Intrinsic value of Charter Communications - CHTR

Previous Close

$288.84

  Intrinsic Value

$581.15

stock screener

  Rating & Target

str. buy

+101%

Previous close

$288.84

 
Intrinsic value

$581.15

 
Up/down potential

+101%

 
Rating

str. buy

We calculate the intrinsic value of CHTR 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
(a)
   1
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -100.00
  43.40
  39.56
  36.10
  32.99
  30.19
  27.67
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.78
  12.91
  12.12
  11.40
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
Revenue, $m
  0
  59,627
  83,216
  113,260
  150,628
  196,109
  250,382
  313,998
  387,368
  470,769
  564,343
  668,122
  782,038
  905,955
  1,039,681
  1,182,997
  1,335,677
  1,497,503
  1,668,279
  1,847,846
  2,036,091
  2,232,951
  2,438,421
  2,652,551
  2,875,455
  3,107,304
  3,348,329
  3,598,819
  3,859,120
  4,129,631
  4,410,804
Variable operating expenses, $m
 
  50,969
  69,490
  93,080
  122,421
  158,132
  200,746
  250,696
  308,306
  373,790
  447,263
  524,598
  614,043
  711,340
  816,339
  928,869
  1,048,751
  1,175,813
  1,309,904
  1,450,897
  1,598,704
  1,753,275
  1,914,606
  2,082,737
  2,257,758
  2,439,801
  2,629,050
  2,825,731
  3,030,114
  3,242,515
  3,463,288
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
  0
  50,969
  69,490
  93,080
  122,421
  158,132
  200,746
  250,696
  308,306
  373,790
  447,263
  524,598
  614,043
  711,340
  816,339
  928,869
  1,048,751
  1,175,813
  1,309,904
  1,450,897
  1,598,704
  1,753,275
  1,914,606
  2,082,737
  2,257,758
  2,439,801
  2,629,050
  2,825,731
  3,030,114
  3,242,515
  3,463,288
Operating income, $m
  0
  8,658
  13,726
  20,180
  28,207
  37,977
  49,636
  63,302
  79,063
  96,979
  117,080
  143,524
  167,995
  194,615
  223,341
  254,128
  286,927
  321,689
  358,375
  396,949
  437,387
  479,676
  523,815
  569,814
  617,697
  667,502
  719,279
  773,088
  829,005
  887,116
  947,517
EBITDA, $m
  0
  23,739
  33,130
  45,091
  59,968
  78,075
  99,682
  125,008
  154,218
  187,421
  224,675
  265,991
  311,343
  360,676
  413,915
  470,972
  531,756
  596,182
  664,170
  735,659
  810,603
  888,976
  970,777
  1,056,026
  1,144,768
  1,237,071
  1,333,027
  1,432,752
  1,536,382
  1,644,077
  1,756,017
Interest expense (income), $m
  0
  3,792
  6,106
  9,138
  12,999
  17,803
  23,648
  30,624
  38,801
  48,232
  58,952
  70,979
  84,319
  98,961
  114,889
  132,077
  150,498
  170,123
  190,923
  212,874
  235,955
  260,151
  285,454
  311,864
  339,388
  368,039
  397,839
  428,820
  461,016
  494,474
  529,244
Earnings before tax, $m
  0
  4,866
  7,620
  11,042
  15,208
  20,175
  25,987
  32,677
  40,262
  48,747
  58,128
  72,545
  83,677
  95,654
  108,453
  122,051
  136,428
  151,566
  167,452
  184,075
  201,433
  219,526
  238,360
  257,949
  278,309
  299,464
  321,439
  344,269
  367,989
  392,642
  418,272
Tax expense, $m
  0
  1,314
  2,057
  2,981
  4,106
  5,447
  7,017
  8,823
  10,871
  13,162
  15,695
  19,587
  22,593
  25,826
  29,282
  32,954
  36,836
  40,923
  45,212
  49,700
  54,387
  59,272
  64,357
  69,646
  75,144
  80,855
  86,789
  92,953
  99,357
  106,013
  112,934
Net income, $m
  0
  3,552
  5,563
  8,061
  11,102
  14,727
  18,971
  23,854
  29,391
  35,585
  42,434
  52,958
  61,084
  69,827
  79,170
  89,097
  99,593
  110,643
  122,240
  134,375
  147,046
  160,254
  174,003
  188,303
  203,166
  218,608
  234,651
  251,316
  268,632
  286,628
  305,339

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
  0
  209,955
  293,013
  398,802
  530,381
  690,526
  881,628
  1,105,626
  1,363,973
  1,657,636
  1,987,123
  2,352,541
  2,753,656
  3,189,981
  3,660,847
  4,165,483
  4,703,090
  5,272,897
  5,874,220
  6,506,500
  7,169,335
  7,862,505
  8,585,988
  9,339,969
  10,124,840
  10,941,210
  11,789,889
  12,671,898
  13,588,450
  14,540,953
  15,531,001
Adjusted assets (=assets-cash), $m
  0
  209,955
  293,013
  398,802
  530,381
  690,526
  881,628
  1,105,626
  1,363,973
  1,657,636
  1,987,123
  2,352,541
  2,753,656
  3,189,981
  3,660,847
  4,165,483
  4,703,090
  5,272,897
  5,874,220
  6,506,500
  7,169,335
  7,862,505
  8,585,988
  9,339,969
  10,124,840
  10,941,210
  11,789,889
  12,671,898
  13,588,450
  14,540,953
  15,531,001
Revenue / Adjusted assets
  0.000
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
  0.284
Average production assets, $m
  0
  109,297
  152,534
  207,605
  276,102
  359,469
  458,951
  575,558
  710,046
  862,919
  1,034,441
  1,224,667
  1,433,476
  1,660,615
  1,905,734
  2,168,434
  2,448,297
  2,744,923
  3,057,955
  3,387,102
  3,732,155
  4,093,000
  4,469,625
  4,862,126
  5,270,708
  5,695,687
  6,137,486
  6,596,635
  7,073,766
  7,569,613
  8,085,004
Working capital, $m
  0
  -12,999
  -18,141
  -24,691
  -32,837
  -42,752
  -54,583
  -68,452
  -84,446
  -102,628
  -123,027
  -145,650
  -170,484
  -197,498
  -226,650
  -257,893
  -291,178
  -326,456
  -363,685
  -402,830
  -443,868
  -486,783
  -531,576
  -578,256
  -626,849
  -677,392
  -729,936
  -784,543
  -841,288
  -900,259
  -961,555
Total debt, $m
  0
  113,068
  169,216
  240,729
  329,677
  437,935
  567,119
  718,542
  893,185
  1,091,701
  1,314,434
  1,561,456
  1,832,611
  2,127,566
  2,445,872
  2,787,006
  3,150,428
  3,535,618
  3,942,112
  4,369,533
  4,817,609
  5,286,192
  5,775,267
  6,284,958
  6,815,531
  7,367,397
  7,941,104
  8,537,342
  9,156,931
  9,800,823
  10,470,096
Total liabilities, $m
  0
  141,929
  198,077
  269,590
  358,538
  466,796
  595,980
  747,403
  922,046
  1,120,562
  1,343,295
  1,590,317
  1,861,472
  2,156,427
  2,474,733
  2,815,867
  3,179,289
  3,564,479
  3,970,973
  4,398,394
  4,846,470
  5,315,053
  5,804,128
  6,313,819
  6,844,392
  7,396,258
  7,969,965
  8,566,203
  9,185,792
  9,829,684
  10,498,957
Total equity, $m
  0
  68,025
  94,936
  129,212
  171,844
  223,730
  285,647
  358,223
  441,927
  537,074
  643,828
  762,223
  892,185
  1,033,554
  1,186,114
  1,349,617
  1,523,801
  1,708,419
  1,903,247
  2,108,106
  2,322,864
  2,547,452
  2,781,860
  3,026,150
  3,280,448
  3,544,952
  3,819,924
  4,105,695
  4,402,658
  4,711,269
  5,032,044
Total liabilities and equity, $m
  0
  209,954
  293,013
  398,802
  530,382
  690,526
  881,627
  1,105,626
  1,363,973
  1,657,636
  1,987,123
  2,352,540
  2,753,657
  3,189,981
  3,660,847
  4,165,484
  4,703,090
  5,272,898
  5,874,220
  6,506,500
  7,169,334
  7,862,505
  8,585,988
  9,339,969
  10,124,840
  10,941,210
  11,789,889
  12,671,898
  13,588,450
  14,540,953
  15,531,001
Debt-to-equity ratio
  0.000
  1.660
  1.780
  1.860
  1.920
  1.960
  1.990
  2.010
  2.020
  2.030
  2.040
  2.050
  2.050
  2.060
  2.060
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
Adjusted equity ratio
  0.000
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  3,552
  5,563
  8,061
  11,102
  14,727
  18,971
  23,854
  29,391
  35,585
  42,434
  52,958
  61,084
  69,827
  79,170
  89,097
  99,593
  110,643
  122,240
  134,375
  147,046
  160,254
  174,003
  188,303
  203,166
  218,608
  234,651
  251,316
  268,632
  286,628
  305,339
Depreciation, amort., depletion, $m
  0
  15,080
  19,404
  24,911
  31,761
  40,097
  50,046
  61,706
  75,155
  90,442
  107,595
  122,467
  143,348
  166,061
  190,573
  216,843
  244,830
  274,492
  305,795
  338,710
  373,215
  409,300
  446,963
  486,213
  527,071
  569,569
  613,749
  659,664
  707,377
  756,961
  808,500
Funds from operations, $m
  0
  18,632
  24,967
  32,972
  42,862
  54,825
  69,016
  85,561
  104,546
  126,027
  150,028
  175,424
  204,432
  235,889
  269,744
  305,941
  344,422
  385,136
  428,035
  473,085
  520,261
  569,554
  620,966
  674,516
  730,237
  788,177
  848,399
  910,980
  976,009
  1,043,590
  1,113,839
Change in working capital, $m
  0
  -3,934
  -5,142
  -6,550
  -8,146
  -9,915
  -11,831
  -13,868
  -15,995
  -18,181
  -20,399
  -22,624
  -24,834
  -27,014
  -29,152
  -31,243
  -33,284
  -35,278
  -37,229
  -39,146
  -41,037
  -42,916
  -44,792
  -46,680
  -48,593
  -50,543
  -52,543
  -54,607
  -56,746
  -58,971
  -61,296
Cash from operations, $m
  0
  22,566
  30,109
  39,521
  51,009
  64,740
  80,848
  99,429
  120,541
  144,209
  170,427
  198,048
  229,265
  262,902
  298,896
  337,184
  377,707
  420,414
  465,264
  512,231
  561,299
  612,469
  665,758
  721,196
  778,830
  838,720
  900,943
  965,587
  1,032,754
  1,102,561
  1,175,135
Maintenance CAPEX, $m
  0
  -7,624
  -10,930
  -15,253
  -20,761
  -27,610
  -35,947
  -45,895
  -57,556
  -71,005
  -86,292
  -103,444
  -122,467
  -143,348
  -166,061
  -190,573
  -216,843
  -244,830
  -274,492
  -305,795
  -338,710
  -373,215
  -409,300
  -446,963
  -486,213
  -527,071
  -569,569
  -613,749
  -659,664
  -707,377
  -756,961
New CAPEX, $m
  0
  -33,060
  -43,238
  -55,071
  -68,496
  -83,367
  -99,482
  -116,607
  -134,488
  -152,873
  -171,522
  -190,226
  -208,810
  -227,139
  -245,119
  -262,700
  -279,863
  -296,626
  -313,032
  -329,147
  -345,053
  -360,845
  -376,625
  -392,501
  -408,582
  -424,979
  -441,799
  -459,149
  -477,131
  -495,847
  -515,391
Cash from investing activities, $m
  0
  -40,684
  -54,168
  -70,324
  -89,257
  -110,977
  -135,429
  -162,502
  -192,044
  -223,878
  -257,814
  -293,670
  -331,277
  -370,487
  -411,180
  -453,273
  -496,706
  -541,456
  -587,524
  -634,942
  -683,763
  -734,060
  -785,925
  -839,464
  -894,795
  -952,050
  -1,011,368
  -1,072,898
  -1,136,795
  -1,203,224
  -1,272,352
Free cash flow, $m
  0
  -18,117
  -24,059
  -30,803
  -38,248
  -46,237
  -54,581
  -63,073
  -71,503
  -79,668
  -87,386
  -95,622
  -102,011
  -107,584
  -112,285
  -116,089
  -119,000
  -121,042
  -122,260
  -122,712
  -122,465
  -121,591
  -120,167
  -118,268
  -115,965
  -113,329
  -110,425
  -107,311
  -104,041
  -100,662
  -97,218
Issuance/(repayment) of debt, $m
  0
  42,837
  56,147
  71,514
  88,948
  108,258
  129,185
  151,423
  174,643
  198,516
  222,733
  247,022
  271,154
  294,956
  318,305
  341,134
  363,422
  385,190
  406,494
  427,421
  448,076
  468,583
  489,075
  509,691
  530,573
  551,865
  573,708
  596,238
  619,589
  643,892
  669,273
Issuance/(repurchase) of shares, $m
  0
  16,942
  21,348
  26,215
  31,530
  37,159
  42,946
  48,721
  54,314
  59,562
  64,320
  65,438
  68,878
  71,542
  73,390
  74,405
  74,592
  73,974
  72,589
  70,484
  67,713
  64,334
  60,406
  55,987
  51,133
  45,895
  40,322
  34,455
  28,331
  21,983
  15,437
Cash from financing (excl. dividends), $m  
  0
  59,779
  77,495
  97,729
  120,478
  145,417
  172,131
  200,144
  228,957
  258,078
  287,053
  312,460
  340,032
  366,498
  391,695
  415,539
  438,014
  459,164
  479,083
  497,905
  515,789
  532,917
  549,481
  565,678
  581,706
  597,760
  614,030
  630,693
  647,920
  665,875
  684,710
Total cash flow (excl. dividends), $m
  0
  41,662
  53,437
  66,926
  82,229
  99,180
  117,550
  137,070
  157,453
  178,409
  199,667
  216,838
  238,021
  258,914
  279,410
  299,450
  319,014
  338,122
  356,823
  375,193
  393,324
  411,325
  429,313
  447,410
  465,741
  484,431
  503,604
  523,381
  543,879
  565,213
  587,492
Retained Cash Flow (-), $m
  0
  -20,494
  -26,911
  -34,276
  -42,632
  -51,887
  -61,917
  -72,575
  -83,705
  -95,147
  -106,754
  -118,395
  -129,962
  -141,369
  -152,560
  -163,502
  -174,184
  -184,618
  -194,829
  -204,859
  -214,758
  -224,587
  -234,409
  -244,290
  -254,299
  -264,504
  -274,972
  -285,771
  -296,963
  -308,611
  -320,776
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
 
  291
  417
  583
  793
  1,054
  1,373
  1,753
  2,198
  2,712
  3,295
  3,950
  4,677
  5,474
  6,342
  7,278
  8,281
  9,350
  10,483
  11,678
  12,935
  14,253
  15,631
  17,069
  18,568
  20,128
  21,751
  23,438
  25,192
  27,014
  28,907
Cash available for distribution, $m
 
  21,168
  26,526
  32,650
  39,598
  47,293
  55,633
  64,495
  73,749
  83,262
  92,913
  98,442
  108,059
  117,545
  126,850
  135,948
  144,830
  153,505
  161,995
  170,334
  178,566
  186,738
  194,904
  203,120
  211,442
  219,928
  228,632
  237,611
  246,917
  256,602
  266,716
Discount rate, %
 
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
 
  19,510
  22,357
  24,956
  27,204
  28,926
  29,988
  30,310
  29,870
  28,711
  26,924
  23,643
  21,197
  18,542
  15,827
  13,185
  10,719
  8,502
  6,577
  4,961
  3,646
  2,609
  1,816
  1,229
  808
  515
  318
  190
  110
  61
  33
Current shareholders' claim on cash, %
  100
  81.4
  67.8
  57.6
  49.8
  43.8
  39.0
  35.1
  32.0
  29.5
  27.4
  25.7
  24.3
  23.1
  22.1
  21.3
  20.5
  19.9
  19.4
  18.9
  18.6
  18.2
  18.0
  17.7
  17.5
  17.4
  17.3
  17.2
  17.1
  17.0
  17.0

Charter Communications, Inc., through its subsidiaries, provides cable services to residential and commercial customers in the United States. It offers subscription-based video services, including a package of basic video programming, video on demand, high definition television, digital video recorder, pay-per-view, and Spectrum guide services, as well as ad-supported free online video products. The company also provides Internet services, such as security suite that protects computers from viruses and spyware; in-home WiFi, which permits customers to lease high performance wireless routers to enhance their in-home wireless Internet experience; out-of-home WiFi; parental control features; and residential Internet services. In addition, it offers voice communications services using voice over Internet protocol technology; and broadband communications solutions, such as Internet access, data networking, fiber connectivity, video entertainment, and business telephone services to cellular towers and office buildings for business and carrier organizations. Further, the company provides video programming and music, Web hosting, e-mail and security, and multi-line telephone services, as well as Web-based service management; and sells video and online advertising inventory to local, regional, and national advertising customers. Additionally, it offers fiber-delivered communications and managed information technology solutions; and security and home management services, as well as owns and operates regional sports networks and local sports, news, and lifestyle channels. As of December 31, 2016, the company served approximately 26.2 million residential and business customers. Charter Communications, Inc. was founded in 1999 and is headquartered in Stamford, Connecticut.

FINANCIAL RATIOS  of  Charter Communications (CHTR)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CHTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHTR stock intrinsic value calculation we used $41581 million for the last fiscal year's total revenue generated by Charter Communications. The default revenue input number comes from income statement of Charter Communications. 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 CHTR stock valuation model: a) initial revenue growth rate of 43.4% 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 8.5%, whose default value for CHTR is calculated based on our internal credit rating of Charter Communications, 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 Charter Communications.
    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 CHTR stock the variable cost ratio is equal to 88.5%.

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 CHTR 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 Charter Communications.

Corporate tax rate of 27% is the nominal tax rate for Charter Communications. 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 CHTR stock is equal to 0.7%.

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 CHTR are equal to 183.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Charter Communications 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 CHTR is equal to -21.8%. 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 - $47531 million for Charter Communications - 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 257 million for Charter Communications 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 Charter Communications at the current share price and the inputted number of shares is $74.2 billion.

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COMPANY NEWS

▶ Why Was Charter Communications Up 12% in June?   [Jul-06-18 11:04AM  Motley Fool]
▶ Charter Closes $1.5 Billion Senior Secured Notes   [Jul-03-18 05:50PM  PR Newswire]
▶ Charter Prices $1.5 Billion Senior Secured Notes   [Jun-28-18 06:15PM  PR Newswire]
▶ Charter Offers Senior Secured Notes   [09:03AM  PR Newswire]
▶ Farewell to Net Neutrality: Winners and Losers   [Jun-22-18 12:23PM  InvestorPlace]
▶ 6 Stock Picks of One of Buffett's Favorite Investors   [Jun-18-18 08:00AM  Investopedia]
▶ [$$] Reeling From Netflix, Media Turns to Mergers   [Jun-16-18 12:01AM  Barrons.com]
▶ 7 Stocks Warren Buffett Would Approve Of   [Jun-07-18 02:27PM  InvestorPlace]
▶ Charlotte Hornets land big-name backer for 30th anniversary   [Jun-05-18 03:05PM  American City Business Journals]
▶ Apple Hopes to (Finally) Kill Off the Cable Box   [Jun-04-18 07:53PM  Fortune]
▶ 3 Bond Funds for Rising Interest Rates   [May-29-18 04:49PM  InvestorPlace]
▶ Charter Communications: Time to Panic Over Cord-Cutting?   [May-22-18 02:57PM  Motley Fool]
▶ [$$] Charter Communications---Choppy Waters   [06:00AM  The Wall Street Journal]
▶ MARKETS: Price inflation just hit the Federal Reserve's magic number   [Apr-30-18 10:56AM  Yahoo Finance Video]
▶ AT&T-DOJ Closing Arguments Cheat Sheet for Monday   [Apr-28-18 08:00AM  TheStreet.com]
▶ Why Shares of Altice USA Slumped Today   [03:35PM  Motley Fool]
▶ The Cable Guys Face a Reckoning   [12:46PM  Bloomberg]
▶ Charter: 1Q Earnings Snapshot   [08:41AM  Associated Press]
▶ GDP What you need to know in markets on Friday   [Apr-26-18 05:43PM  Yahoo Finance]
▶ Wireless allies Comcast & Charter announce partnership   [12:39PM  American City Business Journals]
▶ Charter Closes $2.5 Billion Senior Secured Notes   [Apr-17-18 07:52PM  PR Newswire]
▶ Is Charter Communications a Buy?   [Apr-13-18 10:47AM  Motley Fool]
Financial statements of CHTR
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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