Intrinsic value of Sprint - S

Previous Close

$5.49

  Intrinsic Value

$0.77

stock screener

  Rating & Target

str. sell

-86%

Previous close

$5.49

 
Intrinsic value

$0.77

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of S 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 2017), $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 21.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.63
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  33,347
  34,014
  34,796
  35,691
  36,694
  37,807
  39,028
  40,357
  41,795
  43,346
  45,009
  46,789
  48,688
  50,709
  52,858
  55,138
  57,555
  60,113
  62,817
  65,675
  68,693
  71,877
  75,235
  78,775
  82,504
  86,432
  90,567
  94,920
  99,500
  104,319
  109,388
Variable operating expenses, $m
 
  33,661
  34,420
  35,287
  36,262
  37,341
  38,525
  39,815
  41,211
  42,715
  44,329
  45,398
  47,240
  49,202
  51,287
  53,499
  55,844
  58,325
  60,950
  63,723
  66,651
  69,740
  72,998
  76,433
  80,051
  83,862
  87,875
  92,098
  96,542
  101,218
  106,136
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
  31,583
  33,661
  34,420
  35,287
  36,262
  37,341
  38,525
  39,815
  41,211
  42,715
  44,329
  45,398
  47,240
  49,202
  51,287
  53,499
  55,844
  58,325
  60,950
  63,723
  66,651
  69,740
  72,998
  76,433
  80,051
  83,862
  87,875
  92,098
  96,542
  101,218
  106,136
Operating income, $m
  1,764
  353
  377
  403
  433
  466
  502
  542
  585
  631
  680
  1,391
  1,447
  1,508
  1,571
  1,639
  1,711
  1,787
  1,867
  1,952
  2,042
  2,137
  2,237
  2,342
  2,453
  2,570
  2,692
  2,822
  2,958
  3,101
  3,252
EBITDA, $m
  9,914
  8,514
  8,710
  8,933
  9,185
  9,463
  9,769
  10,101
  10,462
  10,850
  11,266
  11,711
  12,187
  12,693
  13,231
  13,801
  14,406
  15,046
  15,723
  16,439
  17,194
  17,991
  18,832
  19,718
  20,651
  21,634
  22,669
  23,759
  24,905
  26,111
  27,380
Interest expense (income), $m
  0
  1,256
  1,300
  1,350
  1,408
  1,472
  1,544
  1,623
  1,708
  1,801
  1,900
  2,008
  2,122
  2,244
  2,374
  2,513
  2,659
  2,815
  2,979
  3,154
  3,337
  3,532
  3,737
  3,953
  4,180
  4,420
  4,673
  4,939
  5,220
  5,514
  5,824
Earnings before tax, $m
  -771
  -902
  -923
  -947
  -975
  -1,006
  -1,042
  -1,081
  -1,123
  -1,170
  -1,220
  -617
  -675
  -737
  -803
  -873
  -948
  -1,028
  -1,112
  -1,201
  -1,295
  -1,395
  -1,500
  -1,611
  -1,728
  -1,851
  -1,981
  -2,118
  -2,261
  -2,413
  -2,572
Tax expense, $m
  435
  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
Net income, $m
  -1,206
  -902
  -923
  -947
  -975
  -1,006
  -1,042
  -1,081
  -1,123
  -1,170
  -1,220
  -617
  -675
  -737
  -803
  -873
  -948
  -1,028
  -1,112
  -1,201
  -1,295
  -1,395
  -1,500
  -1,611
  -1,728
  -1,851
  -1,981
  -2,118
  -2,261
  -2,413
  -2,572

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  8,314
  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
  85,123
  78,373
  80,176
  82,236
  84,550
  87,113
  89,925
  92,988
  96,303
  99,874
  103,707
  107,808
  112,183
  116,842
  121,793
  127,047
  132,615
  138,508
  144,741
  151,326
  158,279
  165,615
  173,353
  181,508
  190,101
  199,151
  208,680
  218,709
  229,263
  240,366
  252,045
Adjusted assets (=assets-cash), $m
  76,809
  78,373
  80,176
  82,236
  84,550
  87,113
  89,925
  92,988
  96,303
  99,874
  103,707
  107,808
  112,183
  116,842
  121,793
  127,047
  132,615
  138,508
  144,741
  151,326
  158,279
  165,615
  173,353
  181,508
  190,101
  199,151
  208,680
  218,709
  229,263
  240,366
  252,045
Revenue / Adjusted assets
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
  0.434
Average production assets, $m
  63,977
  65,273
  66,774
  68,490
  70,417
  72,552
  74,894
  77,445
  80,206
  83,180
  86,372
  89,787
  93,431
  97,311
  101,435
  105,811
  110,448
  115,356
  120,547
  126,031
  131,822
  137,932
  144,376
  151,168
  158,325
  165,862
  173,798
  182,151
  190,941
  200,188
  209,915
Working capital, $m
  1,659
  -1,667
  -1,705
  -1,749
  -1,798
  -1,853
  -1,912
  -1,977
  -2,048
  -2,124
  -2,205
  -2,293
  -2,386
  -2,485
  -2,590
  -2,702
  -2,820
  -2,946
  -3,078
  -3,218
  -3,366
  -3,522
  -3,687
  -3,860
  -4,043
  -4,235
  -4,438
  -4,651
  -4,876
  -5,112
  -5,360
Total debt, $m
  40,914
  37,141
  38,579
  40,224
  42,070
  44,115
  46,359
  48,803
  51,449
  54,299
  57,357
  60,630
  64,121
  67,839
  71,790
  75,982
  80,425
  85,128
  90,102
  95,357
  100,905
  106,760
  112,934
  119,442
  126,300
  133,522
  141,125
  149,129
  157,551
  166,411
  175,731
Total liabilities, $m
  66,315
  62,542
  63,980
  65,625
  67,471
  69,516
  71,760
  74,204
  76,850
  79,700
  82,758
  86,031
  89,522
  93,240
  97,191
  101,383
  105,826
  110,529
  115,503
  120,758
  126,306
  132,161
  138,335
  144,843
  151,701
  158,923
  166,526
  174,530
  182,952
  191,812
  201,132
Total equity, $m
  18,808
  15,831
  16,195
  16,612
  17,079
  17,597
  18,165
  18,784
  19,453
  20,175
  20,949
  21,777
  22,661
  23,602
  24,602
  25,663
  26,788
  27,979
  29,238
  30,568
  31,972
  33,454
  35,017
  36,665
  38,400
  40,229
  42,153
  44,179
  46,311
  48,554
  50,913
Total liabilities and equity, $m
  85,123
  78,373
  80,175
  82,237
  84,550
  87,113
  89,925
  92,988
  96,303
  99,875
  103,707
  107,808
  112,183
  116,842
  121,793
  127,046
  132,614
  138,508
  144,741
  151,326
  158,278
  165,615
  173,352
  181,508
  190,101
  199,152
  208,679
  218,709
  229,263
  240,366
  252,045
Debt-to-equity ratio
  2.175
  2.350
  2.380
  2.420
  2.460
  2.510
  2.550
  2.600
  2.640
  2.690
  2.740
  2.780
  2.830
  2.870
  2.920
  2.960
  3.000
  3.040
  3.080
  3.120
  3.160
  3.190
  3.230
  3.260
  3.290
  3.320
  3.350
  3.380
  3.400
  3.430
  3.450
Adjusted equity ratio
  0.137
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,206
  -902
  -923
  -947
  -975
  -1,006
  -1,042
  -1,081
  -1,123
  -1,170
  -1,220
  -617
  -675
  -737
  -803
  -873
  -948
  -1,028
  -1,112
  -1,201
  -1,295
  -1,395
  -1,500
  -1,611
  -1,728
  -1,851
  -1,981
  -2,118
  -2,261
  -2,413
  -2,572
Depreciation, amort., depletion, $m
  8,150
  8,161
  8,333
  8,530
  8,752
  8,997
  9,266
  9,560
  9,877
  10,219
  10,586
  10,320
  10,739
  11,185
  11,659
  12,162
  12,695
  13,259
  13,856
  14,486
  15,152
  15,854
  16,595
  17,376
  18,198
  19,065
  19,977
  20,937
  21,947
  23,010
  24,128
Funds from operations, $m
  207
  7,258
  7,410
  7,583
  7,777
  7,991
  8,225
  8,479
  8,753
  9,049
  9,365
  9,704
  10,065
  10,449
  10,856
  11,289
  11,747
  12,231
  12,744
  13,285
  13,857
  14,459
  15,095
  15,765
  16,471
  17,214
  17,996
  18,819
  19,686
  20,597
  21,556
Change in working capital, $m
  -3,961
  -33
  -38
  -44
  -49
  -55
  -60
  -65
  -70
  -76
  -82
  -87
  -93
  -99
  -105
  -112
  -118
  -125
  -133
  -140
  -148
  -156
  -165
  -173
  -183
  -192
  -203
  -213
  -224
  -236
  -248
Cash from operations, $m
  4,168
  7,291
  7,448
  7,627
  7,826
  8,045
  8,285
  8,544
  8,824
  9,125
  9,447
  9,791
  10,158
  10,548
  10,962
  11,400
  11,865
  12,357
  12,876
  13,425
  14,004
  14,615
  15,260
  15,938
  16,653
  17,406
  18,199
  19,033
  19,910
  20,833
  21,804
Maintenance CAPEX, $m
  0
  -7,354
  -7,503
  -7,675
  -7,872
  -8,094
  -8,339
  -8,608
  -8,902
  -9,219
  -9,561
  -9,928
  -10,320
  -10,739
  -11,185
  -11,659
  -12,162
  -12,695
  -13,259
  -13,856
  -14,486
  -15,152
  -15,854
  -16,595
  -17,376
  -18,198
  -19,065
  -19,977
  -20,937
  -21,947
  -23,010
New CAPEX, $m
  -3,958
  -1,296
  -1,501
  -1,716
  -1,927
  -2,135
  -2,342
  -2,551
  -2,761
  -2,975
  -3,192
  -3,415
  -3,644
  -3,880
  -4,124
  -4,376
  -4,637
  -4,908
  -5,191
  -5,485
  -5,791
  -6,110
  -6,444
  -6,792
  -7,156
  -7,537
  -7,936
  -8,353
  -8,790
  -9,247
  -9,727
Cash from investing activities, $m
  -9,225
  -8,650
  -9,004
  -9,391
  -9,799
  -10,229
  -10,681
  -11,159
  -11,663
  -12,194
  -12,753
  -13,343
  -13,964
  -14,619
  -15,309
  -16,035
  -16,799
  -17,603
  -18,450
  -19,341
  -20,277
  -21,262
  -22,298
  -23,387
  -24,532
  -25,735
  -27,001
  -28,330
  -29,727
  -31,194
  -32,737
Free cash flow, $m
  -5,057
  -1,359
  -1,556
  -1,764
  -1,973
  -2,183
  -2,397
  -2,615
  -2,839
  -3,069
  -3,306
  -3,552
  -3,807
  -4,072
  -4,347
  -4,634
  -4,934
  -5,247
  -5,573
  -5,915
  -6,273
  -6,647
  -7,039
  -7,449
  -7,879
  -8,330
  -8,802
  -9,297
  -9,817
  -10,361
  -10,933
Issuance/(repayment) of debt, $m
  5,549
  1,263
  1,438
  1,644
  1,846
  2,046
  2,244
  2,444
  2,645
  2,850
  3,059
  3,272
  3,492
  3,718
  3,951
  4,193
  4,443
  4,703
  4,973
  5,255
  5,549
  5,855
  6,174
  6,508
  6,857
  7,222
  7,604
  8,004
  8,422
  8,860
  9,320
Issuance/(repurchase) of shares, $m
  0
  1,204
  1,287
  1,363
  1,442
  1,524
  1,610
  1,699
  1,793
  1,891
  1,995
  1,445
  1,558
  1,678
  1,803
  1,935
  2,073
  2,218
  2,371
  2,531
  2,700
  2,877
  3,063
  3,258
  3,463
  3,679
  3,906
  4,143
  4,393
  4,656
  4,932
Cash from financing (excl. dividends), $m  
  5,286
  2,467
  2,725
  3,007
  3,288
  3,570
  3,854
  4,143
  4,438
  4,741
  5,054
  4,717
  5,050
  5,396
  5,754
  6,128
  6,516
  6,921
  7,344
  7,786
  8,249
  8,732
  9,237
  9,766
  10,320
  10,901
  11,510
  12,147
  12,815
  13,516
  14,252
Total cash flow (excl. dividends), $m
  229
  1,107
  1,170
  1,243
  1,315
  1,386
  1,457
  1,528
  1,600
  1,673
  1,747
  1,165
  1,243
  1,324
  1,407
  1,493
  1,582
  1,675
  1,771
  1,871
  1,976
  2,085
  2,199
  2,317
  2,442
  2,572
  2,708
  2,850
  2,999
  3,155
  3,318
Retained Cash Flow (-), $m
  975
  -1,204
  -1,287
  -1,363
  -1,442
  -1,524
  -1,610
  -1,699
  -1,793
  -1,891
  -1,995
  -1,445
  -1,558
  -1,678
  -1,803
  -1,935
  -2,073
  -2,218
  -2,371
  -2,531
  -2,700
  -2,877
  -3,063
  -3,258
  -3,463
  -3,679
  -3,906
  -4,143
  -4,393
  -4,656
  -4,932
Prev. year cash balance distribution, $m
 
  3,278
  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
 
  3,182
  -117
  -120
  -127
  -138
  -153
  -171
  -193
  -219
  -248
  -280
  -315
  -354
  -396
  -442
  -491
  -544
  -600
  -660
  -724
  -792
  -864
  -941
  -1,022
  -1,108
  -1,198
  -1,294
  -1,394
  -1,501
  -1,613
Discount rate, %
 
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
 
  2,946
  -100
  -93
  -89
  -87
  -85
  -84
  -82
  -80
  -77
  -73
  -68
  -62
  -55
  -49
  -42
  -35
  -29
  -23
  -18
  -14
  -10
  -7
  -5
  -4
  -2
  -2
  -1
  -1
  0
Current shareholders' claim on cash, %
  100
  93.8
  87.7
  81.8
  76.1
  70.7
  65.6
  60.7
  56.1
  51.8
  47.7
  45.1
  42.5
  39.9
  37.5
  35.1
  32.8
  30.7
  28.6
  26.6
  24.7
  23.0
  21.3
  19.7
  18.2
  16.9
  15.6
  14.4
  13.2
  12.2
  11.2

Sprint Corporation (Sprint) is a holding company. The Company, along with its subsidiaries, is a communications company offering a range of wireless and wireline communications products and services that are designed to meet the needs of consumers, businesses, government subscribers and resellers. It operates through two segments: Wireless and Wireline. The Company offers wireless services on a postpaid and prepaid payment basis to retail subscribers and also on a wholesale basis. The Wireline segment provides voice, data and Internet Protocol (IP) communication services to its Wireless segment. The Company offers wireless and wireline services to subscribers in approximately 50 states, Puerto Rico, and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint, Boost Mobile, Virgin Mobile and Assurance Wireless on its wireless networks utilizing various technologies.

FINANCIAL RATIOS  of  Sprint (S)

Valuation Ratios
P/E Ratio -18.2
Price to Sales 0.7
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 5.3
Price to Free Cash Flow 104.3
Growth Rates
Sales Growth Rate 3.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44%
Cap. Spend. - 3 Yr. Gr. Rate 19.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 190.8%
Total Debt to Equity 217.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.5%
Ret/ On Assets - 3 Yr. Avg. -2.6%
Return On Total Capital -2.1%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity -6.3%
Return On Equity - 3 Yr. Avg. -10%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 55.2%
Gross Margin - 3 Yr. Avg. 51%
EBITDA Margin 22.1%
EBITDA Margin - 3 Yr. Avg. 14.2%
Operating Margin 5.3%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. -6.5%
Net Profit Margin -3.6%
Net Profit Margin - 3 Yr. Avg. -6.5%
Effective Tax Rate -56.4%
Eff/ Tax Rate - 3 Yr. Avg. -16.5%
Payout Ratio 0%

S stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the S stock intrinsic value calculation we used $33347 million for the last fiscal year's total revenue generated by Sprint. The default revenue input number comes from 2017 income statement of Sprint. 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 S stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8%, whose default value for S is calculated based on our internal credit rating of Sprint, 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 Sprint.
    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 S stock the variable cost ratio is equal to 99%.

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 S 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 3.5% for Sprint.

Corporate tax rate of 27% is the nominal tax rate for Sprint. 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 S 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 S are equal to 191.9%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Sprint 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 S is equal to -4.9%. 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 - $18808 million for Sprint - 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 3997.11 million for Sprint 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 Sprint at the current share price and the inputted number of shares is $21.9 billion.

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COMPANY NEWS

▶ Sprint subsidiary accused of repeatedly misrepresenting auctioned phones   [Dec-15-17 02:40PM  American City Business Journals]
▶ After the XTL jumps over 7% in a month   [01:29PM  CNBC Videos]
▶ What Will the Future Look Like Without Net Neutrality?   [Dec-13-17 08:38PM  MarketWatch]
▶ Jio May Be Worth as Much as Sprint   [03:29AM  Bloomberg]
▶ Virgin Mobile begins selling used iPhones   [Dec-11-17 04:45PM  American City Business Journals]
▶ Bitcoin Is Bigger Than General Electric   [11:39AM  TheStreet.com]
▶ Telecom stocks to buy now   [Dec-07-17 03:10PM  CNBC Videos]
▶ Sprint plans price increases as competition slows   [Dec-06-17 05:05PM  American City Business Journals]
▶ Why the iPhone Will Drive Apple Inc. Stock to Record Highs   [Dec-05-17 03:21PM  InvestorPlace]
▶ Sprint hits another cable company with a patent suit   [Dec-04-17 03:40PM  American City Business Journals]
▶ Better Buy: Verizon Communications Inc. vs. Sprint   [Nov-30-17 05:52PM  Motley Fool]
▶ How much runway does SoftBank have left for Sprint stock purchases?   [03:30PM  American City Business Journals]
▶ Sprint Continues Expansion in Major U.S. Carrier Hotels   [Nov-29-17 01:49PM  Business Wire]
▶ AT&Ts latest offer to take over Time Warner   [01:11PM  Yahoo Finance Video]
▶ What Investors Need to Know About T-Mobile US Inc. Stock   [Nov-22-17 03:14PM  InvestorPlace]
▶ T-Mobile US Inc Stock Is the Best Pick in a Bad Sector   [Nov-21-17 01:35PM  InvestorPlace]
▶ Sprint memo details executive shuffle   [06:35AM  American City Business Journals]
▶ Sprint's technology COO will step down   [Nov-20-17 12:31PM  American City Business Journals]
▶ What Does SoftBank Do?   [Nov-17-17 11:26AM  Investopedia]
▶ Sprint Now Offering Free Hulu Service   [09:36AM  Investopedia]
▶ Sprint Fires Back at T-Mobile With Hulu Bundle   [Nov-15-17 04:10PM  Motley Fool]
▶ Sprint Says Hello to Hulu!   [09:00AM  Business Wire]
▶ KC tech giants, others celebrate possibilities with new KCI   [Nov-14-17 05:35PM  American City Business Journals]
▶ Source: Sprint will launch Hulu deal   [02:40PM  American City Business Journals]
▶ Why the Gap Is Widening Between Sprint and T-Mobile   [Nov-11-17 01:42PM  Motley Fool]
▶ How Sprint fits into billionaire Masayoshi Son's grand plan   [Nov-10-17 05:55PM  American City Business Journals]
▶ Sprint CEO sets sights on network buildout by 2019   [Nov-09-17 02:50PM  American City Business Journals]
▶ SoftBank buys $38M more in Sprint stock   [01:25PM  American City Business Journals]
▶ Sprint to accelerate network investment, CEO says   [Nov-08-17 08:16PM  Reuters]
▶ Behind the (failed) deal: Sprint CEO dishes on merger attempts   [06:10PM  American City Business Journals]
▶ No, Snap is not a 'buy' right now   [11:01AM  Yahoo Finance Video]
▶ With merger off the table, SoftBank will boost its stake in Sprint   [Nov-06-17 11:30PM  American City Business Journals]
▶ Sprint strikes deal with cable giant after ending T-Mobile talks   [11:18PM  American City Business Journals]
▶ How Masayoshi Son Can Assuage Sprint Investors   [08:01PM  Bloomberg Video]
Financial statements of S
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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