Intrinsic value of Nortel Inversora ADR - NTL

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$30.60

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of NTL 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 0.1

 

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, %
  31.57
  33.00
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
Revenue, $m
  3,413
  53,917
  70,200
  89,631
  112,408
  138,679
  168,541
  202,048
  239,209
  280,002
  324,376
  372,264
  423,587
  478,263
  536,216
  597,374
  661,681
  729,096
  799,596
  873,180
  949,866
  1,029,695
  1,112,726
  1,199,045
  1,288,753
  1,381,974
  1,478,852
  1,579,548
  1,684,244
  1,793,137
  1,906,442
Variable operating expenses, $m
 
  45,182
  58,827
  75,111
  94,198
  116,213
  141,238
  169,316
  200,458
  234,642
  271,827
  311,957
  354,966
  400,785
  449,349
  500,599
  554,488
  610,982
  670,062
  731,725
  795,988
  862,884
  932,465
  1,004,799
  1,079,975
  1,158,094
  1,239,278
  1,323,662
  1,411,396
  1,502,648
  1,597,598
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
  2,913
  45,182
  58,827
  75,111
  94,198
  116,213
  141,238
  169,316
  200,458
  234,642
  271,827
  311,957
  354,966
  400,785
  449,349
  500,599
  554,488
  610,982
  670,062
  731,725
  795,988
  862,884
  932,465
  1,004,799
  1,079,975
  1,158,094
  1,239,278
  1,323,662
  1,411,396
  1,502,648
  1,597,598
Operating income, $m
  500
  8,735
  11,372
  14,520
  18,210
  22,466
  27,304
  32,732
  38,752
  45,360
  52,549
  60,307
  68,621
  77,479
  86,867
  96,775
  107,192
  118,113
  129,535
  141,455
  153,878
  166,811
  180,262
  194,245
  208,778
  223,880
  239,574
  255,887
  272,848
  290,488
  308,844
EBITDA, $m
  897
  10,460
  13,619
  17,388
  21,807
  26,904
  32,697
  39,197
  46,407
  54,320
  62,929
  72,219
  82,176
  92,783
  104,026
  115,890
  128,366
  141,445
  155,122
  169,397
  184,274
  199,761
  215,869
  232,615
  250,018
  268,103
  286,897
  306,432
  326,743
  347,869
  369,850
Interest expense (income), $m
  101
  448
  1,994
  3,881
  6,133
  8,773
  11,818
  15,279
  19,162
  23,469
  28,196
  33,339
  38,889
  44,837
  51,174
  57,890
  64,978
  72,431
  80,244
  88,414
  96,942
  105,830
  115,082
  124,705
  134,708
  145,105
  155,909
  167,137
  178,807
  190,940
  203,561
Earnings before tax, $m
  358
  8,286
  9,378
  10,639
  12,077
  13,693
  15,486
  17,453
  19,590
  21,892
  24,353
  26,968
  29,732
  32,642
  35,693
  38,885
  42,214
  45,683
  49,291
  53,041
  56,936
  60,981
  65,180
  69,541
  74,070
  78,775
  83,665
  88,750
  94,041
  99,548
  105,283
Tax expense, $m
  103
  2,237
  2,532
  2,873
  3,261
  3,697
  4,181
  4,712
  5,289
  5,911
  6,575
  7,281
  8,028
  8,813
  9,637
  10,499
  11,398
  12,334
  13,309
  14,321
  15,373
  16,465
  17,599
  18,776
  19,999
  21,269
  22,590
  23,963
  25,391
  26,878
  28,426
Net income, $m
  140
  6,049
  6,846
  7,766
  8,816
  9,996
  11,305
  12,741
  14,301
  15,981
  17,777
  19,686
  21,704
  23,828
  26,056
  28,386
  30,816
  33,348
  35,982
  38,720
  41,563
  44,516
  47,581
  50,765
  54,071
  57,506
  61,075
  64,788
  68,650
  72,670
  76,857

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  368
  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
  3,070
  48,097
  62,622
  79,956
  100,275
  123,710
  150,349
  180,239
  213,389
  249,779
  289,363
  332,082
  377,865
  426,640
  478,337
  532,893
  590,259
  650,397
  713,288
  778,930
  847,338
  918,550
  992,619
  1,069,620
  1,149,645
  1,232,805
  1,319,226
  1,409,053
  1,502,448
  1,599,587
  1,700,662
Adjusted assets (=assets-cash), $m
  2,702
  48,097
  62,622
  79,956
  100,275
  123,710
  150,349
  180,239
  213,389
  249,779
  289,363
  332,082
  377,865
  426,640
  478,337
  532,893
  590,259
  650,397
  713,288
  778,930
  847,338
  918,550
  992,619
  1,069,620
  1,149,645
  1,232,805
  1,319,226
  1,409,053
  1,502,448
  1,599,587
  1,700,662
Revenue / Adjusted assets
  1.263
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
Average production assets, $m
  488
  8,627
  11,232
  14,341
  17,985
  22,189
  26,967
  32,328
  38,274
  44,800
  51,900
  59,562
  67,774
  76,522
  85,794
  95,580
  105,869
  116,655
  127,935
  139,709
  151,979
  164,751
  178,036
  191,847
  206,200
  221,116
  236,616
  252,728
  269,479
  286,902
  305,031
Working capital, $m
  -58
  -5,715
  -7,441
  -9,501
  -11,915
  -14,700
  -17,865
  -21,417
  -25,356
  -29,680
  -34,384
  -39,460
  -44,900
  -50,696
  -56,839
  -63,322
  -70,138
  -77,284
  -84,757
  -92,557
  -100,686
  -109,148
  -117,949
  -127,099
  -136,608
  -146,489
  -156,758
  -167,432
  -178,530
  -190,072
  -202,083
Total debt, $m
  762
  11,266
  21,928
  34,651
  49,565
  66,766
  86,319
  108,259
  132,591
  159,301
  188,356
  219,711
  253,316
  289,117
  327,062
  367,107
  409,213
  453,355
  499,517
  547,697
  597,909
  650,179
  704,546
  761,064
  819,803
  880,842
  944,275
  1,010,208
  1,078,760
  1,150,060
  1,224,249
Total liabilities, $m
  2,379
  35,303
  45,965
  58,688
  73,602
  90,803
  110,356
  132,296
  156,628
  183,338
  212,393
  243,748
  277,353
  313,154
  351,099
  391,144
  433,250
  477,392
  523,554
  571,734
  621,946
  674,216
  728,583
  785,101
  843,840
  904,879
  968,312
  1,034,245
  1,102,797
  1,174,097
  1,248,286
Total equity, $m
  691
  12,794
  16,658
  21,268
  26,673
  32,907
  39,993
  47,944
  56,762
  66,441
  76,971
  88,334
  100,512
  113,486
  127,238
  141,750
  157,009
  173,006
  189,735
  207,195
  225,392
  244,334
  264,037
  284,519
  305,806
  327,926
  350,914
  374,808
  399,651
  425,490
  452,376
Total liabilities and equity, $m
  3,070
  48,097
  62,623
  79,956
  100,275
  123,710
  150,349
  180,240
  213,390
  249,779
  289,364
  332,082
  377,865
  426,640
  478,337
  532,894
  590,259
  650,398
  713,289
  778,929
  847,338
  918,550
  992,620
  1,069,620
  1,149,646
  1,232,805
  1,319,226
  1,409,053
  1,502,448
  1,599,587
  1,700,662
Debt-to-equity ratio
  1.103
  0.880
  1.320
  1.630
  1.860
  2.030
  2.160
  2.260
  2.340
  2.400
  2.450
  2.490
  2.520
  2.550
  2.570
  2.590
  2.610
  2.620
  2.630
  2.640
  2.650
  2.660
  2.670
  2.670
  2.680
  2.690
  2.690
  2.700
  2.700
  2.700
  2.710
Adjusted equity ratio
  0.120
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  140
  6,049
  6,846
  7,766
  8,816
  9,996
  11,305
  12,741
  14,301
  15,981
  17,777
  19,686
  21,704
  23,828
  26,056
  28,386
  30,816
  33,348
  35,982
  38,720
  41,563
  44,516
  47,581
  50,765
  54,071
  57,506
  61,075
  64,788
  68,650
  72,670
  76,857
Depreciation, amort., depletion, $m
  397
  1,725
  2,246
  2,868
  3,597
  4,438
  5,393
  6,466
  7,655
  8,960
  10,380
  11,912
  13,555
  15,304
  17,159
  19,116
  21,174
  23,331
  25,587
  27,942
  30,396
  32,950
  35,607
  38,369
  41,240
  44,223
  47,323
  50,546
  53,896
  57,380
  61,006
Funds from operations, $m
  536
  7,774
  9,092
  10,635
  12,413
  14,434
  16,698
  19,206
  21,956
  24,941
  28,158
  31,599
  35,259
  39,133
  43,215
  47,502
  51,990
  56,679
  61,569
  66,662
  71,959
  77,466
  83,189
  89,134
  95,311
  101,729
  108,399
  115,333
  122,546
  130,050
  137,863
Change in working capital, $m
  -189
  -1,418
  -1,726
  -2,060
  -2,414
  -2,785
  -3,165
  -3,552
  -3,939
  -4,324
  -4,704
  -5,076
  -5,440
  -5,796
  -6,143
  -6,483
  -6,817
  -7,146
  -7,473
  -7,800
  -8,129
  -8,462
  -8,801
  -9,150
  -9,509
  -9,881
  -10,269
  -10,674
  -11,098
  -11,543
  -12,010
Cash from operations, $m
  725
  10,356
  10,818
  12,694
  14,828
  17,218
  19,864
  22,758
  25,895
  29,265
  32,861
  36,675
  40,699
  44,929
  49,358
  53,984
  58,807
  63,825
  69,042
  74,461
  80,088
  85,928
  91,990
  98,284
  104,820
  111,610
  118,668
  126,007
  133,643
  141,593
  149,873
Maintenance CAPEX, $m
  0
  -1,299
  -1,725
  -2,246
  -2,868
  -3,597
  -4,438
  -5,393
  -6,466
  -7,655
  -8,960
  -10,380
  -11,912
  -13,555
  -15,304
  -17,159
  -19,116
  -21,174
  -23,331
  -25,587
  -27,942
  -30,396
  -32,950
  -35,607
  -38,369
  -41,240
  -44,223
  -47,323
  -50,546
  -53,896
  -57,380
New CAPEX, $m
  -726
  -2,132
  -2,605
  -3,109
  -3,644
  -4,203
  -4,778
  -5,361
  -5,946
  -6,527
  -7,100
  -7,662
  -8,212
  -8,748
  -9,272
  -9,785
  -10,289
  -10,786
  -11,280
  -11,773
  -12,270
  -12,773
  -13,285
  -13,811
  -14,353
  -14,915
  -15,500
  -16,111
  -16,751
  -17,423
  -18,129
Cash from investing activities, $m
  -726
  -3,431
  -4,330
  -5,355
  -6,512
  -7,800
  -9,216
  -10,754
  -12,412
  -14,182
  -16,060
  -18,042
  -20,124
  -22,303
  -24,576
  -26,944
  -29,405
  -31,960
  -34,611
  -37,360
  -40,212
  -43,169
  -46,235
  -49,418
  -52,722
  -56,155
  -59,723
  -63,434
  -67,297
  -71,319
  -75,509
Free cash flow, $m
  -1
  6,926
  6,488
  7,339
  8,315
  9,418
  10,648
  12,004
  13,483
  15,084
  16,801
  18,633
  20,575
  22,626
  24,781
  27,040
  29,402
  31,865
  34,431
  37,101
  39,876
  42,760
  45,755
  48,866
  52,097
  55,455
  58,944
  62,572
  66,346
  70,274
  74,364
Issuance/(repayment) of debt, $m
  410
  8,733
  10,662
  12,723
  14,914
  17,201
  19,553
  21,939
  24,332
  26,710
  29,055
  31,356
  33,605
  35,801
  37,946
  40,045
  42,106
  44,142
  46,162
  48,181
  50,212
  52,269
  54,367
  56,519
  58,738
  61,039
  63,433
  65,933
  68,552
  71,300
  74,189
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  274
  8,733
  10,662
  12,723
  14,914
  17,201
  19,553
  21,939
  24,332
  26,710
  29,055
  31,356
  33,605
  35,801
  37,946
  40,045
  42,106
  44,142
  46,162
  48,181
  50,212
  52,269
  54,367
  56,519
  58,738
  61,039
  63,433
  65,933
  68,552
  71,300
  74,189
Total cash flow (excl. dividends), $m
  288
  15,659
  17,149
  20,062
  23,229
  26,619
  30,201
  33,943
  37,815
  41,793
  45,856
  49,988
  54,180
  58,426
  62,727
  67,085
  71,508
  76,007
  80,593
  85,282
  90,088
  95,029
  100,122
  105,384
  110,835
  116,493
  122,377
  128,506
  134,898
  141,574
  148,553
Retained Cash Flow (-), $m
  -76
  -3,189
  -3,864
  -4,611
  -5,405
  -6,234
  -7,086
  -7,951
  -8,818
  -9,680
  -10,529
  -11,363
  -12,178
  -12,974
  -13,751
  -14,512
  -15,259
  -15,997
  -16,729
  -17,461
  -18,197
  -18,942
  -19,702
  -20,482
  -21,287
  -22,120
  -22,988
  -23,894
  -24,843
  -25,839
  -26,886
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
 
  12,470
  13,286
  15,451
  17,824
  20,386
  23,115
  25,992
  28,998
  32,114
  35,327
  38,625
  42,002
  45,452
  48,975
  52,573
  56,249
  60,010
  63,864
  67,821
  71,891
  76,087
  80,419
  84,902
  89,549
  94,373
  99,389
  104,612
  110,055
  115,735
  121,667
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  11,956
  12,163
  13,447
  14,676
  15,801
  16,776
  17,560
  18,124
  18,448
  18,520
  18,343
  17,924
  17,282
  16,442
  15,434
  14,294
  13,057
  11,761
  10,443
  9,135
  7,870
  6,673
  5,565
  4,561
  3,671
  2,900
  2,245
  1,703
  1,263
  916
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

Nortel Inversora S.A., through its subsidiary, Telecom Argentina S.A., provides fixed-line public and mobile telecommunication services in Argentina and internationally. It operates through three segments: Fixed Services, Personal Mobile Services, and NĂșcleo Mobile Services. The company offers local fixed telephony, public telephony, domestic and international long-distance telephony, domestic and international point-to-point link, domestic and international telex, and Internet access services. It also provides value-added services, data transmission, videoconferencing, transportation of audio and video signals, and mobile radio communication services. In addition, the company offers call forwarding, call waiting, three-way calling, itemized billing, voicemail, SMS, MMS, GPRS, mobile Internet, online streaming, corporate e-mail and social network access, and other miscellaneous cellular services; provides IT solution outsourcing services; and sells mobile communication devices. The company was founded in 1990 and is based in Buenos Aires, Argentina.

FINANCIAL RATIOS  of  Nortel Inversora ADR (NTL)

Valuation Ratios
P/E Ratio 1.5
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 0.3
Price to Free Cash Flow -208.1
Growth Rates
Sales Growth Rate 31.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 75.8%
Cap. Spend. - 3 Yr. Gr. Rate 22%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 80%
Total Debt to Equity 110.3%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 18.1%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 23.4%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 83.6%
Gross Margin - 3 Yr. Avg. 82.8%
EBITDA Margin 25.1%
EBITDA Margin - 3 Yr. Avg. 25.6%
Operating Margin 14.6%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 10.5%
Pre-Tax Margin - 3 Yr. Avg. 13.4%
Net Profit Margin 4.1%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 28.8%
Eff/ Tax Rate - 3 Yr. Avg. 32.2%
Payout Ratio 65.7%

NTL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NTL stock intrinsic value calculation we used $40539 million for the last fiscal year's total revenue generated by Nortel Inversora ADR. The default revenue input number comes from 2016 income statement of Nortel Inversora ADR. 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 NTL stock valuation model: a) initial revenue growth rate of 33% 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 4.3%, whose default value for NTL is calculated based on our internal credit rating of Nortel Inversora ADR, 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 Nortel Inversora ADR.
    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 NTL stock the variable cost ratio is equal to 83.8%.

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 NTL 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 17.7% for Nortel Inversora ADR.

Corporate tax rate of 27% is the nominal tax rate for Nortel Inversora ADR. 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 NTL 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 NTL are equal to 16%.

Life of production assets of 1.5 years is the average useful life of capital assets used in Nortel Inversora ADR 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 NTL is equal to -10.6%. 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 - $9605 million for Nortel Inversora ADR - 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 3.056 million for Nortel Inversora ADR 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 Nortel Inversora ADR at the current share price and the inputted number of shares is $0.1 billion.


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Stock chart of NTL Financial statements of NTL Annual reports of NTL
Valuation of Stocks

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