Intrinsic value of Rogers Communications Cl B - RCI

Previous Close

$53.01

  Intrinsic Value

$20.23

stock screener

  Rating & Target

str. sell

-62%

Previous close

$53.01

 
Intrinsic value

$20.23

 
Up/down potential

-62%

 
Rating

str. sell

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 27.3

 

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, %
  2.16
  2.50
  2.75
  2.97
  3.18
  3.36
  3.52
  3.67
  3.80
  3.92
  4.03
  4.13
  4.22
  4.29
  4.36
  4.43
  4.49
  4.54
  4.58
  4.62
  4.66
  4.70
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
Revenue, $m
  10,142
  10,396
  10,681
  10,999
  11,349
  11,730
  12,143
  12,589
  13,068
  13,581
  14,128
  14,712
  15,332
  15,990
  16,688
  17,427
  18,209
  19,035
  19,907
  20,828
  21,799
  22,822
  23,901
  25,037
  26,234
  27,493
  28,818
  30,213
  31,680
  33,222
  34,844
Variable operating expenses, $m
 
  8,403
  8,626
  8,874
  9,147
  9,444
  9,767
  10,115
  10,489
  10,889
  11,316
  11,482
  11,967
  12,480
  13,025
  13,602
  14,212
  14,857
  15,538
  16,256
  17,014
  17,813
  18,655
  19,542
  20,476
  21,459
  22,493
  23,581
  24,726
  25,930
  27,196
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
  8,403
  8,626
  8,874
  9,147
  9,444
  9,767
  10,115
  10,489
  10,889
  11,316
  11,482
  11,967
  12,480
  13,025
  13,602
  14,212
  14,857
  15,538
  16,256
  17,014
  17,813
  18,655
  19,542
  20,476
  21,459
  22,493
  23,581
  24,726
  25,930
  27,196
Operating income, $m
  1,403
  1,993
  2,056
  2,125
  2,202
  2,286
  2,376
  2,474
  2,579
  2,692
  2,812
  3,229
  3,365
  3,510
  3,663
  3,825
  3,997
  4,178
  4,370
  4,572
  4,785
  5,009
  5,246
  5,496
  5,758
  6,035
  6,326
  6,632
  6,954
  7,292
  7,648
EBITDA, $m
  3,141
  3,739
  3,842
  3,957
  4,082
  4,219
  4,368
  4,528
  4,701
  4,885
  5,082
  5,292
  5,515
  5,752
  6,003
  6,269
  6,550
  6,847
  7,161
  7,492
  7,841
  8,209
  8,597
  9,006
  9,436
  9,890
  10,366
  10,868
  11,395
  11,950
  12,534
Interest expense (income), $m
  560
  552
  571
  593
  616
  642
  670
  701
  734
  770
  808
  848
  892
  938
  986
  1,038
  1,093
  1,151
  1,212
  1,277
  1,345
  1,417
  1,493
  1,573
  1,657
  1,746
  1,839
  1,938
  2,041
  2,150
  2,264
Earnings before tax, $m
  858
  1,441
  1,484
  1,533
  1,586
  1,643
  1,706
  1,773
  1,845
  1,922
  2,004
  2,381
  2,474
  2,572
  2,677
  2,787
  2,904
  3,027
  3,157
  3,295
  3,440
  3,592
  3,753
  3,923
  4,101
  4,289
  4,486
  4,694
  4,912
  5,142
  5,384
Tax expense, $m
  240
  389
  401
  414
  428
  444
  461
  479
  498
  519
  541
  643
  668
  694
  723
  752
  784
  817
  852
  890
  929
  970
  1,013
  1,059
  1,107
  1,158
  1,211
  1,267
  1,326
  1,388
  1,454
Net income, $m
  618
  1,052
  1,083
  1,119
  1,158
  1,200
  1,245
  1,294
  1,347
  1,403
  1,463
  1,738
  1,806
  1,878
  1,954
  2,035
  2,120
  2,210
  2,305
  2,405
  2,511
  2,622
  2,740
  2,863
  2,994
  3,131
  3,275
  3,427
  3,586
  3,754
  3,930

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
  21,523
  22,115
  22,773
  23,496
  24,286
  25,141
  26,065
  27,056
  28,118
  29,251
  30,459
  31,743
  33,106
  34,551
  36,081
  37,699
  39,409
  41,215
  43,122
  45,132
  47,251
  49,485
  51,837
  54,314
  56,922
  59,666
  62,552
  65,589
  68,783
  72,141
Adjusted assets (=assets-cash), $m
  20,977
  21,523
  22,115
  22,773
  23,496
  24,286
  25,141
  26,065
  27,056
  28,118
  29,251
  30,459
  31,743
  33,106
  34,551
  36,081
  37,699
  39,409
  41,215
  43,122
  45,132
  47,251
  49,485
  51,837
  54,314
  56,922
  59,666
  62,552
  65,589
  68,783
  72,141
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
  13,701
  14,078
  14,497
  14,958
  15,460
  16,005
  16,593
  17,224
  17,900
  18,621
  19,390
  20,207
  21,075
  21,995
  22,969
  23,999
  25,088
  26,238
  27,451
  28,731
  30,080
  31,502
  32,999
  34,576
  36,236
  37,983
  39,820
  41,754
  43,787
  45,924
Working capital, $m
  -1,882
  -697
  -716
  -737
  -760
  -786
  -814
  -843
  -876
  -910
  -947
  -986
  -1,027
  -1,071
  -1,118
  -1,168
  -1,220
  -1,275
  -1,334
  -1,395
  -1,461
  -1,529
  -1,601
  -1,678
  -1,758
  -1,842
  -1,931
  -2,024
  -2,123
  -2,226
  -2,335
Total debt, $m
  12,546
  12,989
  13,470
  14,006
  14,595
  15,238
  15,934
  16,686
  17,493
  18,357
  19,280
  20,262
  21,308
  22,417
  23,593
  24,839
  26,156
  27,548
  29,018
  30,570
  32,206
  33,932
  35,750
  37,664
  39,681
  41,803
  44,037
  46,387
  48,859
  51,458
  54,192
Total liabilities, $m
  17,077
  17,520
  18,001
  18,537
  19,126
  19,769
  20,465
  21,217
  22,024
  22,888
  23,811
  24,793
  25,839
  26,948
  28,124
  29,370
  30,687
  32,079
  33,549
  35,101
  36,737
  38,463
  40,281
  42,195
  44,212
  46,334
  48,568
  50,918
  53,390
  55,989
  58,723
Total equity, $m
  3,900
  4,003
  4,113
  4,236
  4,370
  4,517
  4,676
  4,848
  5,032
  5,230
  5,441
  5,665
  5,904
  6,158
  6,426
  6,711
  7,012
  7,330
  7,666
  8,021
  8,395
  8,789
  9,204
  9,642
  10,102
  10,587
  11,098
  11,635
  12,200
  12,794
  13,418
Total liabilities and equity, $m
  20,977
  21,523
  22,114
  22,773
  23,496
  24,286
  25,141
  26,065
  27,056
  28,118
  29,252
  30,458
  31,743
  33,106
  34,550
  36,081
  37,699
  39,409
  41,215
  43,122
  45,132
  47,252
  49,485
  51,837
  54,314
  56,921
  59,666
  62,553
  65,590
  68,783
  72,141
Debt-to-equity ratio
  3.217
  3.240
  3.270
  3.310
  3.340
  3.370
  3.410
  3.440
  3.480
  3.510
  3.540
  3.580
  3.610
  3.640
  3.670
  3.700
  3.730
  3.760
  3.790
  3.810
  3.840
  3.860
  3.880
  3.910
  3.930
  3.950
  3.970
  3.990
  4.000
  4.020
  4.040
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
  1,052
  1,083
  1,119
  1,158
  1,200
  1,245
  1,294
  1,347
  1,403
  1,463
  1,738
  1,806
  1,878
  1,954
  2,035
  2,120
  2,210
  2,305
  2,405
  2,511
  2,622
  2,740
  2,863
  2,994
  3,131
  3,275
  3,427
  3,586
  3,754
  3,930
Depreciation, amort., depletion, $m
  1,738
  1,747
  1,787
  1,831
  1,880
  1,934
  1,992
  2,054
  2,121
  2,193
  2,270
  2,063
  2,150
  2,242
  2,340
  2,443
  2,553
  2,669
  2,791
  2,920
  3,056
  3,200
  3,351
  3,511
  3,678
  3,855
  4,041
  4,236
  4,442
  4,658
  4,886
Funds from operations, $m
  2,161
  2,798
  2,870
  2,950
  3,038
  3,133
  3,237
  3,349
  3,468
  3,596
  3,733
  3,801
  3,956
  4,120
  4,294
  4,478
  4,673
  4,879
  5,096
  5,326
  5,567
  5,822
  6,091
  6,374
  6,672
  6,986
  7,316
  7,663
  8,028
  8,412
  8,816
Change in working capital, $m
  -768
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -42
  -44
  -47
  -50
  -52
  -55
  -58
  -62
  -65
  -69
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -109
Cash from operations, $m
  2,929
  2,815
  2,889
  2,971
  3,061
  3,159
  3,265
  3,378
  3,500
  3,631
  3,770
  3,840
  3,997
  4,164
  4,341
  4,528
  4,725
  4,934
  5,155
  5,387
  5,632
  5,891
  6,163
  6,450
  6,752
  7,070
  7,404
  7,756
  8,126
  8,515
  8,925
Maintenance CAPEX, $m
  0
  -1,422
  -1,458
  -1,498
  -1,542
  -1,591
  -1,645
  -1,703
  -1,765
  -1,832
  -1,904
  -1,981
  -2,063
  -2,150
  -2,242
  -2,340
  -2,443
  -2,553
  -2,669
  -2,791
  -2,920
  -3,056
  -3,200
  -3,351
  -3,511
  -3,678
  -3,855
  -4,041
  -4,236
  -4,442
  -4,658
New CAPEX, $m
  -1,775
  -334
  -377
  -419
  -461
  -503
  -545
  -588
  -631
  -676
  -722
  -769
  -817
  -868
  -920
  -974
  -1,030
  -1,089
  -1,150
  -1,213
  -1,280
  -1,349
  -1,422
  -1,498
  -1,577
  -1,660
  -1,747
  -1,838
  -1,933
  -2,033
  -2,138
Cash from investing activities, $m
  -1,818
  -1,756
  -1,835
  -1,917
  -2,003
  -2,094
  -2,190
  -2,291
  -2,396
  -2,508
  -2,626
  -2,750
  -2,880
  -3,018
  -3,162
  -3,314
  -3,473
  -3,642
  -3,819
  -4,004
  -4,200
  -4,405
  -4,622
  -4,849
  -5,088
  -5,338
  -5,602
  -5,879
  -6,169
  -6,475
  -6,796
Free cash flow, $m
  1,111
  1,059
  1,055
  1,055
  1,058
  1,065
  1,075
  1,088
  1,104
  1,123
  1,144
  1,090
  1,117
  1,146
  1,179
  1,214
  1,252
  1,292
  1,336
  1,383
  1,432
  1,485
  1,542
  1,601
  1,665
  1,732
  1,803
  1,878
  1,957
  2,040
  2,129
Issuance/(repayment) of debt, $m
  -398
  443
  482
  536
  589
  643
  697
  751
  807
  864
  923
  983
  1,045
  1,109
  1,176
  1,245
  1,317
  1,392
  1,470
  1,552
  1,637
  1,725
  1,818
  1,915
  2,016
  2,122
  2,234
  2,350
  2,472
  2,600
  2,734
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
  443
  482
  536
  589
  643
  697
  751
  807
  864
  923
  983
  1,045
  1,109
  1,176
  1,245
  1,317
  1,392
  1,470
  1,552
  1,637
  1,725
  1,818
  1,915
  2,016
  2,122
  2,234
  2,350
  2,472
  2,600
  2,734
Total cash flow (excl. dividends), $m
  670
  1,502
  1,537
  1,590
  1,647
  1,708
  1,772
  1,840
  1,911
  1,987
  2,067
  2,073
  2,162
  2,256
  2,355
  2,459
  2,569
  2,684
  2,806
  2,934
  3,069
  3,211
  3,360
  3,516
  3,681
  3,854
  4,036
  4,228
  4,429
  4,640
  4,862
Retained Cash Flow (-), $m
  271
  -103
  -110
  -122
  -135
  -147
  -159
  -172
  -184
  -197
  -211
  -225
  -239
  -254
  -269
  -285
  -301
  -318
  -336
  -355
  -374
  -394
  -415
  -438
  -461
  -485
  -510
  -537
  -565
  -594
  -625
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
 
  1,398
  1,426
  1,468
  1,513
  1,561
  1,613
  1,668
  1,727
  1,789
  1,856
  1,848
  1,923
  2,002
  2,086
  2,175
  2,268
  2,366
  2,470
  2,580
  2,695
  2,816
  2,944
  3,079
  3,220
  3,369
  3,526
  3,691
  3,864
  4,046
  4,238
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
 
  1,277
  1,179
  1,089
  997
  904
  812
  721
  633
  549
  469
  380
  316
  258
  208
  164
  127
  96
  71
  52
  36
  25
  17
  11
  7
  4
  2
  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. is a communications and media company. The Company provides wireless communications services, and cable television, Internet, information technology (IT) and telephony services to consumers and businesses. Its segments include Wireless, Cable, Business Solutions and Media. The Wireless segment is engaged in wireless telecommunications operations for Canadian consumers and businesses. The Cable segment include cable telecommunications operations, including Internet, television and telephony (phone) services for Canadian consumers and businesses. The Business Solutions segment is engaged in network connectivity through its fiber network and data center assets to support a range of voice, data, networking, hosting, and cloud-based services for the enterprise, public sector and carrier wholesale markets. The Media segment has a portfolio of media properties, including sports media and entertainment, multi-platform shopping, digital media and publishing.

FINANCIAL RATIOS  of  Rogers Communications Cl B (RCI)

Valuation Ratios
P/E Ratio 44.2
Price to Sales 2.7
Price to Book 7
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow 23.6
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. 17.8%
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 2.5% 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 9.4 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 514.431 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 $27.3 billion.

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COMPANY NEWS

▶ Apple Stock Falls On 'Anemic' iPhone 8 Demand, Production Cuts   [Oct-19-17 04:31PM  Investor's Business Daily]
▶ Rogers Communication beats 3Q profit forecasts   [07:23AM  Associated Press]
▶ Rogers Expands Wireless Service in Winnipeg, Manitoba   [Sep-28-17 10:30AM  CNW Group]
▶ Rogers Improves Wireless Service Across Alberta   [Aug-28-17 12:00PM  CNW Group]
▶ 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]
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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