Intrinsic value of Rogers Communications Cl B - RCI

Previous Close

$50.82

  Intrinsic Value

$21.14

stock screener

  Rating & Target

str. sell

-58%

  Value-price divergence*

-35%

Previous close

$50.82

 
Intrinsic value

$21.14

 
Up/down potential

-58%

 
Rating

str. sell

 
Value-price divergence*

-35%

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

We calculate the intrinsic value of RCI 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 25.4

 

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, %
  2.16
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  10,142
  10,436
  10,761
  11,116
  11,501
  11,918
  12,366
  12,846
  13,360
  13,907
  14,489
  15,107
  15,763
  16,458
  17,193
  17,970
  18,791
  19,657
  20,571
  21,535
  22,550
  23,620
  24,747
  25,933
  27,182
  28,495
  29,877
  31,330
  32,859
  34,466
  36,155
Variable operating expenses, $m
 
  8,434
  8,688
  8,965
  9,266
  9,591
  9,941
  10,316
  10,716
  11,143
  11,598
  11,791
  12,303
  12,845
  13,419
  14,026
  14,666
  15,342
  16,056
  16,808
  17,601
  18,436
  19,315
  20,241
  21,215
  22,241
  23,319
  24,454
  25,646
  26,901
  28,219
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,739
  8,434
  8,688
  8,965
  9,266
  9,591
  9,941
  10,316
  10,716
  11,143
  11,598
  11,791
  12,303
  12,845
  13,419
  14,026
  14,666
  15,342
  16,056
  16,808
  17,601
  18,436
  19,315
  20,241
  21,215
  22,241
  23,319
  24,454
  25,646
  26,901
  28,219
Operating income, $m
  1,403
  2,002
  2,073
  2,151
  2,235
  2,327
  2,425
  2,531
  2,643
  2,763
  2,891
  3,316
  3,460
  3,612
  3,774
  3,944
  4,124
  4,315
  4,515
  4,727
  4,950
  5,185
  5,432
  5,692
  5,966
  6,255
  6,558
  6,877
  7,212
  7,565
  7,936
EBITDA, $m
  3,141
  3,666
  3,780
  3,905
  4,040
  4,187
  4,344
  4,513
  4,693
  4,885
  5,090
  5,307
  5,538
  5,782
  6,040
  6,313
  6,601
  6,905
  7,227
  7,565
  7,922
  8,298
  8,694
  9,110
  9,549
  10,010
  10,496
  11,006
  11,543
  12,108
  12,701
Interest expense (income), $m
  560
  552
  575
  599
  625
  653
  684
  718
  753
  791
  832
  875
  921
  970
  1,021
  1,076
  1,133
  1,194
  1,258
  1,326
  1,398
  1,473
  1,552
  1,636
  1,724
  1,816
  1,914
  2,016
  2,124
  2,237
  2,356
Earnings before tax, $m
  858
  1,450
  1,498
  1,552
  1,611
  1,673
  1,741
  1,813
  1,890
  1,972
  2,059
  2,441
  2,539
  2,643
  2,753
  2,869
  2,991
  3,121
  3,257
  3,401
  3,552
  3,712
  3,880
  4,057
  4,243
  4,438
  4,644
  4,861
  5,088
  5,328
  5,579
Tax expense, $m
  240
  391
  405
  419
  435
  452
  470
  490
  510
  532
  556
  659
  686
  714
  743
  775
  808
  843
  879
  918
  959
  1,002
  1,048
  1,095
  1,146
  1,198
  1,254
  1,312
  1,374
  1,439
  1,506
Net income, $m
  618
  1,058
  1,094
  1,133
  1,176
  1,222
  1,271
  1,324
  1,380
  1,440
  1,503
  1,782
  1,854
  1,929
  2,009
  2,094
  2,184
  2,278
  2,378
  2,483
  2,593
  2,710
  2,832
  2,961
  3,097
  3,240
  3,390
  3,548
  3,715
  3,889
  4,073

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
  20,977
  21,607
  22,279
  23,014
  23,812
  24,675
  25,602
  26,597
  27,660
  28,793
  29,998
  31,278
  32,636
  34,074
  35,596
  37,205
  38,904
  40,698
  42,590
  44,586
  46,688
  48,904
  51,236
  53,692
  56,277
  58,997
  61,857
  64,866
  68,030
  71,357
  74,855
Adjusted assets (=assets-cash), $m
  20,977
  21,607
  22,279
  23,014
  23,812
  24,675
  25,602
  26,597
  27,660
  28,793
  29,998
  31,278
  32,636
  34,074
  35,596
  37,205
  38,904
  40,698
  42,590
  44,586
  46,688
  48,904
  51,236
  53,692
  56,277
  58,997
  61,857
  64,866
  68,030
  71,357
  74,855
Revenue / Adjusted assets
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
Average production assets, $m
  13,367
  13,755
  14,183
  14,650
  15,159
  15,708
  16,298
  16,931
  17,608
  18,329
  19,096
  19,911
  20,776
  21,691
  22,660
  23,684
  24,766
  25,908
  27,113
  28,383
  29,722
  31,132
  32,617
  34,180
  35,826
  37,557
  39,378
  41,294
  43,308
  45,426
  47,652
Working capital, $m
  -1,882
  -699
  -721
  -745
  -771
  -798
  -829
  -861
  -895
  -932
  -971
  -1,012
  -1,056
  -1,103
  -1,152
  -1,204
  -1,259
  -1,317
  -1,378
  -1,443
  -1,511
  -1,583
  -1,658
  -1,738
  -1,821
  -1,909
  -2,002
  -2,099
  -2,202
  -2,309
  -2,422
Total debt, $m
  12,546
  13,057
  13,604
  14,202
  14,852
  15,554
  16,309
  17,119
  17,984
  18,906
  19,887
  20,929
  22,035
  23,205
  24,444
  25,754
  27,137
  28,597
  30,138
  31,762
  33,473
  35,277
  37,175
  39,175
  41,278
  43,492
  45,821
  48,270
  50,846
  53,554
  56,401
Total liabilities, $m
  17,077
  17,588
  18,135
  18,733
  19,383
  20,085
  20,840
  21,650
  22,515
  23,437
  24,418
  25,460
  26,566
  27,736
  28,975
  30,285
  31,668
  33,128
  34,669
  36,293
  38,004
  39,808
  41,706
  43,706
  45,809
  48,023
  50,352
  52,801
  55,377
  58,085
  60,932
Total equity, $m
  3,900
  4,019
  4,144
  4,281
  4,429
  4,589
  4,762
  4,947
  5,145
  5,355
  5,580
  5,818
  6,070
  6,338
  6,621
  6,920
  7,236
  7,570
  7,922
  8,293
  8,684
  9,096
  9,530
  9,987
  10,468
  10,973
  11,505
  12,065
  12,654
  13,272
  13,923
Total liabilities and equity, $m
  20,977
  21,607
  22,279
  23,014
  23,812
  24,674
  25,602
  26,597
  27,660
  28,792
  29,998
  31,278
  32,636
  34,074
  35,596
  37,205
  38,904
  40,698
  42,591
  44,586
  46,688
  48,904
  51,236
  53,693
  56,277
  58,996
  61,857
  64,866
  68,031
  71,357
  74,855
Debt-to-equity ratio
  3.217
  3.250
  3.280
  3.320
  3.350
  3.390
  3.420
  3.460
  3.500
  3.530
  3.560
  3.600
  3.630
  3.660
  3.690
  3.720
  3.750
  3.780
  3.800
  3.830
  3.850
  3.880
  3.900
  3.920
  3.940
  3.960
  3.980
  4.000
  4.020
  4.030
  4.050
Adjusted equity ratio
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  618
  1,058
  1,094
  1,133
  1,176
  1,222
  1,271
  1,324
  1,380
  1,440
  1,503
  1,782
  1,854
  1,929
  2,009
  2,094
  2,184
  2,278
  2,378
  2,483
  2,593
  2,710
  2,832
  2,961
  3,097
  3,240
  3,390
  3,548
  3,715
  3,889
  4,073
Depreciation, amort., depletion, $m
  1,738
  1,664
  1,707
  1,754
  1,805
  1,860
  1,919
  1,982
  2,050
  2,122
  2,199
  1,991
  2,078
  2,169
  2,266
  2,368
  2,477
  2,591
  2,711
  2,838
  2,972
  3,113
  3,262
  3,418
  3,583
  3,756
  3,938
  4,129
  4,331
  4,543
  4,765
Funds from operations, $m
  2,161
  2,723
  2,801
  2,887
  2,981
  3,081
  3,190
  3,306
  3,430
  3,562
  3,702
  3,773
  3,931
  4,098
  4,276
  4,463
  4,660
  4,869
  5,089
  5,321
  5,565
  5,823
  6,094
  6,379
  6,680
  6,996
  7,328
  7,678
  8,045
  8,432
  8,838
Change in working capital, $m
  -768
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -75
  -79
  -84
  -88
  -93
  -97
  -102
  -108
  -113
Cash from operations, $m
  2,929
  2,742
  2,823
  2,911
  3,006
  3,109
  3,220
  3,338
  3,464
  3,598
  3,741
  3,814
  3,975
  4,145
  4,325
  4,515
  4,715
  4,927
  5,150
  5,385
  5,633
  5,894
  6,169
  6,459
  6,763
  7,084
  7,421
  7,775
  8,148
  8,540
  8,951
Maintenance CAPEX, $m
  0
  -1,337
  -1,375
  -1,418
  -1,465
  -1,516
  -1,571
  -1,630
  -1,693
  -1,761
  -1,833
  -1,910
  -1,991
  -2,078
  -2,169
  -2,266
  -2,368
  -2,477
  -2,591
  -2,711
  -2,838
  -2,972
  -3,113
  -3,262
  -3,418
  -3,583
  -3,756
  -3,938
  -4,129
  -4,331
  -4,543
New CAPEX, $m
  -1,775
  -388
  -428
  -468
  -508
  -549
  -591
  -633
  -677
  -721
  -767
  -815
  -864
  -916
  -969
  -1,024
  -1,082
  -1,142
  -1,205
  -1,270
  -1,339
  -1,410
  -1,485
  -1,563
  -1,645
  -1,731
  -1,821
  -1,915
  -2,014
  -2,118
  -2,226
Cash from investing activities, $m
  -1,818
  -1,725
  -1,803
  -1,886
  -1,973
  -2,065
  -2,162
  -2,263
  -2,370
  -2,482
  -2,600
  -2,725
  -2,855
  -2,994
  -3,138
  -3,290
  -3,450
  -3,619
  -3,796
  -3,981
  -4,177
  -4,382
  -4,598
  -4,825
  -5,063
  -5,314
  -5,577
  -5,853
  -6,143
  -6,449
  -6,769
Free cash flow, $m
  1,111
  1,018
  1,020
  1,025
  1,033
  1,044
  1,058
  1,075
  1,094
  1,116
  1,141
  1,090
  1,120
  1,152
  1,187
  1,225
  1,265
  1,308
  1,355
  1,404
  1,456
  1,512
  1,571
  1,634
  1,700
  1,770
  1,844
  1,922
  2,004
  2,091
  2,182
Issuance/(repayment) of debt, $m
  -398
  511
  547
  598
  650
  702
  755
  809
  865
  922
  981
  1,042
  1,105
  1,171
  1,239
  1,310
  1,383
  1,460
  1,540
  1,624
  1,712
  1,803
  1,899
  1,999
  2,104
  2,214
  2,329
  2,449
  2,576
  2,708
  2,847
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  
  -441
  511
  547
  598
  650
  702
  755
  809
  865
  922
  981
  1,042
  1,105
  1,171
  1,239
  1,310
  1,383
  1,460
  1,540
  1,624
  1,712
  1,803
  1,899
  1,999
  2,104
  2,214
  2,329
  2,449
  2,576
  2,708
  2,847
Total cash flow (excl. dividends), $m
  670
  1,529
  1,567
  1,623
  1,683
  1,746
  1,814
  1,884
  1,959
  2,038
  2,122
  2,132
  2,225
  2,323
  2,426
  2,534
  2,648
  2,769
  2,895
  3,028
  3,168
  3,315
  3,470
  3,633
  3,804
  3,984
  4,173
  4,371
  4,580
  4,799
  5,029
Retained Cash Flow (-), $m
  271
  -119
  -125
  -137
  -148
  -160
  -173
  -185
  -198
  -211
  -224
  -238
  -253
  -268
  -283
  -299
  -316
  -334
  -352
  -371
  -391
  -412
  -434
  -457
  -481
  -506
  -532
  -560
  -589
  -619
  -650
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
 
  1,410
  1,442
  1,486
  1,535
  1,586
  1,641
  1,699
  1,762
  1,828
  1,898
  1,894
  1,972
  2,055
  2,143
  2,235
  2,332
  2,435
  2,543
  2,657
  2,777
  2,903
  3,036
  3,176
  3,323
  3,478
  3,640
  3,811
  3,991
  4,180
  4,379
Discount rate, %
 
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
 
  1,288
  1,192
  1,102
  1,011
  918
  826
  735
  646
  560
  480
  389
  324
  265
  213
  168
  130
  99
  73
  53
  38
  26
  17
  11
  7
  4
  3
  1
  1
  0
  0
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

Rogers Communications Inc. operates as a communications and media company in Canada. The company’s Wireless segment offers wireless telecommunications services to consumers and businesses under the Rogers, Fido, and chatr brands; and wireless devices, services, and applications. This segment distributes its products through independent dealer networks, company-owned retail stores, retail chains and convenience stores, ecommerce sites, call centers and outbound telemarketing, and other distribution channels. As of December 31, 2016, it had approximately 10.3 million subscribers. The company’s Cable segment provides high-speed broadband Internet access, digital television and online viewing, phone, and home Wi-Fi services to consumers and businesses. This segment distributes its products through company-owned retail stores, ecommerce sites, call centers, outbound telemarketing, door-to-door agents, and third party retail locations. It had 2.1 million high-speed Internet subscribers, 1.8 million television subscribers, and 1.1 million phone subscribers, as well as operated a network that passes approximately 4.2 million homes. The company’s Business Solutions segment offers network connectivity services through its fiber network and data center assets to the enterprise, public sector, and carrier wholesale markets. This segment provides its products through its sales team; and a network of third-party channel distributors. Its Media segment offers multi-platform televised and online shopping, digital media services, and publishing services; and operates television networks and radio stations, as well as owns the Toronto Blue Jays, a league baseball team and Rogers Centre event venue. The company also provides home or business monitoring, security, and automation systems; and credit cards. Rogers Communications Inc. was founded in 1920 and is headquartered in Toronto, Canada.

FINANCIAL RATIOS  of  Rogers Communications Cl B (RCI)

Valuation Ratios
P/E Ratio 42.3
Price to Sales 2.6
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 8.9
Price to Free Cash Flow 22.7
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 290.9%
Total Debt to Equity 321.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 15.3%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 51.8%
Gross Margin - 3 Yr. Avg. 52.5%
EBITDA Margin 31.1%
EBITDA Margin - 3 Yr. Avg. 35.2%
Operating Margin 13.8%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 8.8%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 27.2%
Payout Ratio 118.3%

RCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RCI stock intrinsic value calculation we used $10142 million for the last fiscal year's total revenue generated by Rogers Communications Cl B. The default revenue input number comes from 2016 income statement of Rogers Communications Cl B. 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 RCI stock valuation model: a) initial revenue growth rate of 2.9% 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 9.5%, whose default value for RCI is calculated based on our internal credit rating of Rogers Communications Cl B, 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 Rogers Communications Cl B.
    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 RCI stock the variable cost ratio is equal to 80.9%.

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 RCI 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 4.4% for Rogers Communications Cl B.

Corporate tax rate of 27% is the nominal tax rate for Rogers Communications Cl B. 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 RCI 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 RCI are equal to 131.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Rogers Communications Cl B 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 RCI is equal to -6.7%. 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 - $3900 million for Rogers Communications Cl B - 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 500.717 million for Rogers Communications Cl B 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 Rogers Communications Cl B at the current share price and the inputted number of shares is $25.4 billion.

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COMPANY NEWS

▶ Rogers Improves Wireless Service across Vancouver Island   [Jul-31-17 11:30AM  PR Newswire]
▶ Rogers Communication tops 2Q profit forecasts   [Jul-21-17 12:24AM  Associated Press]
▶ 7 Tech Stocks That Dial Dividends Up To 14%   [May-21-17 08:12AM  Forbes]
▶ Rogers Communication beats 1Q profit forecasts   [04:50PM  Associated Press]
▶ Joe Natale to join Rogers April 19, 2017   [08:30AM  PR Newswire]
▶ Top Ranked Income Stocks to Buy for March 16th   [Mar-16-17 09:53AM  Zacks]
Stock chart of RCI Financial statements of RCI
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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