
  -108,232
  -115,367
  -122,758
  -130,421
Free cash flow, $m
  -1,458
  -447
  -506
  -537
  -512
  -395
  -144
  290
  960
  1,917
  3,214
  4,831
  6,940
  9,509
  12,562
  16,117
  20,182
  24,761
  29,849
  35,438
  41,518
  48,074
  55,092
  62,560
  70,463
  78,792
  87,537
  96,692
  106,253
  116,220
  126,597
Issuance/(repayment) of debt, $m
  1,409
  2,236
  3,237
  4,547
  6,189
  8,181
  10,528
  13,220
  16,230
  19,520
  23,044
  26,748
  30,581
  34,489
  38,426
  42,352
  46,235
  50,051
  53,787
  57,435
  60,997
  64,480
  67,895
  71,259
  74,590
  77,910
  81,240
  84,604
  88,026
  91,527
  95,130
Issuance/(repurchase) of shares, $m
  0
  995
  1,186
  1,395
  1,594
  1,748
  1,817
  1,749
  1,489
  979
  162
  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  
  1,582
  3,231
  4,423
  5,942
  7,783
  9,929
  12,345
  14,969
  17,719
  20,499
  23,206
  26,748
  30,581
  34,489
  38,426
  42,352
  46,235
  50,051
  53,787
  57,435
  60,997
  64,480
  67,895
  71,259
  74,590
  77,910
  81,240
  84,604
  88,026
  91,527
  95,130
Total cash flow (excl. dividends), $m
  124
  2,784
  3,917
  5,405
  7,270
  9,534
  12,201
  15,259
  18,678
  22,416
  26,419
  31,580
  37,521
  43,998
  50,988
  58,469
  66,417
  74,812
  83,636
  92,874
  102,515
  112,553
  122,987
  133,818
  145,053
  156,702
  168,777
  181,296
  194,278
  207,747
  221,727
Retained Cash Flow (-), $m
  -1,115
  -1,400
  -2,026
  -2,846
  -3,874
  -5,121
  -6,591
  -8,276
  -10,160
  -12,220
  -14,426
  -16,745
  -19,144
  -21,591
  -24,055
  -26,513
  -28,944
  -31,333
  -33,671
  -35,955
  -38,185
  -40,365
  -42,503
  -44,609
  -46,694
  -48,773
  -50,858
  -52,964
  -55,105
  -57,297
  -59,553
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
 
  1,383
  1,890
  2,559
  3,396
  4,412
  5,610
  6,983
  8,518
  10,196
  11,994
  14,835
  18,377
  22,407
  26,933
  31,956
  37,473
  43,479
  49,964
  56,918
  64,330
  72,188
  80,484
  89,209
  98,359
  107,929
  117,919
  128,332
  139,173
  150,450
  162,174
Discount rate, %
 
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
 
  1,289
  1,631
  2,028
  2,455
  2,884
  3,287
  3,633
  3,896
  4,056
  4,102
  4,311
  4,478
  4,517
  4,427
  4,218
  3,908
  3,521
  3,085
  2,629
  2,177
  1,753
  1,371
  1,040
  766
  547
  378
  253
  163
  102
  61
Current shareholders' claim on cash, %
  100
  72.4
  56.4
  46.4
  39.8
  35.4
  32.4
  30.4
  29.3
  28.7
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6
  28.6

Corus Entertainment Inc., a media and content company, operates specialty and conventional television networks, and radio stations in Canada and internationally. It operates through two segments, Television and Radio. The Television segment operates 45 specialty television networks and 15 conventional television stations. It is also involved in the production and distribution of films and television programs; merchandise licensing; childrenÂ’s book publishing; and production and distribution of animation software. This segment advertises and licenses proprietary films and television programs; sells licenses, as well as provides customer support, training, and consulting related to the animation software business; and produces and distributes childrenÂ’s animated content. Its primary brands include Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, History, Showcase, National Geographic, Disney Channel Canada, YTV, and Nickelodeon Canada. The Radio segment operates 39 radio stations that offer rock, news-talk, adult contemporary, and country primarily under the CKNW AM 980, Rock 101, Country 105, 630 CHED, Fresh Radio, JUMP! 106.9, Q107, and 102.1 the Edge brands connecting listeners and communities across the country. Corus Entertainment Inc. was founded in 1998 and is headquartered in Toronto, Canada.

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

Valuation Ratios
P/E Ratio 20.5
Price to Sales 2.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 14.6
Growth Rates
Sales Growth Rate 43.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.3%
Cap. Spend. - 3 Yr. Gr. Rate 12.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 89.8%
Total Debt to Equity 94.7%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 7.2%
Return On Equity - 3 Yr. Avg. 5.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 98.1%
Gross Margin - 3 Yr. Avg. 97.3%
EBITDA Margin 56.5%
EBITDA Margin - 3 Yr. Avg. 51.4%
Operating Margin 15.8%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 14.1%
Net Profit Margin 10.8%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 22.2%
Eff/ Tax Rate - 3 Yr. Avg. 109.9%
Payout Ratio 71.4%

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 $1171 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 2016 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 60% 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 7.3%, 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 51.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $397 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 4.5% 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 176.4%.

Life of production assets of 9 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 -1.5%. 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 - $2318 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 198.027 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 $2.6 billion.

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Stock chart of CJR-B 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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