Intrinsic value of Viacom Cl B - VIAB

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$35.13

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$35.13

 
Intrinsic value

$148.58

 
Up/down potential

+323%

 
Rating

str. buy

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

We calculate the intrinsic value of VIAB 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 14.5

 

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, %
  -5.88
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  12,488
  13,549
  14,654
  15,802
  16,995
  18,235
  19,524
  20,863
  22,256
  23,704
  25,210
  26,778
  28,411
  30,113
  31,886
  33,736
  35,666
  37,681
  39,785
  41,983
  44,280
  46,683
  49,196
  51,825
  54,577
  57,458
  60,476
  63,636
  66,948
  70,418
  74,055
Variable operating expenses, $m
 
  3,589
  3,788
  3,996
  4,211
  4,435
  4,668
  4,910
  5,162
  5,424
  5,696
  4,839
  5,134
  5,442
  5,762
  6,097
  6,445
  6,809
  7,190
  7,587
  8,002
  8,436
  8,890
  9,365
  9,863
  10,383
  10,929
  11,500
  12,098
  12,725
  13,383
Fixed operating expenses, $m
 
  6,900
  7,073
  7,250
  7,431
  7,617
  7,807
  8,002
  8,202
  8,407
  8,618
  8,833
  9,054
  9,280
  9,512
  9,750
  9,994
  10,244
  10,500
  10,762
  11,031
  11,307
  11,590
  11,879
  12,176
  12,481
  12,793
  13,113
  13,440
  13,776
  14,121
Total operating expenses, $m
  9,962
  10,489
  10,861
  11,246
  11,642
  12,052
  12,475
  12,912
  13,364
  13,831
  14,314
  13,672
  14,188
  14,722
  15,274
  15,847
  16,439
  17,053
  17,690
  18,349
  19,033
  19,743
  20,480
  21,244
  22,039
  22,864
  23,722
  24,613
  25,538
  26,501
  27,504
Operating income, $m
  2,526
  3,061
  3,793
  4,557
  5,353
  6,183
  7,049
  7,951
  8,891
  9,873
  10,897
  13,106
  14,223
  15,391
  16,612
  17,890
  19,227
  20,628
  22,095
  23,634
  25,247
  26,940
  28,716
  30,580
  32,538
  34,594
  36,754
  39,024
  41,409
  43,916
  46,551
EBITDA, $m
  2,747
  4,246
  4,982
  5,750
  6,550
  7,385
  8,254
  9,161
  10,106
  11,093
  12,122
  13,196
  14,319
  15,492
  16,719
  18,003
  19,347
  20,755
  22,229
  23,775
  25,396
  27,097
  28,882
  30,755
  32,722
  34,788
  36,958
  39,238
  41,634
  44,153
  46,800
Interest expense (income), $m
  611
  607
  686
  768
  854
  943
  1,035
  1,131
  1,230
  1,334
  1,442
  1,554
  1,671
  1,792
  1,919
  2,051
  2,188
  2,332
  2,482
  2,639
  2,802
  2,973
  3,152
  3,339
  3,535
  3,739
  3,954
  4,178
  4,414
  4,660
  4,918
Earnings before tax, $m
  1,990
  2,454
  3,107
  3,788
  4,499
  5,241
  6,014
  6,820
  7,661
  8,539
  9,455
  11,552
  12,553
  13,599
  14,693
  15,839
  17,039
  18,296
  19,613
  20,995
  22,445
  23,967
  25,564
  27,241
  29,003
  30,855
  32,800
  34,845
  36,995
  39,256
  41,633
Tax expense, $m
  519
  663
  839
  1,023
  1,215
  1,415
  1,624
  1,841
  2,068
  2,305
  2,553
  3,119
  3,389
  3,672
  3,967
  4,276
  4,600
  4,940
  5,296
  5,669
  6,060
  6,471
  6,902
  7,355
  7,831
  8,331
  8,856
  9,408
  9,989
  10,599
  11,241
Net income, $m
  1,438
  1,791
  2,268
  2,765
  3,284
  3,826
  4,390
  4,979
  5,593
  6,233
  6,902
  8,433
  9,164
  9,927
  10,726
  11,562
  12,438
  13,356
  14,318
  15,327
  16,385
  17,496
  18,662
  19,886
  21,173
  22,524
  23,944
  25,437
  27,007
  28,657
  30,392

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  379
  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
  22,508
  24,024
  25,982
  28,018
  30,133
  32,332
  34,617
  36,991
  39,460
  42,028
  44,699
  47,480
  50,375
  53,392
  56,536
  59,816
  63,238
  66,810
  70,540
  74,438
  78,511
  82,771
  87,227
  91,889
  96,768
  101,877
  107,226
  112,830
  118,701
  124,854
  131,302
Adjusted assets (=assets-cash), $m
  22,129
  24,024
  25,982
  28,018
  30,133
  32,332
  34,617
  36,991
  39,460
  42,028
  44,699
  47,480
  50,375
  53,392
  56,536
  59,816
  63,238
  66,810
  70,540
  74,438
  78,511
  82,771
  87,227
  91,889
  96,768
  101,877
  107,226
  112,830
  118,701
  124,854
  131,302
Revenue / Adjusted assets
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
  0.564
Average production assets, $m
  1,267
  1,368
  1,480
  1,596
  1,717
  1,842
  1,972
  2,107
  2,248
  2,394
  2,546
  2,705
  2,870
  3,041
  3,221
  3,407
  3,602
  3,806
  4,018
  4,240
  4,472
  4,715
  4,969
  5,234
  5,512
  5,803
  6,108
  6,427
  6,762
  7,112
  7,480
Working capital, $m
  850
  528
  571
  616
  663
  711
  761
  814
  868
  924
  983
  1,044
  1,108
  1,174
  1,244
  1,316
  1,391
  1,470
  1,552
  1,637
  1,727
  1,821
  1,919
  2,021
  2,129
  2,241
  2,359
  2,482
  2,611
  2,746
  2,888
Total debt, $m
  11,913
  13,454
  15,065
  16,740
  18,482
  20,291
  22,172
  24,126
  26,158
  28,271
  30,469
  32,758
  35,141
  37,623
  40,211
  42,910
  45,727
  48,666
  51,736
  54,944
  58,297
  61,803
  65,470
  69,306
  73,322
  77,526
  81,929
  86,541
  91,373
  96,437
  101,744
Total liabilities, $m
  18,231
  19,772
  21,383
  23,058
  24,800
  26,609
  28,490
  30,444
  32,476
  34,589
  36,787
  39,076
  41,459
  43,941
  46,529
  49,228
  52,045
  54,984
  58,054
  61,262
  64,615
  68,121
  71,788
  75,624
  79,640
  83,844
  88,247
  92,859
  97,691
  102,755
  108,062
Total equity, $m
  4,277
  4,252
  4,599
  4,959
  5,334
  5,723
  6,127
  6,547
  6,984
  7,439
  7,912
  8,404
  8,916
  9,450
  10,007
  10,587
  11,193
  11,825
  12,486
  13,175
  13,897
  14,650
  15,439
  16,264
  17,128
  18,032
  18,979
  19,971
  21,010
  22,099
  23,241
Total liabilities and equity, $m
  22,508
  24,024
  25,982
  28,017
  30,134
  32,332
  34,617
  36,991
  39,460
  42,028
  44,699
  47,480
  50,375
  53,391
  56,536
  59,815
  63,238
  66,809
  70,540
  74,437
  78,512
  82,771
  87,227
  91,888
  96,768
  101,876
  107,226
  112,830
  118,701
  124,854
  131,303
Debt-to-equity ratio
  2.785
  3.160
  3.280
  3.380
  3.470
  3.550
  3.620
  3.680
  3.750
  3.800
  3.850
  3.900
  3.940
  3.980
  4.020
  4.050
  4.090
  4.120
  4.140
  4.170
  4.200
  4.220
  4.240
  4.260
  4.280
  4.300
  4.320
  4.330
  4.350
  4.360
  4.380
Adjusted equity ratio
  0.176
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,438
  1,791
  2,268
  2,765
  3,284
  3,826
  4,390
  4,979
  5,593
  6,233
  6,902
  8,433
  9,164
  9,927
  10,726
  11,562
  12,438
  13,356
  14,318
  15,327
  16,385
  17,496
  18,662
  19,886
  21,173
  22,524
  23,944
  25,437
  27,007
  28,657
  30,392
Depreciation, amort., depletion, $m
  221
  1,186
  1,189
  1,193
  1,197
  1,201
  1,206
  1,210
  1,215
  1,220
  1,225
  90
  96
  101
  107
  114
  120
  127
  134
  141
  149
  157
  166
  174
  184
  193
  204
  214
  225
  237
  249
Funds from operations, $m
  -3,852
  2,977
  3,457
  3,959
  4,482
  5,027
  5,596
  6,189
  6,807
  7,453
  8,127
  8,523
  9,259
  10,029
  10,833
  11,676
  12,558
  13,483
  14,452
  15,468
  16,534
  17,653
  18,827
  20,061
  21,356
  22,717
  24,148
  25,651
  27,232
  28,894
  30,641
Change in working capital, $m
  -5,223
  41
  43
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
Cash from operations, $m
  1,371
  2,916
  3,414
  3,914
  4,435
  4,979
  5,545
  6,137
  6,753
  7,397
  8,068
  8,462
  9,195
  9,962
  10,764
  11,604
  12,483
  13,404
  14,370
  15,382
  16,444
  17,559
  18,729
  19,958
  21,249
  22,605
  24,030
  25,528
  27,103
  28,758
  30,499
Maintenance CAPEX, $m
  0
  -42
  -46
  -49
  -53
  -57
  -61
  -66
  -70
  -75
  -80
  -85
  -90
  -96
  -101
  -107
  -114
  -120
  -127
  -134
  -141
  -149
  -157
  -166
  -174
  -184
  -193
  -204
  -214
  -225
  -237
New CAPEX, $m
  -172
  -101
  -112
  -116
  -121
  -125
  -130
  -135
  -141
  -146
  -152
  -158
  -165
  -172
  -179
  -187
  -195
  -203
  -213
  -222
  -232
  -243
  -254
  -266
  -278
  -291
  -305
  -319
  -334
  -350
  -367
Cash from investing activities, $m
  -299
  -143
  -158
  -165
  -174
  -182
  -191
  -201
  -211
  -221
  -232
  -243
  -255
  -268
  -280
  -294
  -309
  -323
  -340
  -356
  -373
  -392
  -411
  -432
  -452
  -475
  -498
  -523
  -548
  -575
  -604
Free cash flow, $m
  1,072
  2,772
  3,257
  3,749
  4,261
  4,796
  5,354
  5,936
  6,542
  7,175
  7,836
  8,219
  8,940
  9,695
  10,484
  11,310
  12,174
  13,081
  14,030
  15,026
  16,071
  17,167
  18,318
  19,527
  20,796
  22,130
  23,532
  25,005
  26,554
  28,183
  29,895
Issuance/(repayment) of debt, $m
  -368
  1,558
  1,611
  1,675
  1,741
  1,809
  1,880
  1,954
  2,032
  2,113
  2,198
  2,288
  2,383
  2,483
  2,588
  2,699
  2,816
  2,940
  3,070
  3,208
  3,353
  3,506
  3,667
  3,837
  4,016
  4,204
  4,403
  4,612
  4,832
  5,064
  5,307
Issuance/(repurchase) of shares, $m
  -89
  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  
  -538
  1,558
  1,611
  1,675
  1,741
  1,809
  1,880
  1,954
  2,032
  2,113
  2,198
  2,288
  2,383
  2,483
  2,588
  2,699
  2,816
  2,940
  3,070
  3,208
  3,353
  3,506
  3,667
  3,837
  4,016
  4,204
  4,403
  4,612
  4,832
  5,064
  5,307
Total cash flow (excl. dividends), $m
  508
  4,330
  4,868
  5,424
  6,003
  6,606
  7,234
  7,890
  8,574
  9,288
  10,035
  10,507
  11,323
  12,177
  13,072
  14,009
  14,991
  16,020
  17,100
  18,234
  19,424
  20,673
  21,985
  23,364
  24,812
  26,335
  27,935
  29,617
  31,386
  33,246
  35,202
Retained Cash Flow (-), $m
  -739
  -337
  -347
  -360
  -374
  -389
  -404
  -420
  -437
  -454
  -473
  -492
  -512
  -534
  -557
  -580
  -606
  -632
  -660
  -690
  -721
  -754
  -789
  -825
  -864
  -904
  -947
  -992
  -1,039
  -1,089
  -1,141
Prev. year cash balance distribution, $m
 
  362
  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
 
  4,354
  4,522
  5,064
  5,628
  6,217
  6,830
  7,470
  8,137
  8,834
  9,562
  10,015
  10,811
  11,643
  12,515
  13,428
  14,385
  15,388
  16,440
  17,544
  18,703
  19,919
  21,197
  22,539
  23,949
  25,430
  26,988
  28,625
  30,347
  32,157
  34,061
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  4,077
  3,939
  4,076
  4,157
  4,179
  4,145
  4,057
  3,917
  3,732
  3,508
  3,154
  2,887
  2,604
  2,312
  2,019
  1,734
  1,463
  1,212
  985
  784
  612
  466
  347
  252
  179
  123
  83
  54
  34
  21
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

Viacom, Inc. operates as media brand worldwide. The company creates television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences, and other entertainment content for audiences. It operates through two segments, Media Networks and Filmed Entertainment. The Media Networks segment provides entertainment content and related branded products for consumers through approximately 250 locally programmed and operated TV channels, including Nickelodeon, Comedy Central, MTV, VH1, SPIKE, BET, CMT, TV Land, Nick at Nite, Nick Jr., Channel 5 (UK), Logo, Nicktoons, TeenNick, Paramount Channel, and others, as well as through online, mobile, and apps. The Filmed Entertainment segment produces, finances, acquires, and distributes motion pictures, television programming, and other entertainment content under the Paramount Pictures, Paramount Animation, Nickelodeon Movies, MTV Films, and Paramount Television brands; and distributes films released under the Paramount Vantage, Paramount Classics, and Insurge Pictures brands. This segment exhibits motion pictures theatrically through home entertainment, licensing to television and digital platforms, and ancillary activities. The company releases its content through download-to-own, download-to-rent, DVDs, Blu-ray discs, transactional video-on-demand, pay television, subscription video-on-demand, basic cable television, free television, and free video-on-demand, as well as airlines and hotels. Viacom, Inc. is headquartered in New York, New York.

FINANCIAL RATIOS  of  Viacom Cl B (VIAB)

Valuation Ratios
P/E Ratio 9.7
Price to Sales 1.1
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 11.6
Growth Rates
Sales Growth Rate -5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 21.1%
Cap. Spend. - 3 Yr. Gr. Rate 1.5%
Financial Strength
Quick Ratio 22
Current Ratio 0
LT Debt to Equity 278.1%
Total Debt to Equity 278.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital 9%
Ret/ On T. Cap. - 3 Yr. Avg. 11.7%
Return On Equity 36.8%
Return On Equity - 3 Yr. Avg. 47.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 46.5%
Gross Margin - 3 Yr. Avg. 49.1%
EBITDA Margin 22.6%
EBITDA Margin - 3 Yr. Avg. 26.4%
Operating Margin 20.2%
Oper. Margin - 3 Yr. Avg. 24.4%
Pre-Tax Margin 15.9%
Pre-Tax Margin - 3 Yr. Avg. 20.1%
Net Profit Margin 11.5%
Net Profit Margin - 3 Yr. Avg. 14.4%
Effective Tax Rate 26.1%
Eff/ Tax Rate - 3 Yr. Avg. 25.3%
Payout Ratio 44.2%

VIAB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VIAB stock intrinsic value calculation we used $12488 million for the last fiscal year's total revenue generated by Viacom Cl B. The default revenue input number comes from 2016 income statement of Viacom 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 VIAB stock valuation model: a) initial revenue growth rate of 8.5% 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 6.8%, whose default value for VIAB is calculated based on our internal credit rating of Viacom 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 Viacom 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 VIAB stock the variable cost ratio is equal to 27.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6732 million in the base year in the intrinsic value calculation for VIAB 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 5.1% for Viacom Cl B.

Corporate tax rate of 27% is the nominal tax rate for Viacom 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 VIAB 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 VIAB are equal to 10.1%.

Life of production assets of 57.4 years is the average useful life of capital assets used in Viacom 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 VIAB is equal to 3.9%. 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 - $4277 million for Viacom 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 411.512 million for Viacom 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 Viacom Cl B at the current share price and the inputted number of shares is $14.5 billion.


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COMPANY NEWS

▶ 'Pirates of the Caribbean' tops box office, 'Baywatch' sinks   [May-28-17 02:52PM  Associated Press]
▶ Box Office: 'Baywatch' Bombing With $5.7M Friday   [May-27-17 11:35AM  Forbes]
▶ [$$] Viacom Networks to Return on Suddenlink Communications   [06:51PM  The Wall Street Journal]
▶ Line Up for Movie Stocks You Should?   [02:22PM  TheStreet.com]
▶ Sunday Night Live: Leslie Jones to Host 2017 BET Awards   [May-24-17 11:05AM  Business Wire]
▶ BET Sounds Off Black Music Month on a High Note   [May-22-17 12:00PM  Business Wire]
▶ 'Alien: Covenant' edges 'Guardians' at weekend box office   [May-21-17 02:20PM  Associated Press]
▶ CBS' CEO Moonves says Viacom undervalued   [May-19-17 03:20PM  Reuters]
▶ Viacom Declares 20 Cent Quarterly Dividend   [May-18-17 03:01PM  TheStreet.com]
▶ Viacom Declares Quarterly Cash Dividend   [01:35PM  Business Wire]
▶ [$$] Former Paramount Pictures Head Brad Grey Dies at 59   [12:31AM  The Wall Street Journal]
▶ The Biggest Loser: Viacom Slumps 2.5%   [May-15-17 04:39PM  Barrons.com]
▶ 'King Arthur' flops, 'Guardians 2' still rules at box office   [May-14-17 03:15PM  Associated Press]
▶ Viacom Had Better Change the Channel Fast   [04:14PM  Barrons.com]
▶ Viacom: Why Now?   [12:22PM  Barrons.com]
▶ Mario Gabelli Comments on Viacom Inc.   [May-09-17 01:43PM  GuruFocus.com]
▶ Viacom hit with profit slump and bum cable deal with Charter   [May-05-17 05:20PM  American City Business Journals]
▶ [$$] Viacom "Feeling Good" About Ads   [12:41PM  Barrons.com]
▶ Business Highlights   [May-04-17 06:12PM  Associated Press]
▶ [$$] Media Investors Fret About Outlook for Ads, Pay TV   [03:46PM  The Wall Street Journal]
▶ Media Giants Take a Cord-cutting Hit   [11:49AM  Investopedia]
▶ A Look at Disneys Valuation Metrics   [07:35AM  Market Realist]
▶ Viacom posts 2Q profit   [07:23AM  Associated Press]
▶ Viacom's profit plunges 60 percent   [07:07AM  Reuters]
▶ Viacom Reports Second Quarter Results   [07:00AM  Business Wire]
▶ Markets Right Now: Stocks end mostly lower on Wall Street   [May-03-17 04:11PM  Associated Press]
Stock chart of VIAB Financial statements of VIAB Annual reports of VIAB
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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