Intrinsic value of BCE - BCE

Previous Close

$46.65

  Intrinsic Value

$26.60

stock screener

  Rating & Target

sell

-43%

  Value-price divergence*

+18%

Previous close

$46.65

 
Intrinsic value

$26.60

 
Up/down potential

-43%

 
Rating

sell

 
Value-price divergence*

+18%

*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 39.8

 

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
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  16,075
  16,429
  16,836
  17,296
  17,808
  18,371
  18,986
  19,653
  20,372
  21,145
  21,973
  22,857
  23,799
  24,801
  25,864
  26,992
  28,186
  29,449
  30,784
  32,194
  33,682
  35,251
  36,906
  38,649
  40,486
  42,420
  44,455
  46,598
  48,852
  51,223
  53,716
Variable operating expenses, $m
 
  12,882
  13,185
  13,527
  13,908
  14,327
  14,784
  15,280
  15,815
  16,390
  17,006
  17,000
  17,701
  18,446
  19,237
  20,075
  20,963
  21,903
  22,896
  23,944
  25,051
  26,218
  27,449
  28,746
  30,112
  31,550
  33,064
  34,657
  36,334
  38,097
  39,952
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
  12,882
  13,185
  13,527
  13,908
  14,327
  14,784
  15,280
  15,815
  16,390
  17,006
  17,000
  17,701
  18,446
  19,237
  20,075
  20,963
  21,903
  22,896
  23,944
  25,051
  26,218
  27,449
  28,746
  30,112
  31,550
  33,064
  34,657
  36,334
  38,097
  39,952
Operating income, $m
  3,793
  3,547
  3,651
  3,769
  3,900
  4,044
  4,202
  4,373
  4,557
  4,755
  4,967
  5,857
  6,098
  6,355
  6,628
  6,917
  7,222
  7,546
  7,888
  8,249
  8,631
  9,033
  9,457
  9,904
  10,374
  10,870
  11,391
  11,940
  12,518
  13,126
  13,764
EBITDA, $m
  6,389
  6,326
  6,483
  6,660
  6,857
  7,074
  7,311
  7,568
  7,845
  8,143
  8,461
  8,802
  9,165
  9,550
  9,960
  10,394
  10,854
  11,340
  11,854
  12,397
  12,970
  13,574
  14,212
  14,883
  15,590
  16,335
  17,119
  17,944
  18,812
  19,725
  20,685
Interest expense (income), $m
  653
  641
  662
  687
  715
  747
  781
  819
  860
  904
  952
  1,002
  1,057
  1,114
  1,176
  1,241
  1,310
  1,383
  1,461
  1,543
  1,629
  1,720
  1,817
  1,918
  2,025
  2,138
  2,256
  2,381
  2,513
  2,651
  2,796
Earnings before tax, $m
  3,106
  2,906
  2,989
  3,082
  3,185
  3,298
  3,421
  3,554
  3,697
  3,851
  4,016
  4,855
  5,042
  5,241
  5,452
  5,676
  5,912
  6,163
  6,427
  6,707
  7,002
  7,312
  7,640
  7,985
  8,349
  8,732
  9,135
  9,559
  10,005
  10,475
  10,968
Tax expense, $m
  821
  785
  807
  832
  860
  890
  924
  960
  998
  1,040
  1,084
  1,311
  1,361
  1,415
  1,472
  1,532
  1,596
  1,664
  1,735
  1,811
  1,890
  1,974
  2,063
  2,156
  2,254
  2,358
  2,466
  2,581
  2,701
  2,828
  2,961
Net income, $m
  2,243
  2,121
  2,182
  2,250
  2,325
  2,407
  2,497
  2,594
  2,699
  2,811
  2,932
  3,544
  3,681
  3,826
  3,980
  4,143
  4,316
  4,499
  4,692
  4,896
  5,111
  5,338
  5,577
  5,829
  6,095
  6,374
  6,669
  6,978
  7,304
  7,646
  8,007

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
  37,253
  38,177
  39,220
  40,380
  41,658
  43,052
  44,564
  46,195
  47,948
  49,825
  51,830
  53,966
  56,238
  58,650
  61,206
  63,914
  66,778
  69,805
  73,002
  76,376
  79,935
  83,686
  87,640
  91,804
  96,190
  100,806
  105,664
  110,775
  116,151
  121,806
Adjusted assets (=assets-cash), $m
  36,456
  37,253
  38,177
  39,220
  40,380
  41,658
  43,052
  44,564
  46,195
  47,948
  49,825
  51,830
  53,966
  56,238
  58,650
  61,206
  63,914
  66,778
  69,805
  73,002
  76,376
  79,935
  83,686
  87,640
  91,804
  96,190
  100,806
  105,664
  110,775
  116,151
  121,806
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
  25,399
  26,029
  26,740
  27,531
  28,402
  29,352
  30,383
  31,495
  32,690
  33,970
  35,337
  36,793
  38,342
  39,986
  41,730
  43,576
  45,528
  47,592
  49,772
  52,072
  54,498
  57,056
  59,752
  62,591
  65,581
  68,728
  72,040
  75,525
  79,190
  83,045
Working capital, $m
  -3,888
  -920
  -943
  -969
  -997
  -1,029
  -1,063
  -1,101
  -1,141
  -1,184
  -1,230
  -1,280
  -1,333
  -1,389
  -1,448
  -1,512
  -1,578
  -1,649
  -1,724
  -1,803
  -1,886
  -1,974
  -2,067
  -2,164
  -2,267
  -2,375
  -2,489
  -2,609
  -2,736
  -2,868
  -3,008
Total debt, $m
  15,883
  15,769
  16,364
  17,036
  17,783
  18,606
  19,503
  20,477
  21,528
  22,657
  23,866
  25,157
  26,532
  27,995
  29,548
  31,195
  32,938
  34,783
  36,732
  38,791
  40,964
  43,256
  45,672
  48,218
  50,900
  53,724
  56,697
  59,825
  63,117
  66,579
  70,221
Total liabilities, $m
  24,105
  23,991
  24,586
  25,258
  26,005
  26,828
  27,725
  28,699
  29,750
  30,879
  32,088
  33,379
  34,754
  36,217
  37,770
  39,417
  41,160
  43,005
  44,954
  47,013
  49,186
  51,478
  53,894
  56,440
  59,122
  61,946
  64,919
  68,047
  71,339
  74,801
  78,443
Total equity, $m
  12,982
  13,262
  13,591
  13,962
  14,375
  14,830
  15,326
  15,865
  16,445
  17,070
  17,738
  18,452
  19,212
  20,021
  20,879
  21,789
  22,753
  23,773
  24,851
  25,989
  27,190
  28,457
  29,792
  31,200
  32,682
  34,244
  35,887
  37,616
  39,436
  41,350
  43,363
Total liabilities and equity, $m
  37,087
  37,253
  38,177
  39,220
  40,380
  41,658
  43,051
  44,564
  46,195
  47,949
  49,826
  51,831
  53,966
  56,238
  58,649
  61,206
  63,913
  66,778
  69,805
  73,002
  76,376
  79,935
  83,686
  87,640
  91,804
  96,190
  100,806
  105,663
  110,775
  116,151
  121,806
Debt-to-equity ratio
  1.223
  1.190
  1.200
  1.220
  1.240
  1.250
  1.270
  1.290
  1.310
  1.330
  1.350
  1.360
  1.380
  1.400
  1.420
  1.430
  1.450
  1.460
  1.480
  1.490
  1.510
  1.520
  1.530
  1.550
  1.560
  1.570
  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
  2,121
  2,182
  2,250
  2,325
  2,407
  2,497
  2,594
  2,699
  2,811
  2,932
  3,544
  3,681
  3,826
  3,980
  4,143
  4,316
  4,499
  4,692
  4,896
  5,111
  5,338
  5,577
  5,829
  6,095
  6,374
  6,669
  6,978
  7,304
  7,646
  8,007
Depreciation, amort., depletion, $m
  2,596
  2,780
  2,832
  2,891
  2,957
  3,030
  3,109
  3,195
  3,288
  3,387
  3,494
  2,945
  3,066
  3,195
  3,332
  3,477
  3,631
  3,794
  3,966
  4,148
  4,339
  4,542
  4,755
  4,979
  5,216
  5,465
  5,727
  6,003
  6,294
  6,599
  6,920
Funds from operations, $m
  4,058
  4,901
  5,014
  5,141
  5,282
  5,437
  5,606
  5,789
  5,987
  6,199
  6,425
  6,489
  6,747
  7,021
  7,312
  7,621
  7,947
  8,293
  8,658
  9,044
  9,450
  9,880
  10,332
  10,809
  11,311
  11,839
  12,396
  12,981
  13,598
  14,246
  14,927
Change in working capital, $m
  -859
  -20
  -23
  -26
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -133
  -140
Cash from operations, $m
  4,917
  4,921
  5,037
  5,167
  5,311
  5,469
  5,640
  5,826
  6,027
  6,242
  6,472
  6,538
  6,799
  7,077
  7,372
  7,684
  8,014
  8,364
  8,733
  9,122
  9,534
  9,967
  10,425
  10,906
  11,414
  11,948
  12,510
  13,101
  13,724
  14,378
  15,067
Maintenance CAPEX, $m
  0
  -2,071
  -2,117
  -2,169
  -2,228
  -2,294
  -2,367
  -2,446
  -2,532
  -2,625
  -2,724
  -2,831
  -2,945
  -3,066
  -3,195
  -3,332
  -3,477
  -3,631
  -3,794
  -3,966
  -4,148
  -4,339
  -4,542
  -4,755
  -4,979
  -5,216
  -5,465
  -5,727
  -6,003
  -6,294
  -6,599
New CAPEX, $m
  -2,791
  -549
  -630
  -711
  -791
  -871
  -950
  -1,031
  -1,112
  -1,195
  -1,280
  -1,367
  -1,456
  -1,549
  -1,644
  -1,743
  -1,846
  -1,953
  -2,064
  -2,180
  -2,300
  -2,426
  -2,558
  -2,695
  -2,839
  -2,990
  -3,147
  -3,312
  -3,485
  -3,666
  -3,855
Cash from investing activities, $m
  -3,393
  -2,620
  -2,747
  -2,880
  -3,019
  -3,165
  -3,317
  -3,477
  -3,644
  -3,820
  -4,004
  -4,198
  -4,401
  -4,615
  -4,839
  -5,075
  -5,323
  -5,584
  -5,858
  -6,146
  -6,448
  -6,765
  -7,100
  -7,450
  -7,818
  -8,206
  -8,612
  -9,039
  -9,488
  -9,960
  -10,454
Free cash flow, $m
  1,524
  2,301
  2,290
  2,287
  2,291
  2,304
  2,323
  2,350
  2,383
  2,422
  2,468
  2,340
  2,398
  2,462
  2,532
  2,608
  2,691
  2,780
  2,875
  2,977
  3,086
  3,202
  3,325
  3,456
  3,595
  3,742
  3,898
  4,062
  4,236
  4,419
  4,613
Issuance/(repayment) of debt, $m
  532
  517
  595
  672
  747
  823
  898
  974
  1,051
  1,129
  1,209
  1,291
  1,376
  1,463
  1,553
  1,647
  1,744
  1,844
  1,949
  2,059
  2,173
  2,292
  2,416
  2,546
  2,682
  2,824
  2,973
  3,129
  3,292
  3,462
  3,641
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
  517
  595
  672
  747
  823
  898
  974
  1,051
  1,129
  1,209
  1,291
  1,376
  1,463
  1,553
  1,647
  1,744
  1,844
  1,949
  2,059
  2,173
  2,292
  2,416
  2,546
  2,682
  2,824
  2,973
  3,129
  3,292
  3,462
  3,641
Total cash flow (excl. dividends), $m
  1,977
  2,818
  2,885
  2,958
  3,039
  3,126
  3,221
  3,323
  3,433
  3,551
  3,677
  3,632
  3,774
  3,925
  4,085
  4,255
  4,434
  4,624
  4,824
  5,036
  5,259
  5,494
  5,741
  6,002
  6,277
  6,566
  6,870
  7,191
  7,527
  7,882
  8,254
Retained Cash Flow (-), $m
  -382
  -280
  -329
  -371
  -413
  -455
  -496
  -538
  -581
  -624
  -668
  -714
  -760
  -809
  -859
  -910
  -964
  -1,020
  -1,078
  -1,138
  -1,201
  -1,267
  -1,336
  -1,407
  -1,483
  -1,561
  -1,643
  -1,729
  -1,820
  -1,914
  -2,013
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
 
  2,538
  2,556
  2,587
  2,625
  2,671
  2,725
  2,785
  2,853
  2,927
  3,008
  2,918
  3,013
  3,116
  3,227
  3,345
  3,471
  3,604
  3,747
  3,898
  4,058
  4,227
  4,406
  4,595
  4,794
  5,005
  5,227
  5,461
  5,708
  5,968
  6,241
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  2,377
  2,227
  2,083
  1,939
  1,796
  1,654
  1,513
  1,373
  1,237
  1,104
  919
  805
  697
  596
  503
  418
  343
  276
  219
  170
  130
  97
  71
  51
  35
  24
  16
  10
  6
  4
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 18.1
Price to Sales 2.5
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 19.1
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 2.2% 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 6.8%, 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 853.158 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 $39.8 billion.

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COMPANY NEWS

▶ ETFs with exposure to BCE, Inc. : July 14, 2017   [Jul-14-17 01:04PM  Capital Cube]
▶ The 3 Best Dividend Stocks in Telecommunications   [Jun-29-17 05:45PM  Motley Fool]
▶ Bell hires a record number of summer students in 2017   [Jun-28-17 08:00AM  PR Newswire]
▶ BCE, Inc. Value Analysis (NYSE:BCE) : June 9, 2017   [Jun-09-17 02:10PM  Capital Cube]
▶ New Strong Sell Stocks for May 23rd   [May-23-17 10:05AM  Zacks]
▶ ETFs with exposure to BCE, Inc. : May 12, 2017   [May-12-17 03:42PM  Capital Cube]
▶ ETFs with exposure to BCE, Inc. : April 28, 2017   [Apr-28-17 03:44PM  Capital Cube]
▶ BCE announces election of Directors   [Apr-26-17 12:57PM  PR Newswire]
▶ BCE beats 1Q profit forecasts   [08:04AM  Associated Press]
▶ If You're Retired, Consider Buying These 3 Stocks   [Apr-18-17 01:48PM  Motley Fool]
▶ Stocks That Are Changing Direction   [Apr-17-17 02:00PM  TheStreet.com]
▶ BCE Q1 2017 results to be announced April 26, 2017   [Apr-13-17 09:20AM  CNW Group]
▶ BCE files 2016 annual report on Form 40-F   [Mar-08-17 09:52AM  PR Newswire]
▶ Bell announces offering of MTN Debentures   [06:22PM  PR Newswire]
▶ BCE's Manitoba Telecom Takeover Approved With Conditions   [Feb-15-17 06:22PM  at Bloomberg]
Stock chart of BCE Financial statements of BCE
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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