Intrinsic value of Shaw Communications Inc. Class B Non-vot - SJR-B

Previous Close

$28.67

  Intrinsic Value

$19.02

stock screener

  Rating & Target

sell

-34%

  Value-price divergence*

-99%

Previous close

$28.67

 
Intrinsic value

$19.02

 
Up/down potential

-34%

 
Rating

sell

 
Value-price divergence*

-99%

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

We calculate the intrinsic value of SJR-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 14.2

 

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, %
  8.87
  13.30
  12.47
  11.72
  11.05
  10.45
  9.90
  9.41
  8.97
  8.57
  8.22
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
Revenue, $m
  4,884
  5,534
  6,224
  6,953
  7,722
  8,528
  9,373
  10,255
  11,174
  12,132
  13,129
  14,166
  15,243
  16,362
  17,526
  18,735
  19,991
  21,298
  22,658
  24,073
  25,547
  27,082
  28,682
  30,351
  32,092
  33,909
  35,806
  37,788
  39,860
  42,026
  44,292
Variable operating expenses, $m
 
  4,144
  4,644
  5,173
  5,730
  6,315
  6,927
  7,567
  8,234
  8,928
  9,651
  10,271
  11,052
  11,864
  12,707
  13,584
  14,495
  15,443
  16,429
  17,455
  18,523
  19,637
  20,797
  22,007
  23,269
  24,586
  25,962
  27,399
  28,902
  30,472
  32,115
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
  3,788
  4,144
  4,644
  5,173
  5,730
  6,315
  6,927
  7,567
  8,234
  8,928
  9,651
  10,271
  11,052
  11,864
  12,707
  13,584
  14,495
  15,443
  16,429
  17,455
  18,523
  19,637
  20,797
  22,007
  23,269
  24,586
  25,962
  27,399
  28,902
  30,472
  32,115
Operating income, $m
  1,096
  1,390
  1,580
  1,780
  1,991
  2,213
  2,445
  2,688
  2,941
  3,204
  3,478
  3,894
  4,191
  4,498
  4,818
  5,151
  5,496
  5,855
  6,229
  6,618
  7,023
  7,446
  7,885
  8,344
  8,823
  9,322
  9,844
  10,389
  10,959
  11,554
  12,177
EBITDA, $m
  2,058
  2,429
  2,732
  3,053
  3,390
  3,744
  4,115
  4,502
  4,906
  5,326
  5,764
  6,219
  6,692
  7,183
  7,694
  8,225
  8,776
  9,350
  9,947
  10,568
  11,215
  11,889
  12,592
  13,324
  14,089
  14,886
  15,719
  16,590
  17,499
  18,450
  19,445
Interest expense (income), $m
  306
  281
  348
  419
  494
  573
  656
  743
  833
  928
  1,026
  1,128
  1,235
  1,345
  1,460
  1,580
  1,704
  1,833
  1,967
  2,107
  2,252
  2,404
  2,561
  2,726
  2,897
  3,076
  3,262
  3,457
  3,661
  3,874
  4,096
Earnings before tax, $m
  627
  1,109
  1,231
  1,361
  1,497
  1,640
  1,789
  1,945
  2,107
  2,276
  2,452
  2,766
  2,956
  3,153
  3,358
  3,571
  3,792
  4,022
  4,262
  4,511
  4,771
  5,042
  5,324
  5,618
  5,926
  6,246
  6,582
  6,932
  7,298
  7,680
  8,081
Tax expense, $m
  171
  299
  332
  367
  404
  443
  483
  525
  569
  615
  662
  747
  798
  851
  907
  964
  1,024
  1,086
  1,151
  1,218
  1,288
  1,361
  1,437
  1,517
  1,600
  1,687
  1,777
  1,872
  1,970
  2,074
  2,182
Net income, $m
  1,220
  809
  899
  993
  1,093
  1,197
  1,306
  1,420
  1,538
  1,662
  1,790
  2,019
  2,158
  2,302
  2,451
  2,607
  2,768
  2,936
  3,111
  3,293
  3,483
  3,681
  3,887
  4,101
  4,326
  4,560
  4,805
  5,060
  5,327
  5,607
  5,899

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  405
  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
  15,382
  16,974
  19,091
  21,329
  23,686
  26,160
  28,750
  31,456
  34,277
  37,216
  40,273
  43,453
  46,757
  50,191
  53,759
  57,468
  61,323
  65,333
  69,504
  73,845
  78,365
  83,074
  87,982
  93,100
  98,440
  104,014
  109,835
  115,915
  122,271
  128,915
  135,865
Adjusted assets (=assets-cash), $m
  14,977
  16,974
  19,091
  21,329
  23,686
  26,160
  28,750
  31,456
  34,277
  37,216
  40,273
  43,453
  46,757
  50,191
  53,759
  57,468
  61,323
  65,333
  69,504
  73,845
  78,365
  83,074
  87,982
  93,100
  98,440
  104,014
  109,835
  115,915
  122,271
  128,915
  135,865
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  7,455
  8,444
  9,497
  10,611
  11,783
  13,014
  14,302
  15,648
  17,052
  18,514
  20,035
  21,617
  23,260
  24,969
  26,744
  28,589
  30,507
  32,501
  34,576
  36,736
  38,985
  41,327
  43,769
  46,315
  48,972
  51,745
  54,640
  57,665
  60,827
  64,132
  67,590
Working capital, $m
  -943
  -1,062
  -1,195
  -1,335
  -1,483
  -1,637
  -1,800
  -1,969
  -2,145
  -2,329
  -2,521
  -2,720
  -2,927
  -3,142
  -3,365
  -3,597
  -3,838
  -4,089
  -4,350
  -4,622
  -4,905
  -5,200
  -5,507
  -5,827
  -6,162
  -6,510
  -6,875
  -7,255
  -7,653
  -8,069
  -8,504
Total debt, $m
  5,612
  6,451
  7,763
  9,151
  10,612
  12,146
  13,752
  15,430
  17,179
  19,001
  20,896
  22,868
  24,916
  27,045
  29,258
  31,557
  33,948
  36,433
  39,019
  41,711
  44,513
  47,433
  50,476
  53,649
  56,960
  60,416
  64,024
  67,794
  71,735
  75,854
  80,163
Total liabilities, $m
  9,685
  10,524
  11,836
  13,224
  14,685
  16,219
  17,825
  19,503
  21,252
  23,074
  24,969
  26,941
  28,989
  31,118
  33,331
  35,630
  38,021
  40,506
  43,092
  45,784
  48,586
  51,506
  54,549
  57,722
  61,033
  64,489
  68,097
  71,867
  75,808
  79,927
  84,236
Total equity, $m
  5,697
  6,450
  7,255
  8,105
  9,001
  9,941
  10,925
  11,953
  13,025
  14,142
  15,304
  16,512
  17,768
  19,073
  20,429
  21,838
  23,303
  24,826
  26,411
  28,061
  29,779
  31,568
  33,433
  35,378
  37,407
  39,525
  41,737
  44,048
  46,463
  48,988
  51,629
Total liabilities and equity, $m
  15,382
  16,974
  19,091
  21,329
  23,686
  26,160
  28,750
  31,456
  34,277
  37,216
  40,273
  43,453
  46,757
  50,191
  53,760
  57,468
  61,324
  65,332
  69,503
  73,845
  78,365
  83,074
  87,982
  93,100
  98,440
  104,014
  109,834
  115,915
  122,271
  128,915
  135,865
Debt-to-equity ratio
  0.985
  1.000
  1.070
  1.130
  1.180
  1.220
  1.260
  1.290
  1.320
  1.340
  1.370
  1.380
  1.400
  1.420
  1.430
  1.450
  1.460
  1.470
  1.480
  1.490
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.550
  1.550
Adjusted equity ratio
  0.353
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,220
  809
  899
  993
  1,093
  1,197
  1,306
  1,420
  1,538
  1,662
  1,790
  2,019
  2,158
  2,302
  2,451
  2,607
  2,768
  2,936
  3,111
  3,293
  3,483
  3,681
  3,887
  4,101
  4,326
  4,560
  4,805
  5,060
  5,327
  5,607
  5,899
Depreciation, amort., depletion, $m
  962
  1,039
  1,153
  1,272
  1,399
  1,531
  1,669
  1,814
  1,965
  2,122
  2,286
  2,324
  2,501
  2,685
  2,876
  3,074
  3,280
  3,495
  3,718
  3,950
  4,192
  4,444
  4,706
  4,980
  5,266
  5,564
  5,875
  6,201
  6,540
  6,896
  7,268
Funds from operations, $m
  1,735
  1,849
  2,051
  2,266
  2,491
  2,728
  2,976
  3,234
  3,503
  3,784
  4,076
  4,344
  4,659
  4,986
  5,327
  5,681
  6,049
  6,431
  6,829
  7,243
  7,675
  8,124
  8,593
  9,082
  9,592
  10,124
  10,680
  11,261
  11,868
  12,503
  13,167
Change in working capital, $m
  72
  -125
  -132
  -140
  -148
  -155
  -162
  -169
  -177
  -184
  -191
  -199
  -207
  -215
  -223
  -232
  -241
  -251
  -261
  -272
  -283
  -295
  -307
  -320
  -334
  -349
  -364
  -381
  -398
  -416
  -435
Cash from operations, $m
  1,663
  1,974
  2,184
  2,406
  2,639
  2,883
  3,138
  3,403
  3,680
  3,968
  4,267
  4,543
  4,866
  5,201
  5,550
  5,913
  6,290
  6,682
  7,090
  7,515
  7,958
  8,419
  8,900
  9,402
  9,926
  10,473
  11,044
  11,641
  12,266
  12,919
  13,602
Maintenance CAPEX, $m
  0
  -802
  -908
  -1,021
  -1,141
  -1,267
  -1,399
  -1,538
  -1,683
  -1,834
  -1,991
  -2,154
  -2,324
  -2,501
  -2,685
  -2,876
  -3,074
  -3,280
  -3,495
  -3,718
  -3,950
  -4,192
  -4,444
  -4,706
  -4,980
  -5,266
  -5,564
  -5,875
  -6,201
  -6,540
  -6,896
New CAPEX, $m
  -1,198
  -990
  -1,053
  -1,113
  -1,173
  -1,231
  -1,289
  -1,346
  -1,404
  -1,462
  -1,521
  -1,582
  -1,644
  -1,708
  -1,775
  -1,845
  -1,918
  -1,995
  -2,075
  -2,160
  -2,249
  -2,343
  -2,442
  -2,546
  -2,656
  -2,773
  -2,896
  -3,025
  -3,162
  -3,306
  -3,457
Cash from investing activities, $m
  -1,227
  -1,792
  -1,961
  -2,134
  -2,314
  -2,498
  -2,688
  -2,884
  -3,087
  -3,296
  -3,512
  -3,736
  -3,968
  -4,209
  -4,460
  -4,721
  -4,992
  -5,275
  -5,570
  -5,878
  -6,199
  -6,535
  -6,886
  -7,252
  -7,636
  -8,039
  -8,460
  -8,900
  -9,363
  -9,846
  -10,353
Free cash flow, $m
  436
  182
  223
  271
  326
  385
  450
  520
  594
  672
  755
  807
  897
  992
  1,090
  1,192
  1,298
  1,407
  1,520
  1,638
  1,759
  1,885
  2,015
  2,149
  2,289
  2,434
  2,585
  2,741
  2,903
  3,072
  3,248
Issuance/(repayment) of debt, $m
  -51
  1,244
  1,312
  1,388
  1,461
  1,534
  1,606
  1,678
  1,749
  1,822
  1,896
  1,971
  2,049
  2,129
  2,212
  2,299
  2,390
  2,486
  2,586
  2,691
  2,803
  2,920
  3,043
  3,173
  3,311
  3,456
  3,609
  3,770
  3,940
  4,120
  4,309
Issuance/(repurchase) of shares, $m
  38
  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  
  -36
  1,244
  1,312
  1,388
  1,461
  1,534
  1,606
  1,678
  1,749
  1,822
  1,896
  1,971
  2,049
  2,129
  2,212
  2,299
  2,390
  2,486
  2,586
  2,691
  2,803
  2,920
  3,043
  3,173
  3,311
  3,456
  3,609
  3,770
  3,940
  4,120
  4,309
Total cash flow (excl. dividends), $m
  400
  1,426
  1,535
  1,659
  1,787
  1,919
  2,056
  2,197
  2,343
  2,494
  2,651
  2,778
  2,946
  3,121
  3,303
  3,492
  3,688
  3,893
  4,106
  4,329
  4,561
  4,804
  5,058
  5,323
  5,600
  5,890
  6,193
  6,511
  6,844
  7,192
  7,557
Retained Cash Flow (-), $m
  -885
  -753
  -804
  -850
  -896
  -940
  -984
  -1,028
  -1,072
  -1,117
  -1,162
  -1,208
  -1,256
  -1,305
  -1,356
  -1,409
  -1,465
  -1,524
  -1,585
  -1,650
  -1,718
  -1,789
  -1,865
  -1,945
  -2,029
  -2,118
  -2,212
  -2,311
  -2,415
  -2,525
  -2,641
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
 
  673
  731
  809
  891
  979
  1,072
  1,169
  1,271
  1,378
  1,489
  1,570
  1,690
  1,816
  1,947
  2,082
  2,223
  2,369
  2,521
  2,679
  2,844
  3,015
  3,193
  3,378
  3,571
  3,772
  3,982
  4,200
  4,429
  4,667
  4,916
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  630
  636
  649
  655
  654
  646
  629
  606
  575
  539
  486
  443
  398
  351
  305
  260
  218
  179
  145
  114
  88
  67
  49
  35
  25
  17
  11
  7
  5
  3
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

Shaw Communications Inc. operates as a diversified communications company in Canada and the United States. The company operates through Consumer, Business Network Services, Business Infrastructure Services, and Wireless segments. The Consumer segment provides cable telecommunications services, including video, Internet, WiFi and phone, and satellite video services. The Business Network Services segment provides data networking, video, voice, and Internet services through a national fiber-optic backbone network; and satellite video and fleet tracking services. The Business Infrastructure Services segment provides data center colocation, cloud, and managed services. The Wireless segment provides wireless voice and data communications services. The company was formerly known as Shaw Cable systems Ltd. and changed its name to Shaw Communications Inc. in May 1993. Shaw Communications Inc. was founded in 1966 and is based in Calgary, Canada.

FINANCIAL RATIOS  of  Shaw Communications Inc. Class B Non-vot (SJR-B)

Valuation Ratios
P/E Ratio 11.4
Price to Sales 2.9
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 30
Growth Rates
Sales Growth Rate 8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12%
Cap. Spend. - 3 Yr. Gr. Rate 3.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 91.3%
Total Debt to Equity 98.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 9.6%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 11.2%
Ret/ On T. Cap. - 3 Yr. Avg. 9.7%
Return On Equity 23.2%
Return On Equity - 3 Yr. Avg. 20.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 44%
EBITDA Margin 38.8%
EBITDA Margin - 3 Yr. Avg. 42.3%
Operating Margin 22.4%
Oper. Margin - 3 Yr. Avg. 24.9%
Pre-Tax Margin 12.8%
Pre-Tax Margin - 3 Yr. Avg. 18.4%
Net Profit Margin 25%
Net Profit Margin - 3 Yr. Avg. 20.1%
Effective Tax Rate 27.3%
Eff/ Tax Rate - 3 Yr. Avg. 25.9%
Payout Ratio 32.2%

SJR-B stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SJR-B stock intrinsic value calculation we used $4884 million for the last fiscal year's total revenue generated by Shaw Communications Inc. Class B Non-vot. The default revenue input number comes from 2016 income statement of Shaw Communications 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 SJR-B stock valuation model: a) initial revenue growth rate of 13.3% 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 6.9%, whose default value for SJR-B is calculated based on our internal credit rating of Shaw Communications 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 Shaw Communications 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 SJR-B stock the variable cost ratio is equal to 75.2%.

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 SJR-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 5.4% for Shaw Communications Inc. Class B Non-vot.

Corporate tax rate of 27% is the nominal tax rate for Shaw Communications 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 SJR-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 SJR-B are equal to 152.6%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Shaw Communications 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 SJR-B is equal to -19.2%. 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 - $5697 million for Shaw Communications 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 495.822 million for Shaw Communications 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 Shaw Communications Inc. Class B Non-vot at the current share price and the inputted number of shares is $14.2 billion.

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Stock chart of SJR-B Financial statements of SJR-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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