Intrinsic value of TELUS Corporation - T

Previous Close

$44.35

  Intrinsic Value

$17.53

stock screener

  Rating & Target

str. sell

-60%

  Value-price divergence*

0%

Previous close

$44.35

 
Intrinsic value

$17.53

 
Up/down potential

-60%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of T 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 26.2

 

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, %
  2.37
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.85
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
Revenue, $m
  12,725
  13,310
  13,928
  14,579
  15,266
  15,989
  16,751
  17,552
  18,397
  19,285
  20,219
  21,202
  22,235
  23,322
  24,464
  25,665
  26,927
  28,254
  29,647
  31,112
  32,651
  34,267
  35,966
  37,750
  39,624
  41,593
  43,660
  45,832
  48,113
  50,509
  53,025
Variable operating expenses, $m
 
  11,270
  11,775
  12,308
  12,870
  13,461
  14,085
  14,741
  15,431
  16,158
  16,923
  17,348
  18,194
  19,083
  20,018
  21,000
  22,033
  23,118
  24,259
  25,457
  26,716
  28,039
  29,429
  30,889
  32,422
  34,033
  35,725
  37,502
  39,368
  41,328
  43,387
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
  11,018
  11,270
  11,775
  12,308
  12,870
  13,461
  14,085
  14,741
  15,431
  16,158
  16,923
  17,348
  18,194
  19,083
  20,018
  21,000
  22,033
  23,118
  24,259
  25,457
  26,716
  28,039
  29,429
  30,889
  32,422
  34,033
  35,725
  37,502
  39,368
  41,328
  43,387
Operating income, $m
  1,707
  2,041
  2,153
  2,271
  2,396
  2,527
  2,666
  2,812
  2,965
  3,126
  3,296
  3,854
  4,041
  4,239
  4,447
  4,665
  4,894
  5,135
  5,389
  5,655
  5,935
  6,228
  6,537
  6,861
  7,202
  7,560
  7,936
  8,330
  8,745
  9,180
  9,638
EBITDA, $m
  3,754
  4,232
  4,428
  4,635
  4,853
  5,083
  5,325
  5,580
  5,849
  6,131
  6,428
  6,740
  7,069
  7,414
  7,778
  8,159
  8,561
  8,982
  9,425
  9,891
  10,380
  10,894
  11,434
  12,001
  12,597
  13,223
  13,880
  14,571
  15,296
  16,057
  16,857
Interest expense (income), $m
  510
  517
  553
  592
  633
  676
  721
  768
  818
  871
  927
  985
  1,046
  1,111
  1,179
  1,250
  1,325
  1,404
  1,487
  1,574
  1,665
  1,762
  1,863
  1,969
  2,080
  2,197
  2,320
  2,449
  2,585
  2,727
  2,877
Earnings before tax, $m
  1,662
  1,524
  1,599
  1,679
  1,763
  1,852
  1,945
  2,043
  2,147
  2,255
  2,370
  2,869
  2,995
  3,128
  3,268
  3,415
  3,569
  3,731
  3,902
  4,081
  4,269
  4,467
  4,675
  4,893
  5,122
  5,363
  5,616
  5,881
  6,160
  6,453
  6,761
Tax expense, $m
  426
  411
  432
  453
  476
  500
  525
  552
  580
  609
  640
  775
  809
  845
  882
  922
  964
  1,007
  1,053
  1,102
  1,153
  1,206
  1,262
  1,321
  1,383
  1,448
  1,516
  1,588
  1,663
  1,742
  1,825
Net income, $m
  1,223
  1,113
  1,168
  1,226
  1,287
  1,352
  1,420
  1,492
  1,567
  1,646
  1,730
  2,094
  2,186
  2,283
  2,385
  2,493
  2,605
  2,724
  2,848
  2,979
  3,116
  3,261
  3,412
  3,572
  3,739
  3,915
  4,099
  4,293
  4,497
  4,711
  4,935

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  432
  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
  27,729
  28,563
  29,888
  31,286
  32,759
  34,311
  35,945
  37,666
  39,478
  41,383
  43,388
  45,497
  47,715
  50,047
  52,498
  55,075
  57,784
  60,630
  63,621
  66,764
  70,066
  73,535
  77,180
  81,009
  85,030
  89,255
  93,692
  98,352
  103,247
  108,388
  113,787
Adjusted assets (=assets-cash), $m
  27,297
  28,563
  29,888
  31,286
  32,759
  34,311
  35,945
  37,666
  39,478
  41,383
  43,388
  45,497
  47,715
  50,047
  52,498
  55,075
  57,784
  60,630
  63,621
  66,764
  70,066
  73,535
  77,180
  81,009
  85,030
  89,255
  93,692
  98,352
  103,247
  108,388
  113,787
Revenue / Adjusted assets
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
Average production assets, $m
  20,275
  21,203
  22,187
  23,225
  24,318
  25,470
  26,684
  27,961
  29,306
  30,721
  32,209
  33,774
  35,421
  37,152
  38,972
  40,885
  42,895
  45,008
  47,228
  49,561
  52,013
  54,588
  57,294
  60,136
  63,121
  66,257
  69,551
  73,011
  76,644
  80,460
  84,468
Working capital, $m
  -2,477
  -1,544
  -1,616
  -1,691
  -1,771
  -1,855
  -1,943
  -2,036
  -2,134
  -2,237
  -2,345
  -2,459
  -2,579
  -2,705
  -2,838
  -2,977
  -3,124
  -3,277
  -3,439
  -3,609
  -3,787
  -3,975
  -4,172
  -4,379
  -4,596
  -4,825
  -5,065
  -5,317
  -5,581
  -5,859
  -6,151
Total debt, $m
  13,031
  13,499
  14,440
  15,432
  16,478
  17,580
  18,740
  19,962
  21,248
  22,601
  24,025
  25,522
  27,097
  28,752
  30,493
  32,322
  34,245
  36,266
  38,390
  40,621
  42,966
  45,429
  48,017
  50,735
  53,591
  56,590
  59,740
  63,049
  66,524
  70,174
  74,007
Total liabilities, $m
  19,812
  20,280
  21,221
  22,213
  23,259
  24,361
  25,521
  26,743
  28,029
  29,382
  30,806
  32,303
  33,878
  35,533
  37,274
  39,103
  41,026
  43,047
  45,171
  47,402
  49,747
  52,210
  54,798
  57,516
  60,372
  63,371
  66,521
  69,830
  73,305
  76,955
  80,788
Total equity, $m
  7,917
  8,283
  8,668
  9,073
  9,500
  9,950
  10,424
  10,923
  11,448
  12,001
  12,583
  13,194
  13,837
  14,514
  15,225
  15,972
  16,757
  17,583
  18,450
  19,362
  20,319
  21,325
  22,382
  23,492
  24,659
  25,884
  27,171
  28,522
  29,942
  31,432
  32,998
Total liabilities and equity, $m
  27,729
  28,563
  29,889
  31,286
  32,759
  34,311
  35,945
  37,666
  39,477
  41,383
  43,389
  45,497
  47,715
  50,047
  52,499
  55,075
  57,783
  60,630
  63,621
  66,764
  70,066
  73,535
  77,180
  81,008
  85,031
  89,255
  93,692
  98,352
  103,247
  108,387
  113,786
Debt-to-equity ratio
  1.646
  1.630
  1.670
  1.700
  1.730
  1.770
  1.800
  1.830
  1.860
  1.880
  1.910
  1.930
  1.960
  1.980
  2.000
  2.020
  2.040
  2.060
  2.080
  2.100
  2.110
  2.130
  2.150
  2.160
  2.170
  2.190
  2.200
  2.210
  2.220
  2.230
  2.240
Adjusted equity ratio
  0.278
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,223
  1,113
  1,168
  1,226
  1,287
  1,352
  1,420
  1,492
  1,567
  1,646
  1,730
  2,094
  2,186
  2,283
  2,385
  2,493
  2,605
  2,724
  2,848
  2,979
  3,116
  3,261
  3,412
  3,572
  3,739
  3,915
  4,099
  4,293
  4,497
  4,711
  4,935
Depreciation, amort., depletion, $m
  2,047
  2,191
  2,275
  2,364
  2,457
  2,556
  2,659
  2,769
  2,883
  3,004
  3,132
  2,887
  3,027
  3,175
  3,331
  3,494
  3,666
  3,847
  4,037
  4,236
  4,446
  4,666
  4,897
  5,140
  5,395
  5,663
  5,945
  6,240
  6,551
  6,877
  7,219
Funds from operations, $m
  3,276
  3,304
  3,443
  3,590
  3,744
  3,908
  4,079
  4,260
  4,450
  4,651
  4,861
  4,981
  5,214
  5,459
  5,716
  5,987
  6,272
  6,571
  6,885
  7,215
  7,562
  7,926
  8,309
  8,712
  9,134
  9,578
  10,044
  10,533
  11,048
  11,588
  12,155
Change in working capital, $m
  57
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -133
  -139
  -146
  -154
  -162
  -170
  -178
  -188
  -197
  -207
  -217
  -228
  -240
  -252
  -265
  -278
  -292
Cash from operations, $m
  3,219
  3,371
  3,514
  3,665
  3,824
  3,991
  4,168
  4,353
  4,548
  4,754
  4,970
  5,095
  5,334
  5,585
  5,849
  6,126
  6,418
  6,725
  7,047
  7,385
  7,741
  8,114
  8,506
  8,918
  9,351
  9,806
  10,284
  10,785
  11,312
  11,865
  12,447
Maintenance CAPEX, $m
  0
  -1,733
  -1,812
  -1,896
  -1,985
  -2,078
  -2,177
  -2,281
  -2,390
  -2,505
  -2,626
  -2,753
  -2,887
  -3,027
  -3,175
  -3,331
  -3,494
  -3,666
  -3,847
  -4,037
  -4,236
  -4,446
  -4,666
  -4,897
  -5,140
  -5,395
  -5,663
  -5,945
  -6,240
  -6,551
  -6,877
New CAPEX, $m
  -3,132
  -929
  -984
  -1,037
  -1,094
  -1,152
  -1,213
  -1,277
  -1,345
  -1,415
  -1,488
  -1,566
  -1,646
  -1,731
  -1,820
  -1,913
  -2,011
  -2,113
  -2,220
  -2,333
  -2,451
  -2,575
  -2,706
  -2,842
  -2,985
  -3,136
  -3,294
  -3,460
  -3,634
  -3,816
  -4,008
Cash from investing activities, $m
  -2,923
  -2,662
  -2,796
  -2,933
  -3,079
  -3,230
  -3,390
  -3,558
  -3,735
  -3,920
  -4,114
  -4,319
  -4,533
  -4,758
  -4,995
  -5,244
  -5,505
  -5,779
  -6,067
  -6,370
  -6,687
  -7,021
  -7,372
  -7,739
  -8,125
  -8,531
  -8,957
  -9,405
  -9,874
  -10,367
  -10,885
Free cash flow, $m
  296
  710
  718
  731
  745
  761
  777
  795
  814
  834
  856
  776
  801
  826
  854
  883
  913
  945
  979
  1,015
  1,053
  1,093
  1,135
  1,179
  1,226
  1,275
  1,327
  1,381
  1,438
  1,499
  1,562
Issuance/(repayment) of debt, $m
  883
  900
  941
  992
  1,046
  1,102
  1,160
  1,222
  1,286
  1,353
  1,424
  1,497
  1,575
  1,656
  1,741
  1,830
  1,923
  2,021
  2,124
  2,231
  2,345
  2,463
  2,588
  2,718
  2,855
  2,999
  3,150
  3,309
  3,475
  3,650
  3,833
Issuance/(repurchase) of shares, $m
  -179
  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  
  983
  900
  941
  992
  1,046
  1,102
  1,160
  1,222
  1,286
  1,353
  1,424
  1,497
  1,575
  1,656
  1,741
  1,830
  1,923
  2,021
  2,124
  2,231
  2,345
  2,463
  2,588
  2,718
  2,855
  2,999
  3,150
  3,309
  3,475
  3,650
  3,833
Total cash flow (excl. dividends), $m
  1,279
  1,609
  1,659
  1,724
  1,791
  1,863
  1,938
  2,017
  2,100
  2,187
  2,279
  2,274
  2,375
  2,482
  2,594
  2,712
  2,836
  2,966
  3,103
  3,247
  3,398
  3,556
  3,723
  3,898
  4,082
  4,275
  4,477
  4,690
  4,914
  5,148
  5,395
Retained Cash Flow (-), $m
  -245
  -366
  -384
  -405
  -427
  -450
  -474
  -499
  -525
  -553
  -581
  -612
  -643
  -676
  -711
  -747
  -785
  -825
  -867
  -911
  -958
  -1,006
  -1,057
  -1,110
  -1,166
  -1,225
  -1,287
  -1,352
  -1,419
  -1,491
  -1,566
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
 
  1,243
  1,275
  1,318
  1,364
  1,413
  1,464
  1,518
  1,575
  1,635
  1,698
  1,662
  1,732
  1,806
  1,883
  1,965
  2,051
  2,141
  2,236
  2,335
  2,440
  2,550
  2,666
  2,787
  2,915
  3,049
  3,190
  3,339
  3,494
  3,658
  3,829
Discount rate, %
 
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
 
  1,147
  1,077
  1,011
  941
  869
  795
  719
  644
  570
  499
  406
  346
  291
  240
  195
  156
  122
  94
  71
  52
  37
  26
  18
  12
  8
  5
  3
  2
  1
  1
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

TELUS Corporation (TELUS) is a telecommunications company. The Company provides a range of telecommunications services and products, including wireless and wireline voice and data. Its data services include Internet protocol (IP), television (TV), hosting, managed information technology and cloud-based services, and certain healthcare solutions. The Company operates through two business segments: Wireless segment and Wireline segment. Its wireless and wireline businesses are primarily operated through TELUS Communications Company (TCC). The Company offers business services, including healthcare, across wireless and wireline are supported through TELUS sales representatives, product specialists, independent dealers and online self-serve applications for small and medium-sized businesses (SMBs). Its business process outsourcing services are supported through sales representatives and client relationship management teams.

FINANCIAL RATIOS  of  TELUS Corporation (T)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 2.1
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 8.1
Price to Free Cash Flow 300.8
Growth Rates
Sales Growth Rate 2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.3%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 146.6%
Total Debt to Equity 164.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 5.9%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 7.4%
Return On Equity 15.7%
Return On Equity - 3 Yr. Avg. 17.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 55.7%
Gross Margin - 3 Yr. Avg. 55.6%
EBITDA Margin 33.2%
EBITDA Margin - 3 Yr. Avg. 34.2%
Operating Margin 13.4%
Oper. Margin - 3 Yr. Avg. 16.6%
Pre-Tax Margin 13.1%
Pre-Tax Margin - 3 Yr. Avg. 14.8%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 10.9%
Effective Tax Rate 25.6%
Eff/ Tax Rate - 3 Yr. Avg. 26.4%
Payout Ratio 87.5%

T stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the T stock intrinsic value calculation we used $12725 million for the last fiscal year's total revenue generated by TELUS Corporation. The default revenue input number comes from 2016 income statement of TELUS Corporation. 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 T stock valuation model: a) initial revenue growth rate of 4.6% 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 8.4%, whose default value for T is calculated based on our internal credit rating of TELUS Corporation, 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 TELUS Corporation.
    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 T stock the variable cost ratio is equal to 84.8%.

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 T 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 4.1% for TELUS Corporation.

Corporate tax rate of 27% is the nominal tax rate for TELUS Corporation. 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 T 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 T are equal to 159.3%.

Life of production assets of 11.7 years is the average useful life of capital assets used in TELUS Corporation 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 T is equal to -11.6%. 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 - $7917 million for TELUS Corporation - 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 590.715 million for TELUS Corporation 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 TELUS Corporation at the current share price and the inputted number of shares is $26.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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Financial statements of T
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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