Intrinsic value of BCE - BCE

Previous Close

$48.60

  Intrinsic Value

$26.99

stock screener

  Rating & Target

sell

-44%

Previous close

$48.60

 
Intrinsic value

$26.99

 
Up/down potential

-44%

 
Rating

sell

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

We calculate the intrinsic value of BCE 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 43.7

 

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, %
  0.95
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
Revenue, $m
  16,075
  17,152
  18,272
  19,437
  20,650
  21,913
  23,228
  24,600
  26,030
  27,522
  29,079
  30,705
  32,404
  34,180
  36,037
  37,979
  40,011
  42,137
  44,364
  46,695
  49,137
  51,696
  54,376
  57,186
  60,132
  63,220
  66,458
  69,854
  73,416
  77,152
  81,071
Variable operating expenses, $m
 
  13,420
  14,253
  15,120
  16,022
  16,961
  17,939
  18,959
  20,023
  21,132
  22,291
  22,837
  24,101
  25,422
  26,803
  28,247
  29,758
  31,340
  32,996
  34,730
  36,546
  38,449
  40,443
  42,533
  44,723
  47,020
  49,429
  51,954
  54,603
  57,382
  60,297
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
  12,282
  13,420
  14,253
  15,120
  16,022
  16,961
  17,939
  18,959
  20,023
  21,132
  22,291
  22,837
  24,101
  25,422
  26,803
  28,247
  29,758
  31,340
  32,996
  34,730
  36,546
  38,449
  40,443
  42,533
  44,723
  47,020
  49,429
  51,954
  54,603
  57,382
  60,297
Operating income, $m
  3,793
  3,732
  4,019
  4,318
  4,628
  4,952
  5,289
  5,641
  6,007
  6,389
  6,788
  7,868
  8,303
  8,758
  9,234
  9,732
  10,253
  10,797
  11,368
  11,965
  12,591
  13,247
  13,934
  14,654
  15,408
  16,200
  17,030
  17,900
  18,812
  19,770
  20,774
EBITDA, $m
  6,389
  6,605
  7,036
  7,485
  7,952
  8,438
  8,945
  9,473
  10,023
  10,598
  11,198
  11,824
  12,478
  13,162
  13,877
  14,625
  15,407
  16,226
  17,083
  17,981
  18,922
  19,907
  20,939
  22,021
  23,155
  24,345
  25,592
  26,899
  28,271
  29,709
  31,219
Interest expense (income), $m
  653
  641
  707
  775
  847
  921
  999
  1,079
  1,163
  1,251
  1,343
  1,438
  1,538
  1,642
  1,751
  1,865
  1,984
  2,109
  2,239
  2,376
  2,519
  2,668
  2,825
  2,990
  3,162
  3,343
  3,532
  3,731
  3,939
  4,158
  4,387
Earnings before tax, $m
  3,106
  3,092
  3,312
  3,542
  3,782
  4,031
  4,290
  4,561
  4,844
  5,138
  5,446
  6,430
  6,766
  7,116
  7,483
  7,867
  8,268
  8,689
  9,129
  9,590
  10,072
  10,578
  11,108
  11,664
  12,246
  12,857
  13,497
  14,169
  14,873
  15,612
  16,387
Tax expense, $m
  821
  835
  894
  956
  1,021
  1,088
  1,158
  1,232
  1,308
  1,387
  1,470
  1,736
  1,827
  1,921
  2,020
  2,124
  2,232
  2,346
  2,465
  2,589
  2,720
  2,856
  2,999
  3,149
  3,307
  3,471
  3,644
  3,826
  4,016
  4,215
  4,425
Net income, $m
  2,243
  2,257
  2,418
  2,586
  2,761
  2,943
  3,132
  3,330
  3,536
  3,751
  3,975
  4,694
  4,939
  5,195
  5,463
  5,743
  6,036
  6,343
  6,664
  7,000
  7,353
  7,722
  8,109
  8,515
  8,940
  9,386
  9,853
  10,343
  10,858
  11,397
  11,963

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  631
  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
  37,087
  38,893
  41,433
  44,075
  46,825
  49,689
  52,672
  55,782
  59,024
  62,407
  65,939
  69,627
  73,479
  77,506
  81,716
  86,120
  90,728
  95,550
  100,598
  105,885
  111,422
  117,223
  123,303
  129,674
  136,353
  143,356
  150,699
  158,399
  166,476
  174,948
  183,835
Adjusted assets (=assets-cash), $m
  36,456
  38,893
  41,433
  44,075
  46,825
  49,689
  52,672
  55,782
  59,024
  62,407
  65,939
  69,627
  73,479
  77,506
  81,716
  86,120
  90,728
  95,550
  100,598
  105,885
  111,422
  117,223
  123,303
  129,674
  136,353
  143,356
  150,699
  158,399
  166,476
  174,948
  183,835
Revenue / Adjusted assets
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
Average production assets, $m
  24,850
  26,517
  28,249
  30,050
  31,925
  33,877
  35,911
  38,031
  40,242
  42,549
  44,956
  47,471
  50,097
  52,843
  55,713
  58,715
  61,857
  65,144
  68,586
  72,191
  75,966
  79,921
  84,066
  88,410
  92,964
  97,738
  102,744
  107,994
  113,501
  119,277
  125,336
Working capital, $m
  -3,888
  -961
  -1,023
  -1,088
  -1,156
  -1,227
  -1,301
  -1,378
  -1,458
  -1,541
  -1,628
  -1,720
  -1,815
  -1,914
  -2,018
  -2,127
  -2,241
  -2,360
  -2,484
  -2,615
  -2,752
  -2,895
  -3,045
  -3,202
  -3,367
  -3,540
  -3,722
  -3,912
  -4,111
  -4,321
  -4,540
Total debt, $m
  15,883
  16,825
  18,461
  20,163
  21,934
  23,778
  25,699
  27,701
  29,790
  31,968
  34,243
  36,618
  39,099
  41,692
  44,403
  47,239
  50,207
  53,312
  56,563
  59,968
  63,534
  67,270
  71,185
  75,288
  79,590
  84,099
  88,828
  93,787
  98,988
  104,444
  110,168
Total liabilities, $m
  24,105
  25,047
  26,683
  28,385
  30,156
  32,000
  33,921
  35,923
  38,012
  40,190
  42,465
  44,840
  47,321
  49,914
  52,625
  55,461
  58,429
  61,534
  64,785
  68,190
  71,756
  75,492
  79,407
  83,510
  87,812
  92,321
  97,050
  102,009
  107,210
  112,666
  118,390
Total equity, $m
  12,982
  13,846
  14,750
  15,691
  16,670
  17,689
  18,751
  19,858
  21,013
  22,217
  23,474
  24,787
  26,159
  27,592
  29,091
  30,659
  32,299
  34,016
  35,813
  37,695
  39,666
  41,732
  43,896
  46,164
  48,542
  51,035
  53,649
  56,390
  59,265
  62,281
  65,445
Total liabilities and equity, $m
  37,087
  38,893
  41,433
  44,076
  46,826
  49,689
  52,672
  55,781
  59,025
  62,407
  65,939
  69,627
  73,480
  77,506
  81,716
  86,120
  90,728
  95,550
  100,598
  105,885
  111,422
  117,224
  123,303
  129,674
  136,354
  143,356
  150,699
  158,399
  166,475
  174,947
  183,835
Debt-to-equity ratio
  1.223
  1.220
  1.250
  1.280
  1.320
  1.340
  1.370
  1.390
  1.420
  1.440
  1.460
  1.480
  1.490
  1.510
  1.530
  1.540
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.660
  1.670
  1.680
  1.680
Adjusted equity ratio
  0.339
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,243
  2,257
  2,418
  2,586
  2,761
  2,943
  3,132
  3,330
  3,536
  3,751
  3,975
  4,694
  4,939
  5,195
  5,463
  5,743
  6,036
  6,343
  6,664
  7,000
  7,353
  7,722
  8,109
  8,515
  8,940
  9,386
  9,853
  10,343
  10,858
  11,397
  11,963
Depreciation, amort., depletion, $m
  2,596
  2,873
  3,017
  3,167
  3,323
  3,486
  3,656
  3,832
  4,016
  4,209
  4,409
  3,956
  4,175
  4,404
  4,643
  4,893
  5,155
  5,429
  5,716
  6,016
  6,331
  6,660
  7,006
  7,368
  7,747
  8,145
  8,562
  9,000
  9,458
  9,940
  10,445
Funds from operations, $m
  4,058
  5,130
  5,435
  5,753
  6,084
  6,429
  6,788
  7,162
  7,552
  7,960
  8,385
  8,650
  9,114
  9,598
  10,105
  10,636
  11,191
  11,772
  12,380
  13,016
  13,683
  14,382
  15,115
  15,882
  16,687
  17,530
  18,415
  19,343
  20,316
  21,337
  22,407
Change in working capital, $m
  -859
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
  -209
  -219
Cash from operations, $m
  4,917
  5,190
  5,498
  5,818
  6,152
  6,499
  6,861
  7,239
  7,632
  8,043
  8,472
  8,741
  9,209
  9,698
  10,209
  10,745
  11,305
  11,891
  12,504
  13,147
  13,820
  14,526
  15,265
  16,040
  16,852
  17,703
  18,596
  19,533
  20,515
  21,546
  22,627
Maintenance CAPEX, $m
  0
  -2,071
  -2,210
  -2,354
  -2,504
  -2,660
  -2,823
  -2,993
  -3,169
  -3,353
  -3,546
  -3,746
  -3,956
  -4,175
  -4,404
  -4,643
  -4,893
  -5,155
  -5,429
  -5,716
  -6,016
  -6,331
  -6,660
  -7,006
  -7,368
  -7,747
  -8,145
  -8,562
  -9,000
  -9,458
  -9,940
New CAPEX, $m
  -2,791
  -1,667
  -1,732
  -1,801
  -1,875
  -1,952
  -2,034
  -2,120
  -2,211
  -2,307
  -2,408
  -2,514
  -2,627
  -2,745
  -2,870
  -3,002
  -3,141
  -3,288
  -3,442
  -3,604
  -3,775
  -3,955
  -4,145
  -4,344
  -4,554
  -4,774
  -5,006
  -5,250
  -5,506
  -5,776
  -6,059
Cash from investing activities, $m
  -3,393
  -3,738
  -3,942
  -4,155
  -4,379
  -4,612
  -4,857
  -5,113
  -5,380
  -5,660
  -5,954
  -6,260
  -6,583
  -6,920
  -7,274
  -7,645
  -8,034
  -8,443
  -8,871
  -9,320
  -9,791
  -10,286
  -10,805
  -11,350
  -11,922
  -12,521
  -13,151
  -13,812
  -14,506
  -15,234
  -15,999
Free cash flow, $m
  1,524
  1,452
  1,557
  1,663
  1,773
  1,887
  2,004
  2,126
  2,252
  2,383
  2,519
  2,480
  2,626
  2,778
  2,935
  3,099
  3,270
  3,448
  3,634
  3,827
  4,029
  4,240
  4,460
  4,690
  4,931
  5,182
  5,445
  5,721
  6,009
  6,311
  6,628
Issuance/(repayment) of debt, $m
  532
  1,573
  1,636
  1,702
  1,771
  1,844
  1,921
  2,003
  2,088
  2,179
  2,274
  2,375
  2,481
  2,593
  2,711
  2,836
  2,967
  3,105
  3,251
  3,405
  3,566
  3,736
  3,915
  4,103
  4,301
  4,510
  4,729
  4,959
  5,201
  5,456
  5,724
Issuance/(repurchase) of shares, $m
  -5
  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  
  453
  1,573
  1,636
  1,702
  1,771
  1,844
  1,921
  2,003
  2,088
  2,179
  2,274
  2,375
  2,481
  2,593
  2,711
  2,836
  2,967
  3,105
  3,251
  3,405
  3,566
  3,736
  3,915
  4,103
  4,301
  4,510
  4,729
  4,959
  5,201
  5,456
  5,724
Total cash flow (excl. dividends), $m
  1,977
  3,025
  3,192
  3,364
  3,544
  3,731
  3,926
  4,129
  4,341
  4,562
  4,793
  4,855
  5,107
  5,371
  5,647
  5,935
  6,237
  6,554
  6,885
  7,232
  7,595
  7,976
  8,375
  8,793
  9,232
  9,692
  10,174
  10,680
  11,211
  11,767
  12,351
Retained Cash Flow (-), $m
  -382
  -864
  -904
  -941
  -979
  -1,019
  -1,062
  -1,107
  -1,154
  -1,204
  -1,257
  -1,313
  -1,372
  -1,434
  -1,499
  -1,568
  -1,640
  -1,717
  -1,797
  -1,882
  -1,971
  -2,065
  -2,164
  -2,268
  -2,378
  -2,493
  -2,614
  -2,741
  -2,875
  -3,016
  -3,164
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
 
  2,161
  2,288
  2,424
  2,565
  2,711
  2,863
  3,022
  3,186
  3,357
  3,536
  3,542
  3,736
  3,937
  4,148
  4,368
  4,597
  4,837
  5,088
  5,350
  5,624
  5,911
  6,211
  6,525
  6,854
  7,199
  7,560
  7,939
  8,335
  8,751
  9,187
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
 
  2,024
  1,993
  1,951
  1,894
  1,823
  1,738
  1,641
  1,534
  1,418
  1,297
  1,115
  998
  880
  766
  657
  554
  460
  375
  300
  236
  181
  137
  101
  72
  51
  35
  23
  15
  9
  6
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

BCE Inc. is a communications company. The Company's segments include Bell Wireless, Bell Wireline and Bell Media. Its Bell Wireless segment provides wireless voice and data communications products and services to its residential, small and medium-sized business and large enterprise customers across Canada. Its Bell Wireline segment provides data, including Internet access and Internet protocol television (IPTV), local telephone, long distance, as well as other communications services and products to its residential, small and medium-sized business and large enterprise customers, primarily in Ontario, Quebec and the Atlantic provinces, while Satellite television (TV) service and connectivity to business customers are available nationally across Canada. Its Bell Media segment provides conventional, specialty and pay Television, digital media, and radio broadcasting services and out of home (OOH) advertising services to customers across Canada.

FINANCIAL RATIOS  of  BCE (BCE)

Valuation Ratios
P/E Ratio 18.9
Price to Sales 2.6
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 8.6
Price to Free Cash Flow 19.9
Growth Rates
Sales Growth Rate 0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4%
Cap. Spend. - 3 Yr. Gr. Rate 1.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 94.5%
Total Debt to Equity 122.3%
Interest Coverage 6
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 17.5%
Return On Equity - 3 Yr. Avg. 17%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 69.1%
Gross Margin - 3 Yr. Avg. 69.6%
EBITDA Margin 39.5%
EBITDA Margin - 3 Yr. Avg. 38.2%
Operating Margin 23.6%
Oper. Margin - 3 Yr. Avg. 22.1%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 17.9%
Net Profit Margin 14%
Net Profit Margin - 3 Yr. Avg. 12.8%
Effective Tax Rate 26.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.7%
Payout Ratio 80.2%

BCE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BCE stock intrinsic value calculation we used $16075 million for the last fiscal year's total revenue generated by BCE. The default revenue input number comes from 2016 income statement of BCE. 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 BCE stock valuation model: a) initial revenue growth rate of 6.7% 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 BCE is calculated based on our internal credit rating of BCE, 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 BCE.
    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 BCE stock the variable cost ratio is equal to 78.5%.

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 BCE 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 4.2% for BCE.

Corporate tax rate of 27% is the nominal tax rate for BCE. 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 BCE 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 BCE are equal to 154.6%.

Life of production assets of 12 years is the average useful life of capital assets used in BCE 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 BCE is equal to -5.6%. 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 - $12982 million for BCE - 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 899.894 million for BCE 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 BCE at the current share price and the inputted number of shares is $43.7 billion.

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COMPANY NEWS

▶ Pay Less for Inflation-Beating Gains With BCE Inc. (USA)   [Dec-06-17 10:13AM  InvestorPlace]
▶ November Dividend Favorites BCE And More   [Nov-23-17 08:02AM  Simply Wall St.]
▶ ETFs with exposure to BCE, Inc. : November 20, 2017   [Nov-20-17 11:48AM  Capital Cube]
▶ ETFs with exposure to BCE, Inc. : November 9, 2017   [Nov-09-17 12:04PM  Capital Cube]
▶ Is It Time To Sell BCE Inc (TSX:BCE)?   [Nov-03-17 05:33PM  Simply Wall St.]
▶ BCE tops 3Q profit forecasts   [10:07AM  Associated Press]
▶ BCE reports third quarter 2017 results   [07:00AM  PR Newswire]
▶ BCE, Inc. to Host Earnings Call   [06:10AM  ACCESSWIRE]
▶ Can BCE Inc (TSX:BCE) Improve Your Portfolio Returns?   [Oct-03-17 03:16PM  Simply Wall St.]
▶ BCE, Inc. Value Analysis (NYSE:BCE) : September 27, 2017   [Sep-27-17 10:48AM  Capital Cube]
▶ Bell Canada announces offering of MTN Debentures   [Sep-26-17 07:35PM  CNW Group]
▶ Mawer Canadian Equity Fund Buys 2 New Stocks in 2nd Quarter   [Sep-14-17 06:58PM  GuruFocus.com]
▶ PRESS DIGEST-Canada-Aug 4   [Aug-04-17 06:55AM  Reuters]
▶ BCE misses Street 2Q forecasts   [02:29AM  Associated Press]
▶ BCE reports second quarter 2017 results   [07:00AM  PR Newswire]
Financial statements of BCE
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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