Intrinsic value of Comtech Telecommunications - CMTL

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$14.43

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$14.43

 
Intrinsic value

$44.12

 
Up/down potential

+206%

 
Rating

str. buy

 
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 CMTL 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 0.3

 

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, %
  33.88
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  411
  658
  1,016
  1,519
  2,205
  3,110
  4,276
  5,740
  7,537
  9,698
  12,249
  15,211
  18,596
  22,415
  26,669
  31,358
  36,477
  42,019
  47,974
  54,333
  61,086
  68,225
  75,742
  83,632
  91,890
  100,516
  109,510
  118,878
  128,623
  138,757
  149,289
Variable operating expenses, $m
 
  567
  860
  1,272
  1,832
  2,573
  3,526
  4,723
  6,193
  7,961
  10,048
  12,441
  15,210
  18,334
  21,813
  25,649
  29,836
  34,368
  39,239
  44,440
  49,964
  55,803
  61,952
  68,405
  75,159
  82,215
  89,572
  97,233
  105,205
  113,493
  122,108
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
  412
  567
  860
  1,272
  1,832
  2,573
  3,526
  4,723
  6,193
  7,961
  10,048
  12,441
  15,210
  18,334
  21,813
  25,649
  29,836
  34,368
  39,239
  44,440
  49,964
  55,803
  61,952
  68,405
  75,159
  82,215
  89,572
  97,233
  105,205
  113,493
  122,108
Operating income, $m
  -1
  91
  156
  248
  373
  538
  750
  1,016
  1,343
  1,737
  2,201
  2,769
  3,386
  4,081
  4,856
  5,709
  6,642
  7,650
  8,735
  9,893
  11,122
  12,422
  13,791
  15,227
  16,731
  18,301
  19,939
  21,644
  23,419
  25,264
  27,182
EBITDA, $m
  22
  137
  211
  316
  458
  646
  888
  1,193
  1,566
  2,015
  2,545
  3,160
  3,864
  4,657
  5,541
  6,516
  7,579
  8,731
  9,968
  11,289
  12,692
  14,176
  15,738
  17,377
  19,093
  20,885
  22,754
  24,700
  26,725
  28,831
  31,019
Interest expense (income), $m
  5
  10
  20
  35
  55
  84
  121
  170
  230
  305
  394
  500
  623
  763
  921
  1,097
  1,292
  1,504
  1,733
  1,980
  2,244
  2,523
  2,819
  3,131
  3,458
  3,800
  4,157
  4,530
  4,918
  5,322
  5,742
Earnings before tax, $m
  -8
  81
  136
  213
  317
  454
  628
  847
  1,113
  1,432
  1,807
  2,269
  2,763
  3,318
  3,935
  4,612
  5,350
  6,147
  7,001
  7,912
  8,878
  9,898
  10,971
  12,096
  13,273
  14,501
  15,782
  17,115
  18,501
  19,942
  21,440
Tax expense, $m
  0
  22
  37
  58
  86
  122
  170
  229
  301
  387
  488
  613
  746
  896
  1,062
  1,245
  1,444
  1,660
  1,890
  2,136
  2,397
  2,673
  2,962
  3,266
  3,584
  3,915
  4,261
  4,621
  4,995
  5,384
  5,789
Net income, $m
  -8
  59
  100
  156
  232
  331
  459
  618
  813
  1,045
  1,319
  1,657
  2,017
  2,422
  2,872
  3,367
  3,905
  4,487
  5,111
  5,776
  6,481
  7,226
  8,009
  8,830
  9,689
  10,586
  11,521
  12,494
  13,506
  14,558
  15,651

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  67
  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
  921
  1,367
  2,112
  3,159
  4,583
  6,466
  8,890
  11,933
  15,669
  20,162
  25,466
  31,623
  38,662
  46,600
  55,445
  65,194
  75,836
  87,357
  99,738
  112,958
  126,998
  141,840
  157,468
  173,870
  191,039
  208,973
  227,672
  247,147
  267,408
  288,476
  310,373
Adjusted assets (=assets-cash), $m
  854
  1,367
  2,112
  3,159
  4,583
  6,466
  8,890
  11,933
  15,669
  20,162
  25,466
  31,623
  38,662
  46,600
  55,445
  65,194
  75,836
  87,357
  99,738
  112,958
  126,998
  141,840
  157,468
  173,870
  191,039
  208,973
  227,672
  247,147
  267,408
  288,476
  310,373
Revenue / Adjusted assets
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
Average production assets, $m
  180
  287
  444
  664
  963
  1,359
  1,869
  2,508
  3,293
  4,238
  5,353
  6,647
  8,127
  9,795
  11,654
  13,704
  15,941
  18,362
  20,965
  23,743
  26,695
  29,814
  33,099
  36,547
  40,156
  43,925
  47,856
  51,949
  56,208
  60,637
  65,239
Working capital, $m
  120
  109
  168
  251
  364
  513
  706
  947
  1,244
  1,600
  2,021
  2,510
  3,068
  3,698
  4,400
  5,174
  6,019
  6,933
  7,916
  8,965
  10,079
  11,257
  12,497
  13,799
  15,162
  16,585
  18,069
  19,615
  21,223
  22,895
  24,633
Total debt, $m
  259
  507
  887
  1,422
  2,150
  3,112
  4,351
  5,906
  7,815
  10,111
  12,821
  15,967
  19,564
  23,621
  28,141
  33,122
  38,560
  44,447
  50,774
  57,530
  64,704
  72,288
  80,274
  88,656
  97,429
  106,593
  116,149
  126,100
  136,454
  147,219
  158,408
Total liabilities, $m
  451
  699
  1,079
  1,614
  2,342
  3,304
  4,543
  6,098
  8,007
  10,303
  13,013
  16,159
  19,756
  23,813
  28,333
  33,314
  38,752
  44,639
  50,966
  57,722
  64,896
  72,480
  80,466
  88,848
  97,621
  106,785
  116,341
  126,292
  136,646
  147,411
  158,600
Total equity, $m
  470
  669
  1,033
  1,545
  2,241
  3,162
  4,347
  5,835
  7,662
  9,859
  12,453
  15,464
  18,906
  22,788
  27,113
  31,880
  37,084
  42,718
  48,772
  55,236
  62,102
  69,360
  77,002
  85,023
  93,418
  102,188
  111,332
  120,855
  130,763
  141,065
  151,772
Total liabilities and equity, $m
  921
  1,368
  2,112
  3,159
  4,583
  6,466
  8,890
  11,933
  15,669
  20,162
  25,466
  31,623
  38,662
  46,601
  55,446
  65,194
  75,836
  87,357
  99,738
  112,958
  126,998
  141,840
  157,468
  173,871
  191,039
  208,973
  227,673
  247,147
  267,409
  288,476
  310,372
Debt-to-equity ratio
  0.551
  0.760
  0.860
  0.920
  0.960
  0.980
  1.000
  1.010
  1.020
  1.030
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
Adjusted equity ratio
  0.472
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489
  0.489

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -8
  59
  100
  156
  232
  331
  459
  618
  813
  1,045
  1,319
  1,657
  2,017
  2,422
  2,872
  3,367
  3,905
  4,487
  5,111
  5,776
  6,481
  7,226
  8,009
  8,830
  9,689
  10,586
  11,521
  12,494
  13,506
  14,558
  15,651
Depreciation, amort., depletion, $m
  23
  46
  55
  68
  85
  109
  139
  176
  223
  278
  344
  391
  478
  576
  686
  806
  938
  1,080
  1,233
  1,397
  1,570
  1,754
  1,947
  2,150
  2,362
  2,584
  2,815
  3,056
  3,306
  3,567
  3,838
Funds from operations, $m
  10
  105
  155
  224
  317
  440
  597
  794
  1,035
  1,324
  1,663
  2,048
  2,495
  2,998
  3,558
  4,173
  4,843
  5,567
  6,344
  7,173
  8,052
  8,980
  9,956
  10,980
  12,051
  13,170
  14,336
  15,550
  16,812
  18,125
  19,489
Change in working capital, $m
  -5
  41
  59
  83
  113
  149
  192
  242
  296
  357
  421
  489
  559
  630
  702
  774
  845
  914
  983
  1,049
  1,114
  1,178
  1,240
  1,302
  1,363
  1,423
  1,484
  1,546
  1,608
  1,672
  1,738
Cash from operations, $m
  15
  208
  95
  140
  204
  290
  405
  553
  739
  967
  1,242
  1,559
  1,936
  2,368
  2,856
  3,399
  3,998
  4,653
  5,362
  6,123
  6,937
  7,802
  8,716
  9,678
  10,689
  11,747
  12,852
  14,004
  15,204
  16,453
  17,751
Maintenance CAPEX, $m
  0
  -11
  -17
  -26
  -39
  -57
  -80
  -110
  -148
  -194
  -249
  -315
  -391
  -478
  -576
  -686
  -806
  -938
  -1,080
  -1,233
  -1,397
  -1,570
  -1,754
  -1,947
  -2,150
  -2,362
  -2,584
  -2,815
  -3,056
  -3,306
  -3,567
New CAPEX, $m
  -6
  -108
  -157
  -220
  -299
  -396
  -509
  -640
  -785
  -944
  -1,115
  -1,294
  -1,480
  -1,669
  -1,859
  -2,049
  -2,237
  -2,422
  -2,602
  -2,779
  -2,951
  -3,120
  -3,285
  -3,448
  -3,609
  -3,769
  -3,931
  -4,093
  -4,259
  -4,428
  -4,603
Cash from investing activities, $m
  -286
  -119
  -174
  -246
  -338
  -453
  -589
  -750
  -933
  -1,138
  -1,364
  -1,609
  -1,871
  -2,147
  -2,435
  -2,735
  -3,043
  -3,360
  -3,682
  -4,012
  -4,348
  -4,690
  -5,039
  -5,395
  -5,759
  -6,131
  -6,515
  -6,908
  -7,315
  -7,734
  -8,170
Free cash flow, $m
  -271
  90
  -78
  -106
  -135
  -162
  -184
  -197
  -194
  -171
  -122
  -50
  66
  222
  420
  664
  955
  1,294
  1,679
  2,111
  2,589
  3,112
  3,677
  4,284
  4,930
  5,615
  6,337
  7,095
  7,889
  8,718
  9,581
Issuance/(repayment) of debt, $m
  255
  263
  381
  535
  728
  962
  1,238
  1,555
  1,909
  2,296
  2,710
  3,146
  3,597
  4,057
  4,520
  4,982
  5,438
  5,887
  6,326
  6,756
  7,175
  7,584
  7,986
  8,382
  8,773
  9,164
  9,556
  9,951
  10,354
  10,766
  11,189
Issuance/(repurchase) of shares, $m
  96
  0
  62
  83
  103
  121
  131
  130
  112
  72
  6
  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  
  206
  263
  443
  618
  831
  1,083
  1,369
  1,685
  2,021
  2,368
  2,716
  3,146
  3,597
  4,057
  4,520
  4,982
  5,438
  5,887
  6,326
  6,756
  7,175
  7,584
  7,986
  8,382
  8,773
  9,164
  9,556
  9,951
  10,354
  10,766
  11,189
Total cash flow (excl. dividends), $m
  -65
  352
  303
  429
  593
  800
  1,054
  1,358
  1,715
  2,125
  2,588
  3,096
  3,663
  4,278
  4,940
  5,646
  6,394
  7,181
  8,006
  8,867
  9,764
  10,696
  11,663
  12,665
  13,704
  14,779
  15,893
  17,047
  18,243
  19,483
  20,771
Retained Cash Flow (-), $m
  -69
  -251
  -364
  -512
  -697
  -921
  -1,185
  -1,488
  -1,827
  -2,197
  -2,594
  -3,011
  -3,442
  -3,882
  -4,325
  -4,767
  -5,204
  -5,634
  -6,054
  -6,465
  -6,866
  -7,258
  -7,642
  -8,021
  -8,396
  -8,769
  -9,144
  -9,523
  -9,908
  -10,302
  -10,708
Prev. year cash balance distribution, $m
 
  52
  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
 
  154
  0
  0
  0
  0
  0
  0
  0
  0
  0
  85
  221
  396
  615
  879
  1,189
  1,547
  1,951
  2,402
  2,898
  3,438
  4,021
  4,645
  5,308
  6,010
  6,749
  7,524
  8,335
  9,181
  10,063
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  144
  0
  0
  0
  0
  0
  0
  0
  0
  0
  26
  58
  87
  111
  129
  139
  142
  139
  130
  116
  101
  84
  68
  53
  40
  29
  20
  14
  9
  6
Current shareholders' claim on cash, %
  100
  100.0
  88.7
  79.8
  73.0
  68.0
  64.3
  61.7
  60.1
  59.4
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3
  59.3

Comtech Telecommunications Corp. designs, develops, produces, and markets products, systems, and services for communications solutions. The company’s Commercial Solutions segment provides ground-based equipment, such as single channel per carrier modems and solid state amplifiers that facilitate the transmission of voice, video, and data, as well as offers traveling wave tube amplifiers comprising high power narrow-band amplifiers that are used to amplify signals from satellite earth stations; and safety and security technology solutions that enable 911 call routing. This segment also offers enterprise application technologies, including location-based technology, such as Trusted Location, a software-based scoring system that allows providers to determine mobile location and identify fraudulent behavior and other security risks; Look4, an application that enables customers to build their own applications; Indoor Location, a solution that enables the determination of a cell phone user’s geospatial position; text messaging platforms that are used by wireless carriers to provide short-messaging services and to communicate with 911 public safety answering points; and VirtuMedix, a digital health platform that enables virtual healthcare. The company’s Government Solutions segment provides command and control technologies, including tactical communications, managed networks, logistics, and end-to-end integration; cyber security training and computer network operations; and satellite-based mobile communications and tracking systems. This segment also offers over-the-horizon microwave systems, such as equipment and systems that transmit digitized voice, video, and data; and solid state high power broadband amplifiers designed for radar, electronic warfare, jamming, medical, and aviation applications. The company serves commercial and government customers worldwide. Comtech Telecommunications Corp. was founded in 1967 and is headquartered in Melville, New York.

FINANCIAL RATIOS  of  Comtech Telecommunications (CMTL)

Valuation Ratios
P/E Ratio -42.1
Price to Sales 0.8
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 22.4
Price to Free Cash Flow 37.4
Growth Rates
Sales Growth Rate 33.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 51.9%
Total Debt to Equity 55.1%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.4%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital -1.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity -1.8%
Return On Equity - 3 Yr. Avg. 3.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 41.6%
Gross Margin - 3 Yr. Avg. 43.5%
EBITDA Margin 4.9%
EBITDA Margin - 3 Yr. Avg. 12.3%
Operating Margin -0.2%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin -1.9%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin -1.9%
Net Profit Margin - 3 Yr. Avg. 4.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 22.8%
Payout Ratio -237.5%

CMTL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMTL stock intrinsic value calculation we used $411 million for the last fiscal year's total revenue generated by Comtech Telecommunications. The default revenue input number comes from 2016 income statement of Comtech Telecommunications. 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 CMTL stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.9%, whose default value for CMTL is calculated based on our internal credit rating of Comtech Telecommunications, 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 Comtech Telecommunications.
    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 CMTL stock the variable cost ratio is equal to 88.8%.

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 CMTL 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 3.9% for Comtech Telecommunications.

Corporate tax rate of 27% is the nominal tax rate for Comtech Telecommunications. 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 CMTL 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 CMTL are equal to 43.7%.

Life of production assets of 17 years is the average useful life of capital assets used in Comtech Telecommunications 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 CMTL is equal to 16.5%. 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 - $470 million for Comtech Telecommunications - 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 23.512 million for Comtech Telecommunications 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 Comtech Telecommunications at the current share price and the inputted number of shares is $0.3 billion.


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COMPANY NEWS

▶ Communications technology firm plans layoffs, plant shutdown in Tampa   [12:55PM  American City Business Journals]
▶ Comtech tops 2Q revenue forecasts   [Mar-08-17 05:54PM  AP]
▶ Is Lee Enterprises, Incorporated (LEE) A Good Stock To Buy?   [Dec-12-16 04:19PM  at Insider Monkey]
▶ Is Pfenex Inc (PFNX) A Good Stock To Buy?   [07:35AM  at Insider Monkey]
▶ Comtech reports 1Q loss   [04:26PM  AP]
▶ Comtech misses 4Q revenue forecasts   [Oct-06-16 06:03PM  AP]
Stock chart of CMTL Financial statements of CMTL Annual reports of CMTL
Valuation of Stocks

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