Intrinsic value of BCE - BCE

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$45.46

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$45.46

 
Intrinsic value

$24.64

 
Up/down potential

-46%

 
Rating

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 BCE 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 41.0

 

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, %
  0.95
  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
  16,075
  16,397
  16,774
  17,205
  17,689
  18,225
  18,813
  19,454
  20,148
  20,895
  21,697
  22,555
  23,470
  24,445
  25,480
  26,580
  27,744
  28,977
  30,281
  31,659
  33,114
  34,649
  36,267
  37,973
  39,771
  41,665
  43,658
  45,756
  47,964
  50,287
  52,731
Variable operating expenses, $m
 
  12,858
  13,138
  13,459
  13,819
  14,218
  14,656
  15,132
  15,648
  16,204
  16,800
  16,775
  17,456
  18,181
  18,951
  19,769
  20,635
  21,552
  22,522
  23,547
  24,628
  25,770
  26,974
  28,243
  29,580
  30,988
  32,471
  34,032
  35,674
  37,401
  39,219
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
  12,282
  12,858
  13,138
  13,459
  13,819
  14,218
  14,656
  15,132
  15,648
  16,204
  16,800
  16,775
  17,456
  18,181
  18,951
  19,769
  20,635
  21,552
  22,522
  23,547
  24,628
  25,770
  26,974
  28,243
  29,580
  30,988
  32,471
  34,032
  35,674
  37,401
  39,219
Operating income, $m
  3,793
  3,539
  3,635
  3,746
  3,870
  4,007
  4,158
  4,322
  4,500
  4,691
  4,897
  5,779
  6,014
  6,264
  6,529
  6,811
  7,109
  7,425
  7,759
  8,112
  8,485
  8,878
  9,293
  9,730
  10,191
  10,676
  11,187
  11,725
  12,291
  12,886
  13,512
EBITDA, $m
  6,389
  6,314
  6,459
  6,625
  6,812
  7,018
  7,245
  7,491
  7,758
  8,046
  8,355
  8,685
  9,038
  9,413
  9,812
  10,235
  10,684
  11,159
  11,661
  12,191
  12,751
  13,342
  13,966
  14,623
  15,315
  16,044
  16,812
  17,620
  18,470
  19,364
  20,305
Interest expense (income), $m
  653
  641
  660
  683
  710
  740
  772
  809
  848
  890
  936
  985
  1,038
  1,094
  1,154
  1,217
  1,285
  1,356
  1,432
  1,512
  1,596
  1,686
  1,780
  1,879
  1,984
  2,094
  2,210
  2,332
  2,461
  2,596
  2,739
Earnings before tax, $m
  3,106
  2,898
  2,975
  3,062
  3,160
  3,267
  3,385
  3,513
  3,652
  3,801
  3,960
  4,794
  4,976
  5,170
  5,375
  5,593
  5,824
  6,069
  6,327
  6,601
  6,889
  7,193
  7,513
  7,851
  8,207
  8,582
  8,977
  9,392
  9,830
  10,289
  10,773
Tax expense, $m
  821
  782
  803
  827
  853
  882
  914
  949
  986
  1,026
  1,069
  1,294
  1,344
  1,396
  1,451
  1,510
  1,573
  1,639
  1,708
  1,782
  1,860
  1,942
  2,029
  2,120
  2,216
  2,317
  2,424
  2,536
  2,654
  2,778
  2,909
Net income, $m
  2,243
  2,115
  2,172
  2,235
  2,307
  2,385
  2,471
  2,565
  2,666
  2,775
  2,891
  3,500
  3,632
  3,774
  3,924
  4,083
  4,252
  4,430
  4,619
  4,818
  5,029
  5,251
  5,485
  5,732
  5,991
  6,265
  6,553
  6,856
  7,176
  7,511
  7,864

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  631
  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
  37,087
  37,180
  38,035
  39,013
  40,110
  41,326
  42,661
  44,114
  45,686
  47,381
  49,199
  51,144
  53,220
  55,430
  57,779
  60,271
  62,912
  65,708
  68,665
  71,789
  75,088
  78,568
  82,239
  86,108
  90,184
  94,477
  98,998
  103,756
  108,763
  114,030
  119,570
Adjusted assets (=assets-cash), $m
  36,456
  37,180
  38,035
  39,013
  40,110
  41,326
  42,661
  44,114
  45,686
  47,381
  49,199
  51,144
  53,220
  55,430
  57,779
  60,271
  62,912
  65,708
  68,665
  71,789
  75,088
  78,568
  82,239
  86,108
  90,184
  94,477
  98,998
  103,756
  108,763
  114,030
  119,570
Revenue / Adjusted assets
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
Average production assets, $m
  24,850
  25,349
  25,932
  26,598
  27,347
  28,176
  29,085
  30,076
  31,148
  32,303
  33,543
  34,869
  36,285
  37,791
  39,393
  41,092
  42,893
  44,799
  46,815
  48,945
  51,194
  53,567
  56,069
  58,707
  61,486
  64,413
  67,495
  70,739
  74,153
  77,744
  81,521
Working capital, $m
  -3,888
  -918
  -939
  -963
  -991
  -1,021
  -1,054
  -1,089
  -1,128
  -1,170
  -1,215
  -1,263
  -1,314
  -1,369
  -1,427
  -1,488
  -1,554
  -1,623
  -1,696
  -1,773
  -1,854
  -1,940
  -2,031
  -2,127
  -2,227
  -2,333
  -2,445
  -2,562
  -2,686
  -2,816
  -2,953
Total debt, $m
  15,883
  15,722
  16,273
  16,902
  17,609
  18,392
  19,251
  20,187
  21,200
  22,291
  23,462
  24,715
  26,052
  27,475
  28,988
  30,593
  32,294
  34,094
  35,998
  38,010
  40,134
  42,376
  44,740
  47,231
  49,856
  52,621
  55,533
  58,597
  61,821
  65,213
  68,781
Total liabilities, $m
  24,105
  23,944
  24,495
  25,124
  25,831
  26,614
  27,473
  28,409
  29,422
  30,513
  31,684
  32,937
  34,274
  35,697
  37,210
  38,815
  40,516
  42,316
  44,220
  46,232
  48,356
  50,598
  52,962
  55,453
  58,078
  60,843
  63,755
  66,819
  70,043
  73,435
  77,003
Total equity, $m
  12,982
  13,236
  13,541
  13,889
  14,279
  14,712
  15,187
  15,704
  16,264
  16,867
  17,515
  18,207
  18,946
  19,733
  20,569
  21,457
  22,397
  23,392
  24,445
  25,557
  26,731
  27,970
  29,277
  30,654
  32,106
  33,634
  35,243
  36,937
  38,719
  40,595
  42,567
Total liabilities and equity, $m
  37,087
  37,180
  38,036
  39,013
  40,110
  41,326
  42,660
  44,113
  45,686
  47,380
  49,199
  51,144
  53,220
  55,430
  57,779
  60,272
  62,913
  65,708
  68,665
  71,789
  75,087
  78,568
  82,239
  86,107
  90,184
  94,477
  98,998
  103,756
  108,762
  114,030
  119,570
Debt-to-equity ratio
  1.223
  1.190
  1.200
  1.220
  1.230
  1.250
  1.270
  1.290
  1.300
  1.320
  1.340
  1.360
  1.380
  1.390
  1.410
  1.430
  1.440
  1.460
  1.470
  1.490
  1.500
  1.520
  1.530
  1.540
  1.550
  1.560
  1.580
  1.590
  1.600
  1.610
  1.620
Adjusted equity ratio
  0.339
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,243
  2,115
  2,172
  2,235
  2,307
  2,385
  2,471
  2,565
  2,666
  2,775
  2,891
  3,500
  3,632
  3,774
  3,924
  4,083
  4,252
  4,430
  4,619
  4,818
  5,029
  5,251
  5,485
  5,732
  5,991
  6,265
  6,553
  6,856
  7,176
  7,511
  7,864
Depreciation, amort., depletion, $m
  2,596
  2,775
  2,824
  2,880
  2,942
  3,011
  3,087
  3,169
  3,259
  3,355
  3,458
  2,906
  3,024
  3,149
  3,283
  3,424
  3,574
  3,733
  3,901
  4,079
  4,266
  4,464
  4,672
  4,892
  5,124
  5,368
  5,625
  5,895
  6,179
  6,479
  6,793
Funds from operations, $m
  4,879
  4,891
  4,996
  5,115
  5,248
  5,396
  5,558
  5,734
  5,925
  6,130
  6,349
  6,405
  6,656
  6,923
  7,207
  7,508
  7,826
  8,164
  8,520
  8,897
  9,295
  9,715
  10,157
  10,624
  11,115
  11,633
  12,178
  12,751
  13,355
  13,990
  14,658
Change in working capital, $m
  -38
  -18
  -21
  -24
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -81
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
Cash from operations, $m
  4,917
  5,478
  5,017
  5,139
  5,276
  5,426
  5,591
  5,770
  5,963
  6,171
  6,394
  6,453
  6,707
  6,978
  7,265
  7,569
  7,891
  8,233
  8,593
  8,974
  9,376
  9,801
  10,248
  10,719
  11,216
  11,739
  12,289
  12,869
  13,479
  14,120
  14,795
Maintenance CAPEX, $m
  0
  -2,071
  -2,112
  -2,161
  -2,217
  -2,279
  -2,348
  -2,424
  -2,506
  -2,596
  -2,692
  -2,795
  -2,906
  -3,024
  -3,149
  -3,283
  -3,424
  -3,574
  -3,733
  -3,901
  -4,079
  -4,266
  -4,464
  -4,672
  -4,892
  -5,124
  -5,368
  -5,625
  -5,895
  -6,179
  -6,479
New CAPEX, $m
  -2,791
  -499
  -583
  -666
  -748
  -829
  -910
  -991
  -1,072
  -1,155
  -1,240
  -1,326
  -1,415
  -1,507
  -1,601
  -1,699
  -1,801
  -1,906
  -2,016
  -2,130
  -2,249
  -2,373
  -2,502
  -2,638
  -2,779
  -2,927
  -3,082
  -3,244
  -3,414
  -3,591
  -3,777
Cash from investing activities, $m
  -3,393
  -2,570
  -2,695
  -2,827
  -2,965
  -3,108
  -3,258
  -3,415
  -3,578
  -3,751
  -3,932
  -4,121
  -4,321
  -4,531
  -4,750
  -4,982
  -5,225
  -5,480
  -5,749
  -6,031
  -6,328
  -6,639
  -6,966
  -7,310
  -7,671
  -8,051
  -8,450
  -8,869
  -9,309
  -9,770
  -10,256
Free cash flow, $m
  1,524
  2,908
  2,321
  2,312
  2,311
  2,318
  2,333
  2,356
  2,385
  2,421
  2,463
  2,332
  2,386
  2,447
  2,514
  2,587
  2,666
  2,752
  2,844
  2,943
  3,049
  3,162
  3,282
  3,409
  3,544
  3,688
  3,840
  4,000
  4,170
  4,349
  4,538
Issuance/(repayment) of debt, $m
  532
  470
  551
  630
  707
  783
  859
  936
  1,013
  1,091
  1,171
  1,253
  1,337
  1,423
  1,513
  1,605
  1,701
  1,801
  1,904
  2,012
  2,124
  2,241
  2,364
  2,492
  2,625
  2,765
  2,911
  3,064
  3,224
  3,392
  3,568
Issuance/(repurchase) of shares, $m
  -5
  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  
  453
  470
  551
  630
  707
  783
  859
  936
  1,013
  1,091
  1,171
  1,253
  1,337
  1,423
  1,513
  1,605
  1,701
  1,801
  1,904
  2,012
  2,124
  2,241
  2,364
  2,492
  2,625
  2,765
  2,911
  3,064
  3,224
  3,392
  3,568
Total cash flow (excl. dividends), $m
  1,977
  3,378
  2,872
  2,941
  3,018
  3,101
  3,193
  3,291
  3,398
  3,512
  3,634
  3,585
  3,723
  3,870
  4,027
  4,192
  4,367
  4,553
  4,748
  4,955
  5,173
  5,403
  5,645
  5,901
  6,170
  6,453
  6,751
  7,065
  7,394
  7,742
  8,106
Retained Cash Flow (-), $m
  -382
  -254
  -304
  -348
  -391
  -433
  -475
  -517
  -560
  -603
  -647
  -693
  -739
  -787
  -836
  -887
  -940
  -995
  -1,053
  -1,112
  -1,174
  -1,239
  -1,307
  -1,377
  -1,451
  -1,528
  -1,609
  -1,694
  -1,782
  -1,875
  -1,972
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
 
  3,124
  2,568
  2,593
  2,627
  2,669
  2,718
  2,774
  2,838
  2,908
  2,986
  2,892
  2,984
  3,084
  3,190
  3,305
  3,427
  3,557
  3,696
  3,843
  3,999
  4,164
  4,339
  4,523
  4,718
  4,924
  5,142
  5,371
  5,612
  5,866
  6,134
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  2,914
  2,219
  2,062
  1,907
  1,754
  1,604
  1,456
  1,311
  1,171
  1,036
  854
  741
  635
  537
  448
  368
  297
  236
  185
  141
  106
  78
  56
  39
  27
  18
  11
  7
  4
  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

BCE Inc. provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through Bell Wireless, Bell Wireline, and Bell Media segments. The Bell Wireless segment provides integrated digital wireless voice and data communications products and services. The Bell Wireline segment offers data, including Internet access and Internet protocol TV, local telephone, long distance, as well as other communications services and products. This segment also provides competitive local exchange carrier services; business service solutions, such as hosting and cloud services, managed services, professional services, and infrastructure services; and Web and audio conferencing, and e-mail solutions. The Bell Media segment owns and operates approximately 30 conventional TV stations; and 38 specialty and pay TV channels; 106 radio stations; 30,500 advertising faces; and 200 Websites. This segment also offers out of home advertising services and digital media services, including CTV. In addition, the company investments in the Toronto Argonauts Football Club and mobile products distribution company. BCE Inc. offers its services through a network of corporate and dealer-owned retail stores, national retailers, and call center representatives, as well as Websites and door-to-door sales representatives. The company was formerly known as Bell Canada Enterprises Inc. BCE Inc. was incorporated in 1970 and is headquartered in Verdun, Canada.

FINANCIAL RATIOS  of  BCE (BCE)

Valuation Ratios
P/E Ratio 17.6
Price to Sales 2.5
Price to Book 3
Price to Tangible Book
Price to Cash Flow 8.1
Price to Free Cash Flow 18.6
Growth Rates
Sales Growth Rate 0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4%
Cap. Spend. - 3 Yr. Gr. Rate 1.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 94.5%
Total Debt to Equity 122.3%
Interest Coverage 6
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 17.5%
Return On Equity - 3 Yr. Avg. 17%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 69.1%
Gross Margin - 3 Yr. Avg. 69.6%
EBITDA Margin 39.5%
EBITDA Margin - 3 Yr. Avg. 38.2%
Operating Margin 23.6%
Oper. Margin - 3 Yr. Avg. 22.1%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 17.9%
Net Profit Margin 14%
Net Profit Margin - 3 Yr. Avg. 12.8%
Effective Tax Rate 26.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.7%
Payout Ratio 80.2%

BCE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BCE stock intrinsic value calculation we used $16075 million for the last fiscal year's total revenue generated by BCE. The default revenue input number comes from 2016 income statement of BCE. 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 BCE 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 7.2%, whose default value for BCE is calculated based on our internal credit rating of BCE, 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 BCE.
    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 BCE stock the variable cost ratio is equal to 78.5%.

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 BCE 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 4.2% for BCE.

Corporate tax rate of 27% is the nominal tax rate for BCE. 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 BCE 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 BCE are equal to 154.6%.

Life of production assets of 12 years is the average useful life of capital assets used in BCE 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 BCE is equal to -5.6%. 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 - $12982 million for BCE - 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 902.191 million for BCE 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 BCE at the current share price and the inputted number of shares is $41.0 billion.


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Stock chart of BCE Financial statements of BCE
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