Intrinsic value of Shenandoah Telecommunications - SHEN

Previous Close

$39.30

  Intrinsic Value

$159.68

stock screener

  Rating & Target

str. buy

+306%

Previous close

$39.30

 
Intrinsic value

$159.68

 
Up/down potential

+306%

 
Rating

str. buy

We calculate the intrinsic value of SHEN 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 1.9

 

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, %
  56.43
  56.40
  51.26
  46.63
  42.47
  38.72
  35.35
  32.32
  29.58
  27.13
  24.91
  22.92
  21.13
  19.52
  18.07
  16.76
  15.58
  14.52
  13.57
  12.71
  11.94
  11.25
  10.62
  10.06
  9.56
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
Revenue, $m
  535
  837
  1,266
  1,856
  2,644
  3,668
  4,965
  6,569
  8,512
  10,821
  13,517
  16,616
  20,127
  24,055
  28,401
  33,160
  38,327
  43,894
  49,852
  56,190
  62,901
  69,977
  77,412
  85,201
  93,342
  101,836
  110,686
  119,896
  129,474
  139,431
  149,778
Variable operating expenses, $m
 
  647
  971
  1,417
  2,013
  2,787
  3,767
  4,980
  6,449
  8,194
  10,232
  12,560
  15,214
  18,183
  21,468
  25,066
  28,972
  33,180
  37,683
  42,474
  47,547
  52,896
  58,515
  64,403
  70,557
  76,978
  83,667
  90,629
  97,869
  105,395
  113,217
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
  513
  647
  971
  1,417
  2,013
  2,787
  3,767
  4,980
  6,449
  8,194
  10,232
  12,560
  15,214
  18,183
  21,468
  25,066
  28,972
  33,180
  37,683
  42,474
  47,547
  52,896
  58,515
  64,403
  70,557
  76,978
  83,667
  90,629
  97,869
  105,395
  113,217
Operating income, $m
  23
  190
  294
  439
  631
  881
  1,197
  1,589
  2,063
  2,627
  3,285
  4,056
  4,913
  5,872
  6,933
  8,094
  9,356
  10,715
  12,169
  13,716
  15,354
  17,082
  18,896
  20,798
  22,785
  24,858
  27,019
  29,267
  31,605
  34,035
  36,561
EBITDA, $m
  181
  432
  653
  958
  1,365
  1,893
  2,562
  3,390
  4,393
  5,585
  6,976
  8,575
  10,387
  12,414
  14,657
  17,113
  19,780
  22,652
  25,727
  28,998
  32,461
  36,113
  39,950
  43,969
  48,171
  52,554
  57,121
  61,874
  66,817
  71,956
  77,295
Interest expense (income), $m
  21
  33
  59
  98
  150
  220
  311
  425
  568
  740
  945
  1,184
  1,459
  1,770
  2,118
  2,503
  2,925
  3,384
  3,877
  4,405
  4,967
  5,563
  6,190
  6,849
  7,540
  8,262
  9,015
  9,799
  10,616
  11,465
  12,348
Earnings before tax, $m
  2
  157
  235
  341
  481
  661
  887
  1,164
  1,496
  1,887
  2,340
  2,872
  3,454
  4,102
  4,815
  5,591
  6,430
  7,331
  8,292
  9,311
  10,387
  11,519
  12,706
  13,949
  15,245
  16,597
  18,004
  19,467
  20,989
  22,570
  24,213
Tax expense, $m
  3
  42
  63
  92
  130
  179
  239
  314
  404
  509
  632
  775
  933
  1,108
  1,300
  1,510
  1,736
  1,979
  2,239
  2,514
  2,804
  3,110
  3,431
  3,766
  4,116
  4,481
  4,861
  5,256
  5,667
  6,094
  6,538
Net income, $m
  -1
  115
  172
  249
  351
  483
  647
  849
  1,092
  1,378
  1,708
  2,097
  2,522
  2,994
  3,515
  4,081
  4,694
  5,352
  6,053
  6,797
  7,582
  8,409
  9,276
  10,182
  11,129
  12,116
  13,143
  14,211
  15,322
  16,476
  17,676

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  36
  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
  1,484
  2,268
  3,430
  5,029
  7,166
  9,940
  13,454
  17,802
  23,069
  29,327
  36,633
  45,030
  54,544
  65,190
  76,966
  89,865
  103,869
  118,955
  135,100
  152,277
  170,464
  189,640
  209,788
  230,896
  252,959
  275,979
  299,961
  324,921
  350,878
  377,861
  405,902
Adjusted assets (=assets-cash), $m
  1,448
  2,268
  3,430
  5,029
  7,166
  9,940
  13,454
  17,802
  23,069
  29,327
  36,633
  45,030
  54,544
  65,190
  76,966
  89,865
  103,869
  118,955
  135,100
  152,277
  170,464
  189,640
  209,788
  230,896
  252,959
  275,979
  299,961
  324,921
  350,878
  377,861
  405,902
Revenue / Adjusted assets
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
Average production assets, $m
  815
  1,274
  1,928
  2,827
  4,027
  5,586
  7,561
  10,005
  12,964
  16,481
  20,587
  25,306
  30,653
  36,636
  43,254
  50,503
  58,373
  66,851
  75,924
  85,578
  95,799
  106,575
  117,898
  129,760
  142,160
  155,096
  168,574
  182,601
  197,189
  212,353
  228,112
Working capital, $m
  -3
  -11
  -16
  -24
  -34
  -48
  -65
  -85
  -111
  -141
  -176
  -216
  -262
  -313
  -369
  -431
  -498
  -571
  -648
  -730
  -818
  -910
  -1,006
  -1,108
  -1,213
  -1,324
  -1,439
  -1,559
  -1,683
  -1,813
  -1,947
Total debt, $m
  829
  1,451
  2,378
  3,655
  5,359
  7,573
  10,378
  13,847
  18,050
  23,044
  28,874
  35,575
  43,167
  51,662
  61,060
  71,353
  82,528
  94,567
  107,450
  121,158
  135,672
  150,974
  167,052
  183,896
  201,502
  219,872
  239,010
  258,928
  279,642
  301,174
  323,551
Total liabilities, $m
  1,189
  1,810
  2,737
  4,014
  5,718
  7,932
  10,737
  14,206
  18,409
  23,403
  29,233
  35,934
  43,526
  52,021
  61,419
  71,712
  82,887
  94,926
  107,809
  121,517
  136,031
  151,333
  167,411
  184,255
  201,861
  220,231
  239,369
  259,287
  280,001
  301,533
  323,910
Total equity, $m
  296
  458
  693
  1,016
  1,447
  2,008
  2,718
  3,596
  4,660
  5,924
  7,400
  9,096
  11,018
  13,168
  15,547
  18,153
  20,981
  24,029
  27,290
  30,760
  34,434
  38,307
  42,377
  46,641
  51,098
  55,748
  60,592
  65,634
  70,877
  76,328
  81,992
Total liabilities and equity, $m
  1,485
  2,268
  3,430
  5,030
  7,165
  9,940
  13,455
  17,802
  23,069
  29,327
  36,633
  45,030
  54,544
  65,189
  76,966
  89,865
  103,868
  118,955
  135,099
  152,277
  170,465
  189,640
  209,788
  230,896
  252,959
  275,979
  299,961
  324,921
  350,878
  377,861
  405,902
Debt-to-equity ratio
  2.801
  3.170
  3.430
  3.600
  3.700
  3.770
  3.820
  3.850
  3.870
  3.890
  3.900
  3.910
  3.920
  3.920
  3.930
  3.930
  3.930
  3.940
  3.940
  3.940
  3.940
  3.940
  3.940
  3.940
  3.940
  3.940
  3.940
  3.950
  3.950
  3.950
  3.950
Adjusted equity ratio
  0.180
  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
  115
  172
  249
  351
  483
  647
  849
  1,092
  1,378
  1,708
  2,097
  2,522
  2,994
  3,515
  4,081
  4,694
  5,352
  6,053
  6,797
  7,582
  8,409
  9,276
  10,182
  11,129
  12,116
  13,143
  14,211
  15,322
  16,476
  17,676
Depreciation, amort., depletion, $m
  158
  242
  359
  519
  734
  1,012
  1,365
  1,801
  2,330
  2,958
  3,691
  4,519
  5,474
  6,542
  7,724
  9,018
  10,424
  11,938
  13,558
  15,282
  17,107
  19,031
  21,053
  23,172
  25,386
  27,696
  30,103
  32,607
  35,212
  37,920
  40,734
Funds from operations, $m
  203
  357
  530
  768
  1,085
  1,495
  2,012
  2,650
  3,421
  4,335
  5,399
  6,616
  7,996
  9,537
  11,239
  13,100
  15,118
  17,289
  19,611
  22,079
  24,689
  27,440
  30,329
  33,354
  36,515
  39,811
  43,245
  46,819
  50,534
  54,396
  58,410
Change in working capital, $m
  41
  -4
  -6
  -8
  -10
  -13
  -17
  -21
  -25
  -30
  -35
  -40
  -46
  -51
  -56
  -62
  -67
  -72
  -77
  -82
  -87
  -92
  -97
  -101
  -106
  -110
  -115
  -120
  -125
  -129
  -135
Cash from operations, $m
  162
  361
  536
  776
  1,095
  1,508
  2,029
  2,671
  3,447
  4,365
  5,434
  6,656
  8,041
  9,588
  11,295
  13,162
  15,185
  17,362
  19,688
  22,161
  24,777
  27,532
  30,426
  33,455
  36,621
  39,922
  43,360
  46,938
  50,659
  54,526
  58,544
Maintenance CAPEX, $m
  0
  -146
  -228
  -344
  -505
  -719
  -998
  -1,350
  -1,787
  -2,315
  -2,943
  -3,676
  -4,519
  -5,474
  -6,542
  -7,724
  -9,018
  -10,424
  -11,938
  -13,558
  -15,282
  -17,107
  -19,031
  -21,053
  -23,172
  -25,386
  -27,696
  -30,103
  -32,607
  -35,212
  -37,920
New CAPEX, $m
  -173
  -459
  -653
  -899
  -1,200
  -1,559
  -1,975
  -2,443
  -2,960
  -3,517
  -4,106
  -4,719
  -5,347
  -5,983
  -6,618
  -7,249
  -7,870
  -8,478
  -9,073
  -9,654
  -10,221
  -10,776
  -11,323
  -11,863
  -12,399
  -12,937
  -13,478
  -14,027
  -14,588
  -15,164
  -15,759
Cash from investing activities, $m
  -820
  -605
  -881
  -1,243
  -1,705
  -2,278
  -2,973
  -3,793
  -4,747
  -5,832
  -7,049
  -8,395
  -9,866
  -11,457
  -13,160
  -14,973
  -16,888
  -18,902
  -21,011
  -23,212
  -25,503
  -27,883
  -30,354
  -32,916
  -35,571
  -38,323
  -41,174
  -44,130
  -47,195
  -50,376
  -53,679
Free cash flow, $m
  -658
  -244
  -345
  -467
  -610
  -770
  -943
  -1,122
  -1,300
  -1,467
  -1,615
  -1,739
  -1,825
  -1,869
  -1,865
  -1,811
  -1,703
  -1,540
  -1,323
  -1,051
  -726
  -351
  72
  539
  1,050
  1,600
  2,187
  2,809
  3,464
  4,150
  4,865
Issuance/(repayment) of debt, $m
  646
  654
  928
  1,276
  1,705
  2,214
  2,804
  3,470
  4,203
  4,994
  5,830
  6,701
  7,593
  8,495
  9,398
  10,293
  11,175
  12,039
  12,883
  13,708
  14,513
  15,302
  16,078
  16,844
  17,607
  18,369
  19,138
  19,918
  20,714
  21,532
  22,377
Issuance/(repurchase) of shares, $m
  -2
  51
  63
  74
  80
  78
  62
  29
  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  
  630
  705
  991
  1,350
  1,785
  2,292
  2,866
  3,499
  4,203
  4,994
  5,830
  6,701
  7,593
  8,495
  9,398
  10,293
  11,175
  12,039
  12,883
  13,708
  14,513
  15,302
  16,078
  16,844
  17,607
  18,369
  19,138
  19,918
  20,714
  21,532
  22,377
Total cash flow (excl. dividends), $m
  -29
  461
  646
  883
  1,175
  1,522
  1,923
  2,376
  2,903
  3,527
  4,216
  4,961
  5,768
  6,626
  7,532
  8,482
  9,472
  10,499
  11,561
  12,657
  13,787
  14,951
  16,149
  17,384
  18,656
  19,969
  21,325
  22,727
  24,178
  25,682
  27,242
Retained Cash Flow (-), $m
  -6
  -166
  -235
  -323
  -431
  -560
  -710
  -878
  -1,064
  -1,264
  -1,476
  -1,696
  -1,922
  -2,150
  -2,379
  -2,606
  -2,829
  -3,047
  -3,261
  -3,470
  -3,674
  -3,873
  -4,070
  -4,264
  -4,457
  -4,650
  -4,844
  -5,042
  -5,243
  -5,450
  -5,664
Prev. year cash balance distribution, $m
 
  4
  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
 
  299
  411
  560
  743
  961
  1,213
  1,498
  1,839
  2,263
  2,740
  3,265
  3,846
  4,476
  5,153
  5,876
  6,643
  7,451
  8,300
  9,187
  10,113
  11,078
  12,080
  13,120
  14,200
  15,319
  16,480
  17,685
  18,934
  20,231
  21,578
Discount rate, %
 
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
 
  270
  334
  404
  472
  530
  574
  601
  617
  625
  614
  584
  539
  483
  420
  354
  290
  230
  177
  132
  95
  66
  45
  29
  18
  11
  6
  4
  2
  1
  0
Current shareholders' claim on cash, %
  100
  97.4
  95.4
  93.8
  92.7
  91.9
  91.5
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3
  91.3

Shenandoah Telecommunications Company is a telecommunications holding company. The Company's segments are Wireless, Cable, Wireline and Other. The Company, through its operating subsidiaries, provides both regulated and unregulated telecommunications services to end user customers and other telecommunications providers in Virginia, West Virginia, central Pennsylvania, western Maryland, and portions of Kentucky and Ohio. The business of the Wireless segment is conducted principally by the Company's subsidiary, Shenandoah Personal Communications, LLC (PCS). The business of the Company's Cable segment is conducted through Shenandoah Cable Television, LLC (Shenandoah Cable). The Wireline segment provides regulated and unregulated voice services, digital subscriber line (DSL) Internet access, cable modem and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia.

FINANCIAL RATIOS  of  Shenandoah Telecommunications (SHEN)

Valuation Ratios
P/E Ratio -1923.3
Price to Sales 3.6
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 11.9
Price to Free Cash Flow -174.8
Growth Rates
Sales Growth Rate 56.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 147.1%
Cap. Spend. - 3 Yr. Gr. Rate 8.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 269.3%
Total Debt to Equity 280.1%
Interest Coverage 1
Management Effectiveness
Return On Assets -1.1%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital -0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.2%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 63.9%
Gross Margin - 3 Yr. Avg. 62.9%
EBITDA Margin 33.8%
EBITDA Margin - 3 Yr. Avg. 38.8%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 14.9%
Pre-Tax Margin 0.4%
Pre-Tax Margin - 3 Yr. Avg. 12.6%
Net Profit Margin -0.2%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 150%
Eff/ Tax Rate - 3 Yr. Avg. 76.6%
Payout Ratio -1200%

SHEN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHEN stock intrinsic value calculation we used $535 million for the last fiscal year's total revenue generated by Shenandoah Telecommunications. The default revenue input number comes from 2016 income statement of Shenandoah Telecommunications. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SHEN stock valuation model: a) initial revenue growth rate of 56.4% 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 10.4%, whose default value for SHEN is calculated based on our internal credit rating of Shenandoah Telecommunications, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Shenandoah Telecommunications.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SHEN stock the variable cost ratio is equal to 78.3%.

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 SHEN 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 4.1% for Shenandoah Telecommunications.

Corporate tax rate of 27% is the nominal tax rate for Shenandoah Telecommunications. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SHEN 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 SHEN are equal to 152.3%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Shenandoah Telecommunications operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SHEN is equal to -1.3%. 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 - $296 million for Shenandoah Telecommunications - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 49.109 million for Shenandoah Telecommunications is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Shenandoah Telecommunications at the current share price and the inputted number of shares is $1.9 billion.

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COMPANY NEWS

▶ Shenandoah Telecom posts 2Q loss   [12:16AM  Associated Press]
▶ Shenandoah Telecom posts 1Q profit   [May-04-17 08:31AM  Associated Press]
▶ Shenandoah Telecom posts 4Q loss   [09:38AM  Associated Press]
Financial statements of SHEN
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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