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

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$59.22

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$59.22

 
Intrinsic value

$26.13

 
Up/down potential

-56%

 
Rating

str. sell

 
Value-price divergence* premium content

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*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 30.7

 

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
  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
  13,702
  13,976
  14,297
  14,665
  15,077
  15,535
  16,036
  16,582
  17,173
  17,810
  18,494
  19,225
  20,005
  20,836
  21,719
  22,656
  23,649
  24,700
  25,811
  26,985
  28,225
  29,534
  30,913
  32,368
  33,900
  35,514
  37,213
  39,002
  40,884
  42,864
  44,946
Variable operating expenses, $m
 
  11,299
  11,550
  11,836
  12,158
  12,515
  12,907
  13,333
  13,794
  14,291
  14,825
  15,005
  15,614
  16,263
  16,952
  17,683
  18,458
  19,278
  20,146
  21,062
  22,030
  23,051
  24,128
  25,263
  26,459
  27,719
  29,045
  30,441
  31,910
  33,455
  35,081
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
  11,299
  11,550
  11,836
  12,158
  12,515
  12,907
  13,333
  13,794
  14,291
  14,825
  15,005
  15,614
  16,263
  16,952
  17,683
  18,458
  19,278
  20,146
  21,062
  22,030
  23,051
  24,128
  25,263
  26,459
  27,719
  29,045
  30,441
  31,910
  33,455
  35,081
Operating income, $m
  1,895
  2,677
  2,748
  2,828
  2,919
  3,019
  3,129
  3,249
  3,379
  3,519
  3,669
  4,220
  4,391
  4,574
  4,767
  4,973
  5,191
  5,422
  5,666
  5,923
  6,195
  6,483
  6,785
  7,105
  7,441
  7,795
  8,168
  8,561
  8,974
  9,409
  9,866
EBITDA, $m
  4,242
  5,027
  5,143
  5,275
  5,424
  5,588
  5,768
  5,965
  6,177
  6,407
  6,652
  6,915
  7,196
  7,495
  7,813
  8,150
  8,507
  8,885
  9,285
  9,707
  10,153
  10,624
  11,120
  11,643
  12,194
  12,775
  13,386
  14,029
  14,706
  15,419
  16,168
Interest expense (income), $m
  756
  746
  767
  791
  818
  849
  883
  920
  960
  1,004
  1,051
  1,102
  1,156
  1,214
  1,276
  1,341
  1,411
  1,484
  1,562
  1,645
  1,732
  1,824
  1,921
  2,023
  2,131
  2,244
  2,364
  2,490
  2,623
  2,762
  2,909
Earnings before tax, $m
  1,159
  1,931
  1,981
  2,038
  2,101
  2,171
  2,247
  2,330
  2,419
  2,515
  2,618
  3,118
  3,235
  3,359
  3,492
  3,632
  3,780
  3,937
  4,103
  4,279
  4,464
  4,659
  4,865
  5,082
  5,310
  5,551
  5,804
  6,071
  6,351
  6,646
  6,957
Tax expense, $m
  324
  521
  535
  550
  567
  586
  607
  629
  653
  679
  707
  842
  873
  907
  943
  981
  1,021
  1,063
  1,108
  1,155
  1,205
  1,258
  1,314
  1,372
  1,434
  1,499
  1,567
  1,639
  1,715
  1,794
  1,878
Net income, $m
  835
  1,410
  1,446
  1,487
  1,534
  1,585
  1,640
  1,701
  1,766
  1,836
  1,911
  2,276
  2,361
  2,452
  2,549
  2,651
  2,760
  2,874
  2,995
  3,123
  3,259
  3,401
  3,551
  3,710
  3,876
  4,052
  4,237
  4,432
  4,636
  4,852
  5,078

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
  28,936
  29,601
  30,362
  31,216
  32,163
  33,201
  34,332
  35,556
  36,874
  38,289
  39,803
  41,419
  43,139
  44,967
  46,907
  48,962
  51,138
  53,439
  55,871
  58,438
  61,146
  64,003
  67,014
  70,187
  73,528
  77,046
  80,749
  84,646
  88,745
  93,057
Adjusted assets (=assets-cash), $m
  28,342
  28,936
  29,601
  30,362
  31,216
  32,163
  33,201
  34,332
  35,556
  36,874
  38,289
  39,803
  41,419
  43,139
  44,967
  46,907
  48,962
  51,138
  53,439
  55,871
  58,438
  61,146
  64,003
  67,014
  70,187
  73,528
  77,046
  80,749
  84,646
  88,745
  93,057
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
  18,420
  18,844
  19,328
  19,872
  20,475
  21,136
  21,855
  22,635
  23,474
  24,375
  25,339
  26,367
  27,462
  28,626
  29,860
  31,169
  32,554
  34,019
  35,567
  37,201
  38,925
  40,744
  42,661
  44,680
  46,807
  49,047
  51,404
  53,885
  56,494
  59,239
Working capital, $m
  -2,543
  -936
  -958
  -983
  -1,010
  -1,041
  -1,074
  -1,111
  -1,151
  -1,193
  -1,239
  -1,288
  -1,340
  -1,396
  -1,455
  -1,518
  -1,584
  -1,655
  -1,729
  -1,808
  -1,891
  -1,979
  -2,071
  -2,169
  -2,271
  -2,379
  -2,493
  -2,613
  -2,739
  -2,872
  -3,011
Total debt, $m
  16,951
  17,432
  17,974
  18,593
  19,288
  20,058
  20,904
  21,824
  22,820
  23,894
  25,046
  26,278
  27,593
  28,993
  30,481
  32,060
  33,733
  35,504
  37,378
  39,357
  41,446
  43,651
  45,976
  48,427
  51,010
  53,730
  56,593
  59,608
  62,779
  66,116
  69,626
Total liabilities, $m
  23,073
  23,554
  24,096
  24,715
  25,410
  26,180
  27,026
  27,946
  28,942
  30,016
  31,168
  32,400
  33,715
  35,115
  36,603
  38,182
  39,855
  41,626
  43,500
  45,479
  47,568
  49,773
  52,098
  54,549
  57,132
  59,852
  62,715
  65,730
  68,901
  72,238
  75,748
Total equity, $m
  5,269
  5,382
  5,506
  5,647
  5,806
  5,982
  6,175
  6,386
  6,613
  6,859
  7,122
  7,403
  7,704
  8,024
  8,364
  8,725
  9,107
  9,512
  9,940
  10,392
  10,869
  11,373
  11,905
  12,465
  13,055
  13,676
  14,331
  15,019
  15,744
  16,507
  17,309
Total liabilities and equity, $m
  28,342
  28,936
  29,602
  30,362
  31,216
  32,162
  33,201
  34,332
  35,555
  36,875
  38,290
  39,803
  41,419
  43,139
  44,967
  46,907
  48,962
  51,138
  53,440
  55,871
  58,437
  61,146
  64,003
  67,014
  70,187
  73,528
  77,046
  80,749
  84,645
  88,745
  93,057
Debt-to-equity ratio
  3.217
  3.240
  3.260
  3.290
  3.320
  3.350
  3.380
  3.420
  3.450
  3.480
  3.520
  3.550
  3.580
  3.610
  3.640
  3.670
  3.700
  3.730
  3.760
  3.790
  3.810
  3.840
  3.860
  3.890
  3.910
  3.930
  3.950
  3.970
  3.990
  4.010
  4.020
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
  1,410
  1,446
  1,487
  1,534
  1,585
  1,640
  1,701
  1,766
  1,836
  1,911
  2,276
  2,361
  2,452
  2,549
  2,651
  2,760
  2,874
  2,995
  3,123
  3,259
  3,401
  3,551
  3,710
  3,876
  4,052
  4,237
  4,432
  4,636
  4,852
  5,078
Depreciation, amort., depletion, $m
  2,347
  2,350
  2,395
  2,447
  2,505
  2,569
  2,639
  2,716
  2,798
  2,888
  2,984
  2,696
  2,805
  2,921
  3,045
  3,177
  3,316
  3,463
  3,619
  3,784
  3,958
  4,141
  4,334
  4,538
  4,753
  4,980
  5,218
  5,469
  5,732
  6,010
  6,302
Funds from operations, $m
  2,920
  3,760
  3,841
  3,934
  4,038
  4,153
  4,279
  4,416
  4,564
  4,724
  4,894
  4,972
  5,166
  5,374
  5,594
  5,828
  6,075
  6,337
  6,614
  6,907
  7,216
  7,542
  7,886
  8,248
  8,630
  9,032
  9,455
  9,900
  10,369
  10,862
  11,380
Change in working capital, $m
  -1,037
  -18
  -22
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -70
  -74
  -79
  -83
  -88
  -92
  -97
  -103
  -108
  -114
  -120
  -126
  -133
  -140
Cash from operations, $m
  3,957
  3,598
  3,863
  3,959
  4,066
  4,184
  4,313
  4,453
  4,604
  4,766
  4,940
  5,021
  5,219
  5,430
  5,653
  5,891
  6,142
  6,408
  6,689
  6,986
  7,299
  7,630
  7,978
  8,345
  8,732
  9,140
  9,569
  10,020
  10,495
  10,994
  11,520
Maintenance CAPEX, $m
  0
  -1,921
  -1,960
  -2,005
  -2,056
  -2,114
  -2,178
  -2,248
  -2,325
  -2,408
  -2,497
  -2,593
  -2,696
  -2,805
  -2,921
  -3,045
  -3,177
  -3,316
  -3,463
  -3,619
  -3,784
  -3,958
  -4,141
  -4,334
  -4,538
  -4,753
  -4,980
  -5,218
  -5,469
  -5,732
  -6,010
New CAPEX, $m
  -2,398
  -361
  -424
  -484
  -544
  -602
  -661
  -720
  -779
  -839
  -901
  -964
  -1,028
  -1,095
  -1,164
  -1,235
  -1,309
  -1,385
  -1,465
  -1,548
  -1,634
  -1,724
  -1,818
  -1,917
  -2,020
  -2,127
  -2,240
  -2,357
  -2,481
  -2,610
  -2,745
Cash from investing activities, $m
  -2,456
  -2,282
  -2,384
  -2,489
  -2,600
  -2,716
  -2,839
  -2,968
  -3,104
  -3,247
  -3,398
  -3,557
  -3,724
  -3,900
  -4,085
  -4,280
  -4,486
  -4,701
  -4,928
  -5,167
  -5,418
  -5,682
  -5,959
  -6,251
  -6,558
  -6,880
  -7,220
  -7,575
  -7,950
  -8,342
  -8,755
Free cash flow, $m
  1,501
  1,316
  1,479
  1,470
  1,466
  1,467
  1,474
  1,484
  1,500
  1,519
  1,542
  1,464
  1,495
  1,530
  1,568
  1,611
  1,657
  1,707
  1,761
  1,819
  1,881
  1,948
  2,019
  2,094
  2,174
  2,259
  2,350
  2,445
  2,546
  2,652
  2,765
Issuance/(repayment) of debt, $m
  -538
  481
  542
  619
  695
  770
  845
  920
  996
  1,073
  1,152
  1,232
  1,315
  1,400
  1,488
  1,579
  1,673
  1,771
  1,873
  1,979
  2,090
  2,205
  2,325
  2,451
  2,582
  2,720
  2,864
  3,014
  3,172
  3,337
  3,510
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
  481
  542
  619
  695
  770
  845
  920
  996
  1,073
  1,152
  1,232
  1,315
  1,400
  1,488
  1,579
  1,673
  1,771
  1,873
  1,979
  2,090
  2,205
  2,325
  2,451
  2,582
  2,720
  2,864
  3,014
  3,172
  3,337
  3,510
Total cash flow (excl. dividends), $m
  906
  1,797
  2,021
  2,089
  2,161
  2,238
  2,319
  2,405
  2,496
  2,592
  2,694
  2,696
  2,810
  2,930
  3,056
  3,189
  3,330
  3,478
  3,634
  3,798
  3,971
  4,153
  4,344
  4,545
  4,757
  4,979
  5,213
  5,459
  5,718
  5,989
  6,275
Retained Cash Flow (-), $m
  367
  -113
  -124
  -142
  -159
  -176
  -193
  -210
  -228
  -245
  -263
  -282
  -300
  -320
  -340
  -361
  -382
  -405
  -428
  -452
  -477
  -504
  -531
  -560
  -590
  -621
  -654
  -689
  -725
  -762
  -802
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
 
  1,683
  1,897
  1,948
  2,002
  2,062
  2,126
  2,195
  2,268
  2,347
  2,431
  2,415
  2,509
  2,610
  2,716
  2,829
  2,948
  3,073
  3,206
  3,346
  3,493
  3,649
  3,813
  3,985
  4,167
  4,358
  4,559
  4,770
  4,993
  5,227
  5,473
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
 
  1,537
  1,569
  1,444
  1,319
  1,194
  1,070
  948
  831
  720
  615
  496
  412
  337
  270
  213
  165
  125
  92
  67
  47
  33
  22
  14
  9
  5
  3
  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. operates as a communications and media company in Canada. The company’s Wireless segment offers wireless telecommunications services to consumers and businesses under the Rogers, Fido, chatr, and Mobilicity brands; and wireless devices, services, and applications. This segment distributes its products through independent dealer networks, company-owned retail stores, retail chains and convenience stores, ecommerce sites, call centers and outbound telemarketing, and other distribution channels. As of December 31, 2015, it had approximately 9.9 million subscribers. The company’s Cable segment provides high-speed broadband Internet access, digital television and online viewing, phone, and home Wi-Fi services to consumers and businesses. This segment distributes its products through company-owned retail stores, ecommerce sites, call centers, outbound telemarketing, door-to-door agents, and third party retail locations. It had 2.0 million high-speed Internet subscribers, 1.9 million television subscribers, and 1.1 million phone subscribers, as well as operated a network that passes approximately 4.2 million homes. The company’s Business Solutions segment offers network connectivity services through its fiber network and data center assets for businesses, governments, and other telecommunications providers. This segment provides its products through its sales team; and a network of third-party channel distributors. Its Media segment offers consumer magazine, marketing, medical, financial, trade, and online publications, as well as digital magazine services; operates television networks and radio stations, and online and mobile digital media platforms; and owns the Toronto Blue Jays, a major league baseball team and Rogers Centre event venue. The company also provides digital services, and home security and automation systems; and credit cards. Rogers Communications Inc. was founded in 1920 and is headquartered in Toronto, Canada.

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

Valuation Ratios
P/E Ratio 36.5
Price to Sales 2.2
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow 19.6
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. 17.9%
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 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 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 519.12 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 $30.7 billion.


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