Intrinsic value of Altice USA Cl A - ATUS

Previous Close

$19.21

  Intrinsic Value

$119.69

stock screener

  Rating & Target

str. buy

+523%

Previous close

$19.21

 
Intrinsic value

$119.69

 
Up/down potential

+523%

 
Rating

str. buy

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

We calculate the intrinsic value of ATUS 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 14.2

 

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, %
  -100.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  6,017
  9,627
  14,874
  22,244
  32,275
  45,535
  62,601
  84,029
  110,335
  141,974
  179,325
  222,681
  272,248
  328,151
  390,435
  459,082
  534,023
  615,149
  702,331
  795,426
  894,295
  998,809
  1,108,858
  1,224,360
  1,345,261
  1,471,542
  1,603,222
  1,740,356
  1,883,034
  2,031,387
  2,185,581
Variable operating expenses, $m
 
  8,580
  12,820
  18,776
  26,883
  37,599
  51,391
  68,708
  89,967
  115,537
  145,722
  179,962
  220,020
  265,198
  315,534
  371,012
  431,576
  497,139
  567,596
  642,832
  722,734
  807,197
  896,135
  989,478
  1,087,185
  1,189,241
  1,295,660
  1,406,485
  1,521,792
  1,641,685
  1,766,299
Fixed operating expenses, $m
 
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
Total operating expenses, $m
  5,685
  8,606
  12,846
  18,803
  26,911
  37,627
  51,420
  68,738
  89,997
  115,568
  145,754
  179,995
  220,054
  265,232
  315,569
  371,048
  431,613
  497,177
  567,635
  642,872
  722,775
  807,239
  896,178
  989,522
  1,087,230
  1,189,287
  1,295,708
  1,406,534
  1,521,842
  1,641,736
  1,766,351
Operating income, $m
  332
  1,022
  2,028
  3,441
  5,365
  7,908
  11,181
  15,291
  20,337
  26,406
  33,570
  42,686
  52,195
  62,918
  74,866
  88,034
  102,410
  117,972
  134,696
  152,555
  171,521
  191,570
  212,681
  234,837
  258,030
  282,255
  307,515
  333,822
  361,192
  389,651
  419,230
EBITDA, $m
  2,032
  3,899
  6,037
  9,041
  13,129
  18,534
  25,490
  34,224
  44,946
  57,843
  73,068
  90,741
  110,946
  133,733
  159,122
  187,104
  217,652
  250,722
  286,259
  324,208
  364,510
  407,113
  451,972
  499,054
  548,337
  599,814
  653,491
  709,390
  767,551
  828,024
  890,878
Interest expense (income), $m
  1,092
  2,075
  3,669
  6,182
  9,712
  14,517
  20,868
  29,041
  39,304
  51,903
  67,057
  84,946
  105,711
  129,451
  156,226
  186,056
  218,935
  254,827
  293,683
  335,438
  380,026
  427,379
  477,436
  530,143
  585,462
  643,368
  703,850
  766,918
  832,597
  900,933
  971,986
Earnings before tax, $m
  -1,091
  -1,053
  -1,642
  -2,741
  -4,348
  -6,609
  -9,687
  -13,750
  -18,967
  -25,497
  -33,486
  -42,259
  -53,516
  -66,533
  -81,360
  -98,022
  -116,525
  -136,855
  -158,986
  -182,883
  -208,505
  -235,809
  -264,755
  -295,306
  -327,432
  -361,113
  -396,335
  -433,096
  -471,405
  -511,282
  -552,756
Tax expense, $m
  -260
  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
  -832
  -1,053
  -1,642
  -2,741
  -4,348
  -6,609
  -9,687
  -13,750
  -18,967
  -25,497
  -33,486
  -42,259
  -53,516
  -66,533
  -81,360
  -98,022
  -116,525
  -136,855
  -158,986
  -182,883
  -208,505
  -235,809
  -264,755
  -295,306
  -327,432
  -361,113
  -396,335
  -433,096
  -471,405
  -511,282
  -552,756

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,228
  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
  36,474
  56,299
  86,983
  130,082
  188,743
  266,289
  366,086
  491,395
  645,233
  830,258
  1,048,683
  1,302,226
  1,592,096
  1,919,011
  2,283,245
  2,684,690
  3,122,939
  3,597,364
  4,107,199
  4,651,617
  5,229,798
  5,840,989
  6,484,552
  7,159,999
  7,867,021
  8,605,511
  9,375,569
  10,177,518
  11,011,894
  11,879,457
  12,781,175
Adjusted assets (=assets-cash), $m
  35,246
  56,299
  86,983
  130,082
  188,743
  266,289
  366,086
  491,395
  645,233
  830,258
  1,048,683
  1,302,226
  1,592,096
  1,919,011
  2,283,245
  2,684,690
  3,122,939
  3,597,364
  4,107,199
  4,651,617
  5,229,798
  5,840,989
  6,484,552
  7,159,999
  7,867,021
  8,605,511
  9,375,569
  10,177,518
  11,011,894
  11,879,457
  12,781,175
Revenue / Adjusted assets
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
  0.171
Average production assets, $m
  12,986
  20,775
  32,098
  48,003
  69,650
  98,266
  135,092
  181,334
  238,102
  306,380
  386,983
  480,545
  587,512
  708,150
  842,558
  990,699
  1,152,421
  1,327,492
  1,515,630
  1,716,530
  1,929,890
  2,155,430
  2,392,916
  2,642,168
  2,903,072
  3,175,588
  3,459,754
  3,755,687
  4,063,587
  4,383,733
  4,716,484
Working capital, $m
  -2,000
  -2,599
  -4,016
  -6,006
  -8,714
  -12,295
  -16,902
  -22,688
  -29,790
  -38,333
  -48,418
  -60,124
  -73,507
  -88,601
  -105,417
  -123,952
  -144,186
  -166,090
  -189,629
  -214,765
  -241,460
  -269,678
  -299,392
  -330,577
  -363,220
  -397,316
  -432,870
  -469,896
  -508,419
  -548,475
  -590,107
Total debt, $m
  24,030
  40,323
  67,938
  106,728
  159,523
  229,314
  319,132
  431,909
  570,363
  736,886
  933,469
  1,161,658
  1,422,541
  1,716,764
  2,044,574
  2,405,875
  2,800,299
  3,227,282
  3,686,133
  4,176,109
  4,696,472
  5,246,544
  5,825,751
  6,433,653
  7,069,973
  7,734,613
  8,427,666
  9,149,420
  9,900,359
  10,681,165
  11,492,712
Total liabilities, $m
  34,377
  50,669
  78,284
  117,074
  169,869
  239,660
  329,478
  442,255
  580,709
  747,232
  943,815
  1,172,004
  1,432,887
  1,727,110
  2,054,920
  2,416,221
  2,810,645
  3,237,628
  3,696,479
  4,186,455
  4,706,818
  5,256,890
  5,836,097
  6,443,999
  7,080,319
  7,744,959
  8,438,012
  9,159,766
  9,910,705
  10,691,511
  11,503,058
Total equity, $m
  2,098
  5,630
  8,698
  13,008
  18,874
  26,629
  36,609
  49,139
  64,523
  83,026
  104,868
  130,223
  159,210
  191,901
  228,324
  268,469
  312,294
  359,736
  410,720
  465,162
  522,980
  584,099
  648,455
  716,000
  786,702
  860,551
  937,557
  1,017,752
  1,101,189
  1,187,946
  1,278,118
Total liabilities and equity, $m
  36,475
  56,299
  86,982
  130,082
  188,743
  266,289
  366,087
  491,394
  645,232
  830,258
  1,048,683
  1,302,227
  1,592,097
  1,919,011
  2,283,244
  2,684,690
  3,122,939
  3,597,364
  4,107,199
  4,651,617
  5,229,798
  5,840,989
  6,484,552
  7,159,999
  7,867,021
  8,605,510
  9,375,569
  10,177,518
  11,011,894
  11,879,457
  12,781,176
Debt-to-equity ratio
  11.454
  7.160
  7.810
  8.200
  8.450
  8.610
  8.720
  8.790
  8.840
  8.880
  8.900
  8.920
  8.940
  8.950
  8.950
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  0.025
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -832
  -1,053
  -1,642
  -2,741
  -4,348
  -6,609
  -9,687
  -13,750
  -18,967
  -25,497
  -33,486
  -42,259
  -53,516
  -66,533
  -81,360
  -98,022
  -116,525
  -136,855
  -158,986
  -182,883
  -208,505
  -235,809
  -264,755
  -295,306
  -327,432
  -361,113
  -396,335
  -433,096
  -471,405
  -511,282
  -552,756
Depreciation, amort., depletion, $m
  1,700
  2,877
  4,009
  5,600
  7,764
  10,626
  14,309
  18,933
  24,610
  31,437
  39,498
  48,054
  58,751
  70,815
  84,256
  99,070
  115,242
  132,749
  151,563
  171,653
  192,989
  215,543
  239,292
  264,217
  290,307
  317,559
  345,975
  375,569
  406,359
  438,373
  471,648
Funds from operations, $m
  1,622
  1,824
  2,368
  2,858
  3,417
  4,017
  4,622
  5,183
  5,643
  5,940
  6,011
  5,795
  5,235
  4,282
  2,896
  1,048
  -1,283
  -4,106
  -7,423
  -11,230
  -15,516
  -20,266
  -25,463
  -31,089
  -37,125
  -43,554
  -50,359
  -57,527
  -65,047
  -72,909
  -81,108
Change in working capital, $m
  438
  -975
  -1,417
  -1,990
  -2,708
  -3,580
  -4,608
  -5,785
  -7,103
  -8,543
  -10,085
  -11,706
  -13,383
  -15,094
  -16,817
  -18,535
  -20,234
  -21,904
  -23,539
  -25,136
  -26,695
  -28,219
  -29,713
  -31,185
  -32,643
  -34,096
  -35,554
  -37,026
  -38,523
  -40,055
  -41,632
Cash from operations, $m
  1,184
  2,799
  3,784
  4,848
  6,125
  7,598
  9,230
  10,968
  12,745
  14,483
  16,096
  17,501
  18,618
  19,376
  19,713
  19,583
  18,951
  17,799
  16,116
  13,906
  11,179
  7,953
  4,250
  96
  -4,482
  -9,458
  -14,806
  -20,501
  -26,523
  -32,853
  -39,475
Maintenance CAPEX, $m
  0
  -1,299
  -2,078
  -3,210
  -4,800
  -6,965
  -9,827
  -13,509
  -18,133
  -23,810
  -30,638
  -38,698
  -48,054
  -58,751
  -70,815
  -84,256
  -99,070
  -115,242
  -132,749
  -151,563
  -171,653
  -192,989
  -215,543
  -239,292
  -264,217
  -290,307
  -317,559
  -345,975
  -375,569
  -406,359
  -438,373
New CAPEX, $m
  -626
  -7,788
  -11,323
  -15,905
  -21,647
  -28,616
  -36,827
  -46,241
  -56,769
  -68,278
  -80,603
  -93,562
  -106,967
  -120,638
  -134,409
  -148,141
  -161,722
  -175,071
  -188,138
  -200,900
  -213,359
  -225,541
  -237,486
  -249,252
  -260,904
  -272,516
  -284,166
  -295,933
  -307,900
  -320,146
  -332,750
Cash from investing activities, $m
  -9,599
  -9,087
  -13,401
  -19,115
  -26,447
  -35,581
  -46,654
  -59,750
  -74,902
  -92,088
  -111,241
  -132,260
  -155,021
  -179,389
  -205,224
  -232,397
  -260,792
  -290,313
  -320,887
  -352,463
  -385,012
  -418,530
  -453,029
  -488,544
  -525,121
  -562,823
  -601,725
  -641,908
  -683,469
  -726,505
  -771,123
Free cash flow, $m
  -8,415
  -6,289
  -9,616
  -14,266
  -20,322
  -27,983
  -37,424
  -48,782
  -62,157
  -77,605
  -95,145
  -114,759
  -136,403
  -160,013
  -185,511
  -212,814
  -241,840
  -272,515
  -304,772
  -338,557
  -373,834
  -410,577
  -448,779
  -488,447
  -529,603
  -572,281
  -616,530
  -662,410
  -709,992
  -759,358
  -810,599
Issuance/(repayment) of debt, $m
  -546
  17,521
  27,615
  38,790
  52,795
  69,791
  89,817
  112,778
  138,454
  166,522
  196,583
  228,189
  260,883
  294,224
  327,810
  361,301
  394,424
  426,982
  458,851
  489,976
  520,363
  550,072
  579,207
  607,902
  636,320
  664,640
  693,053
  721,753
  750,939
  780,806
  811,547
Issuance/(repurchase) of shares, $m
  1,247
  4,585
  4,710
  7,051
  10,214
  14,363
  19,666
  26,281
  34,351
  44,000
  55,329
  67,614
  82,503
  99,225
  117,783
  138,167
  160,350
  184,297
  209,970
  237,325
  266,323
  296,928
  329,111
  362,851
  398,135
  434,962
  473,341
  513,291
  554,843
  598,038
  642,928
Cash from financing (excl. dividends), $m  
  131
  22,106
  32,325
  45,841
  63,009
  84,154
  109,483
  139,059
  172,805
  210,522
  251,912
  295,803
  343,386
  393,449
  445,593
  499,468
  554,774
  611,279
  668,821
  727,301
  786,686
  847,000
  908,318
  970,753
  1,034,455
  1,099,602
  1,166,394
  1,235,044
  1,305,782
  1,378,844
  1,454,475
Total cash flow (excl. dividends), $m
  -8,283
  15,818
  22,709
  31,575
  42,686
  56,171
  72,060
  90,276
  110,648
  132,917
  156,767
  181,044
  206,983
  233,435
  260,082
  286,654
  312,933
  338,765
  364,049
  388,743
  412,853
  436,424
  459,538
  482,305
  504,852
  527,321
  549,863
  572,634
  595,790
  619,486
  643,876
Retained Cash Flow (-), $m
  -2,098
  -4,585
  -4,710
  -7,051
  -10,214
  -14,363
  -19,666
  -26,281
  -34,351
  -44,000
  -55,329
  -67,614
  -82,503
  -99,225
  -117,783
  -138,167
  -160,350
  -184,297
  -209,970
  -237,325
  -266,323
  -296,928
  -329,111
  -362,851
  -398,135
  -434,962
  -473,341
  -513,291
  -554,843
  -598,038
  -642,928
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
 
  11,233
  17,999
  24,524
  32,473
  41,808
  52,394
  63,996
  76,297
  88,917
  101,438
  113,430
  124,480
  134,210
  142,299
  148,487
  152,584
  154,467
  154,080
  151,418
  146,529
  139,495
  130,427
  119,455
  106,717
  92,359
  76,523
  59,343
  40,947
  21,448
  948
Discount rate, %
 
  13.80
  14.49
  15.21
  15.98
  16.77
  17.61
  18.49
  19.42
  20.39
  21.41
  22.48
  23.60
  24.78
  26.02
  27.32
  28.69
  30.12
  31.63
  33.21
  34.87
  36.62
  38.45
  40.37
  42.39
  44.51
  46.73
  49.07
  51.52
  54.10
  56.80
PV of cash for distribution, $m
 
  9,871
  13,731
  16,035
  17,950
  19,254
  19,795
  19,512
  18,448
  16,738
  14,579
  12,192
  9,790
  7,547
  5,584
  3,964
  2,697
  1,757
  1,095
  651
  369
  199
  102
  49
  22
  9
  4
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  75.5
  67.2
  60.0
  53.8
  48.3
  43.5
  39.4
  35.7
  32.4
  29.5
  26.9
  24.6
  22.5
  20.6
  18.9
  17.4
  16.0
  14.7
  13.6
  12.5
  11.5
  10.6
  9.8
  9.1
  8.4
  7.8
  7.2
  6.6
  6.1
  5.7

Altice USA, Inc. is engaged in providing broadband communications and video services in the United States. The Company’s segments include Cablevision and Cequel. Cablevision provides broadband, pay television and telephony services to residential and business customers in and around the New York metropolitan area. Cequel provides broadband, pay television and telephony services to residential and business customers in the south-central United States. It also provides services through ten states of Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, Arizona, California, Missouri and Ohio. The Company also provides Wi-Fi hotspot access content and advertising services. Broadband provides services, such as video streaming, content downloading for time-shifted video consumption and other applications delivered over OTT platforms. Pay Television provides services through cable network. Video services delivered over DSL networks.

FINANCIAL RATIOS  of  Altice USA Cl A (ATUS)

Valuation Ratios
P/E Ratio -17
Price to Sales 2.4
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow 25.4
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 1069%
Total Debt to Equity 1145.4%
Interest Coverage 0
Management Effectiveness
Return On Assets -0%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital -6.4%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -79.3%
Return On Equity - 3 Yr. Avg. -26.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 68.4%
Gross Margin - 3 Yr. Avg. 22.8%
EBITDA Margin 28.3%
EBITDA Margin - 3 Yr. Avg. 9.4%
Operating Margin 5.5%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin -18.1%
Pre-Tax Margin - 3 Yr. Avg. -6%
Net Profit Margin -13.8%
Net Profit Margin - 3 Yr. Avg. -4.6%
Effective Tax Rate 23.8%
Eff/ Tax Rate - 3 Yr. Avg. 7.9%
Payout Ratio 0%

ATUS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATUS stock intrinsic value calculation we used $6017 million for the last fiscal year's total revenue generated by Altice USA Cl A. The default revenue input number comes from 2016 income statement of Altice USA Cl A. 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 ATUS stock valuation model: a) initial revenue growth rate of 60% 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 13.8%, whose default value for ATUS is calculated based on our internal credit rating of Altice USA Cl A, 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 Altice USA Cl A.
    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 ATUS stock the variable cost ratio is equal to 94.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $25 million in the base year in the intrinsic value calculation for ATUS 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 9.1% for Altice USA Cl A.

Corporate tax rate of 27% is the nominal tax rate for Altice USA Cl A. 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 ATUS 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 ATUS are equal to 215.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Altice USA Cl A 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 ATUS is equal to -27%. 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 - $2098 million for Altice USA Cl A - 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 737.125 million for Altice USA Cl A 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 Altice USA Cl A at the current share price and the inputted number of shares is $14.2 billion.

COMPANY NEWS

▶ Verizon plan to launch 5G broadband lifts shares   [Nov-30-17 12:53PM  Reuters]
▶ [$$] IPOs Roar Back World-Wide, With Asia Driving the Boom   [12:32AM  The Wall Street Journal]
▶ [$$] IPOs Roar Back World-Wide, With Asia Driving the Boom   [Nov-13-17 08:27AM  The Wall Street Journal]
▶ Deals of the day-Mergers and acquisitions   [Nov-06-17 03:22PM  Reuters]
▶ Sprint Makes an MVNO Deal with Altice   [10:32AM  Investopedia]
▶ Altice USA reports 3Q loss   [05:37AM  Associated Press]
▶ Altice USA, Sprint agree to wireless partnership   [Nov-05-17 10:37PM  Reuters]
▶ Introducing Altice One   [Nov-02-17 04:30PM  Business Wire]
▶ Disney, Altice finalise new programming agreement   [Oct-05-17 06:25PM  Reuters]
▶ What's driving the market higher   [Oct-02-17 07:20PM  CNBC Videos]
▶ Disney, Altice Shares Rise On Deal; Verizon Next Up For Mouse?   [10:37AM  Investor's Business Daily]
▶ Focus on fundamentals, not calendar   [06:57PM  CNBC Videos]
▶ Optimum Cable Customers May Face ABC, ESPN Blackout   [Sep-25-17 01:43PM  InvestorPlace]
▶ Markets struggle after Trumps troubles   [09:15AM  Yahoo Finance]
▶ Disney May Play Hardball With Altice Amid ESPN Woes   [Sep-18-17 04:04PM  Investor's Business Daily]
▶ Altice says open-minded about cable M&A   [Sep-12-17 10:51AM  Reuters]
▶ [$$] A Smart Strategy for Cable and Telecom Investors   [Sep-09-17 12:20AM  Barrons.com]
▶ Why Media Stocks & ETFs Are Under Pressure   [Sep-08-17 02:45PM  Zacks]
▶ Charter Communications: No Deal for You   [Sep-06-17 03:45PM  Barrons.com]
▶ Former Suddenlink CTO gets promotion at Altice   [Sep-01-17 01:25PM  American City Business Journals]
▶ Altice USA Announces Technology Executive Appointments   [Aug-30-17 03:30PM  Business Wire]
▶ [$$] Charter M&A Chatter Doesn't Make Sense   [Aug-16-17 12:36PM  Barrons.com]
▶ [$$] Altice-Charter Chatter May Be Just Talk   [Aug-11-17 12:46AM  The Wall Street Journal]
▶ Altice USA Reports Second Quarter 2017 Results1   [Jul-27-17 04:32PM  Business Wire]
▶ [$$] Gameday for Disney to Boost ESPN Growth   [Jul-18-17 12:46AM  The Wall Street Journal]
▶ IBM Narrative 'Tedious'; Acacia, AMC Price Targets Cut; Citi Target Raised   [Jul-17-17 04:04PM  Investor's Business Daily]
▶ [$$] Gameday for Disney to Boost ESPN Growth   [10:56AM  The Wall Street Journal]
▶ IPO Market Back On Track: ETFs to Tap   [Jul-12-17 09:50AM  Zacks]
▶ [$$] A Surge of Dealmaking Ahead for Cable, Wireless   [Jul-01-17 02:20AM  Barrons.com]
▶ IPO Market Reignites With Strong Quarterly Performance   [Jun-30-17 02:08PM  Investor's Business Daily]
▶ Blue Apron Reduces IPO Price to $10 a Share   [Jun-28-17 06:47PM  TheStreet.com]
▶ Altice IPO and the Best Activism Defense --- Dealpolitik   [Jun-27-17 01:51PM  The Wall Street Journal]
▶ Get ready for the busiest IPO week so far this year   [Jun-26-17 03:57PM  MarketWatch]
▶ Altice USA IPO Off to a Strong Start   [Jun-23-17 06:25AM  24/7 Wall St.]
▶ [$$] BC Partners Nets Bumper Return After $1.9 Billion IPO of Altice   [Jun-22-17 06:22PM  The Wall Street Journal]
▶ Market awaits Altice IPO at open   [09:38AM  CNBC Videos]
Financial statements of ATUS
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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