Intrinsic value of CenturyLink - CTL

Previous Close

$16.75

  Intrinsic Value

$38.97

stock screener

  Rating & Target

str. buy

+133%

Previous close

$16.75

 
Intrinsic value

$38.97

 
Up/down potential

+133%

 
Rating

str. buy

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

We calculate the intrinsic value of CTL 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 9.2

 

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, %
  -2.40
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  17,470
  17,819
  18,229
  18,698
  19,224
  19,807
  20,446
  21,142
  21,896
  22,708
  23,580
  24,512
  25,507
  26,566
  27,692
  28,886
  30,152
  31,492
  32,909
  34,406
  35,987
  37,655
  39,415
  41,269
  43,223
  45,280
  47,447
  49,727
  52,127
  54,651
  57,306
Variable operating expenses, $m
 
  6,429
  6,532
  6,649
  6,781
  6,927
  7,087
  7,262
  7,450
  7,654
  7,872
  6,141
  6,390
  6,655
  6,937
  7,237
  7,554
  7,889
  8,244
  8,620
  9,016
  9,433
  9,874
  10,339
  10,828
  11,344
  11,886
  12,458
  13,059
  13,691
  14,357
Fixed operating expenses, $m
 
  9,247
  9,478
  9,715
  9,957
  10,206
  10,462
  10,723
  10,991
  11,266
  11,548
  11,836
  12,132
  12,436
  12,746
  13,065
  13,392
  13,727
  14,070
  14,421
  14,782
  15,152
  15,530
  15,919
  16,317
  16,724
  17,143
  17,571
  18,010
  18,461
  18,922
Total operating expenses, $m
  15,139
  15,676
  16,010
  16,364
  16,738
  17,133
  17,549
  17,985
  18,441
  18,920
  19,420
  17,977
  18,522
  19,091
  19,683
  20,302
  20,946
  21,616
  22,314
  23,041
  23,798
  24,585
  25,404
  26,258
  27,145
  28,068
  29,029
  30,029
  31,069
  32,152
  33,279
Operating income, $m
  2,331
  2,144
  2,220
  2,334
  2,485
  2,673
  2,897
  3,158
  3,454
  3,788
  4,160
  6,535
  6,984
  7,475
  8,008
  8,584
  9,207
  9,876
  10,595
  11,365
  12,190
  13,070
  14,010
  15,012
  16,078
  17,212
  18,418
  19,698
  21,057
  22,499
  24,028
EBITDA, $m
  6,247
  6,211
  6,335
  6,505
  6,718
  6,975
  7,274
  7,617
  8,003
  8,432
  8,907
  9,427
  9,994
  10,609
  11,275
  11,993
  12,764
  13,592
  14,478
  15,425
  16,436
  17,513
  18,660
  19,880
  21,177
  22,554
  24,016
  25,565
  27,207
  28,947
  30,789
Interest expense (income), $m
  1,301
  1,265
  1,312
  1,363
  1,421
  1,486
  1,559
  1,639
  1,725
  1,819
  1,920
  2,028
  2,144
  2,268
  2,400
  2,540
  2,689
  2,846
  3,013
  3,189
  3,376
  3,572
  3,780
  3,999
  4,229
  4,472
  4,728
  4,998
  5,282
  5,580
  5,894
Earnings before tax, $m
  1,020
  878
  908
  971
  1,064
  1,187
  1,338
  1,519
  1,729
  1,969
  2,240
  4,506
  4,840
  5,207
  5,608
  6,044
  6,518
  7,030
  7,582
  8,176
  8,814
  9,498
  10,230
  11,013
  11,848
  12,740
  13,689
  14,700
  15,776
  16,919
  18,133
Tax expense, $m
  394
  237
  245
  262
  287
  320
  361
  410
  467
  532
  605
  1,217
  1,307
  1,406
  1,514
  1,632
  1,760
  1,898
  2,047
  2,208
  2,380
  2,565
  2,762
  2,973
  3,199
  3,440
  3,696
  3,969
  4,259
  4,568
  4,896
Net income, $m
  626
  641
  663
  709
  777
  866
  977
  1,109
  1,262
  1,438
  1,635
  3,290
  3,533
  3,801
  4,094
  4,412
  4,758
  5,132
  5,535
  5,969
  6,434
  6,934
  7,468
  8,039
  8,649
  9,300
  9,993
  10,731
  11,516
  12,351
  13,237

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  222
  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
  47,017
  47,773
  48,872
  50,128
  51,538
  53,101
  54,815
  56,682
  58,703
  60,880
  63,216
  65,715
  68,383
  71,222
  74,240
  77,443
  80,837
  84,429
  88,228
  92,242
  96,481
  100,953
  105,669
  110,640
  115,878
  121,395
  127,203
  133,317
  139,750
  146,518
  153,637
Adjusted assets (=assets-cash), $m
  46,795
  47,773
  48,872
  50,128
  51,538
  53,101
  54,815
  56,682
  58,703
  60,880
  63,216
  65,715
  68,383
  71,222
  74,240
  77,443
  80,837
  84,429
  88,228
  92,242
  96,481
  100,953
  105,669
  110,640
  115,878
  121,395
  127,203
  133,317
  139,750
  146,518
  153,637
Revenue / Adjusted assets
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
Average production assets, $m
  22,460
  22,916
  23,443
  24,045
  24,722
  25,471
  26,294
  27,189
  28,158
  29,203
  30,323
  31,522
  32,802
  34,164
  35,611
  37,148
  38,776
  40,499
  42,321
  44,247
  46,280
  48,425
  50,687
  53,072
  55,584
  58,230
  61,016
  63,949
  67,035
  70,281
  73,696
Working capital, $m
  -187
  1,123
  1,148
  1,178
  1,211
  1,248
  1,288
  1,332
  1,379
  1,431
  1,486
  1,544
  1,607
  1,674
  1,745
  1,820
  1,900
  1,984
  2,073
  2,168
  2,267
  2,372
  2,483
  2,600
  2,723
  2,853
  2,989
  3,133
  3,284
  3,443
  3,610
Total debt, $m
  19,688
  20,180
  20,965
  21,861
  22,868
  23,984
  25,208
  26,541
  27,984
  29,538
  31,206
  32,991
  34,895
  36,923
  39,078
  41,364
  43,787
  46,352
  49,065
  51,931
  54,957
  58,150
  61,518
  65,067
  68,807
  72,746
  76,893
  81,258
  85,851
  90,684
  95,767
Total liabilities, $m
  33,618
  34,110
  34,895
  35,791
  36,798
  37,914
  39,138
  40,471
  41,914
  43,468
  45,136
  46,921
  48,825
  50,853
  53,008
  55,294
  57,717
  60,282
  62,995
  65,861
  68,887
  72,080
  75,448
  78,997
  82,737
  86,676
  90,823
  95,188
  99,781
  104,614
  109,697
Total equity, $m
  13,399
  13,663
  13,977
  14,337
  14,740
  15,187
  15,677
  16,211
  16,789
  17,412
  18,080
  18,795
  19,557
  20,370
  21,233
  22,149
  23,119
  24,147
  25,233
  26,381
  27,593
  28,872
  30,221
  31,643
  33,141
  34,719
  36,380
  38,129
  39,968
  41,904
  43,940
Total liabilities and equity, $m
  47,017
  47,773
  48,872
  50,128
  51,538
  53,101
  54,815
  56,682
  58,703
  60,880
  63,216
  65,716
  68,382
  71,223
  74,241
  77,443
  80,836
  84,429
  88,228
  92,242
  96,480
  100,952
  105,669
  110,640
  115,878
  121,395
  127,203
  133,317
  139,749
  146,518
  153,637
Debt-to-equity ratio
  1.469
  1.480
  1.500
  1.520
  1.550
  1.580
  1.610
  1.640
  1.670
  1.700
  1.730
  1.760
  1.780
  1.810
  1.840
  1.870
  1.890
  1.920
  1.940
  1.970
  1.990
  2.010
  2.040
  2.060
  2.080
  2.100
  2.110
  2.130
  2.150
  2.160
  2.180
Adjusted equity ratio
  0.282
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286
  0.286

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  626
  641
  663
  709
  777
  866
  977
  1,109
  1,262
  1,438
  1,635
  3,290
  3,533
  3,801
  4,094
  4,412
  4,758
  5,132
  5,535
  5,969
  6,434
  6,934
  7,468
  8,039
  8,649
  9,300
  9,993
  10,731
  11,516
  12,351
  13,237
Depreciation, amort., depletion, $m
  3,916
  4,067
  4,116
  4,171
  4,233
  4,302
  4,377
  4,459
  4,548
  4,644
  4,747
  2,892
  3,009
  3,134
  3,267
  3,408
  3,557
  3,715
  3,883
  4,059
  4,246
  4,443
  4,650
  4,869
  5,099
  5,342
  5,598
  5,867
  6,150
  6,448
  6,761
Funds from operations, $m
  4,354
  4,709
  4,779
  4,880
  5,010
  5,168
  5,354
  5,568
  5,811
  6,082
  6,382
  6,182
  6,543
  6,935
  7,361
  7,820
  8,315
  8,847
  9,418
  10,028
  10,680
  11,376
  12,118
  12,908
  13,749
  14,642
  15,591
  16,598
  17,666
  18,799
  19,998
Change in working capital, $m
  -254
  22
  26
  30
  33
  37
  40
  44
  47
  51
  55
  59
  63
  67
  71
  75
  80
  84
  89
  94
  100
  105
  111
  117
  123
  130
  136
  144
  151
  159
  167
Cash from operations, $m
  4,608
  4,687
  4,753
  4,850
  4,977
  5,131
  5,314
  5,524
  5,763
  6,031
  6,327
  6,123
  6,480
  6,869
  7,290
  7,745
  8,236
  8,763
  9,328
  9,934
  10,581
  11,271
  12,007
  12,792
  13,626
  14,513
  15,455
  16,454
  17,515
  18,640
  19,831
Maintenance CAPEX, $m
  0
  -2,061
  -2,102
  -2,151
  -2,206
  -2,268
  -2,337
  -2,412
  -2,494
  -2,583
  -2,679
  -2,782
  -2,892
  -3,009
  -3,134
  -3,267
  -3,408
  -3,557
  -3,715
  -3,883
  -4,059
  -4,246
  -4,443
  -4,650
  -4,869
  -5,099
  -5,342
  -5,598
  -5,867
  -6,150
  -6,448
New CAPEX, $m
  -2,981
  -456
  -527
  -602
  -676
  -749
  -822
  -895
  -969
  -1,044
  -1,121
  -1,199
  -1,279
  -1,362
  -1,448
  -1,536
  -1,628
  -1,723
  -1,822
  -1,925
  -2,033
  -2,145
  -2,262
  -2,385
  -2,512
  -2,646
  -2,786
  -2,933
  -3,086
  -3,246
  -3,415
Cash from investing activities, $m
  -2,994
  -2,517
  -2,629
  -2,753
  -2,882
  -3,017
  -3,159
  -3,307
  -3,463
  -3,627
  -3,800
  -3,981
  -4,171
  -4,371
  -4,582
  -4,803
  -5,036
  -5,280
  -5,537
  -5,808
  -6,092
  -6,391
  -6,705
  -7,035
  -7,381
  -7,745
  -8,128
  -8,531
  -8,953
  -9,396
  -9,863
Free cash flow, $m
  1,614
  2,170
  2,123
  2,097
  2,094
  2,114
  2,155
  2,217
  2,299
  2,403
  2,527
  2,142
  2,309
  2,497
  2,708
  2,942
  3,200
  3,482
  3,791
  4,125
  4,488
  4,880
  5,303
  5,757
  6,244
  6,767
  7,326
  7,924
  8,562
  9,243
  9,969
Issuance/(repayment) of debt, $m
  -341
  714
  785
  897
  1,007
  1,116
  1,224
  1,333
  1,443
  1,554
  1,668
  1,785
  1,904
  2,028
  2,155
  2,287
  2,423
  2,565
  2,713
  2,866
  3,026
  3,193
  3,367
  3,549
  3,740
  3,939
  4,147
  4,365
  4,593
  4,832
  5,083
Issuance/(repurchase) of shares, $m
  -10
  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  
  -351
  714
  785
  897
  1,007
  1,116
  1,224
  1,333
  1,443
  1,554
  1,668
  1,785
  1,904
  2,028
  2,155
  2,287
  2,423
  2,565
  2,713
  2,866
  3,026
  3,193
  3,367
  3,549
  3,740
  3,939
  4,147
  4,365
  4,593
  4,832
  5,083
Total cash flow (excl. dividends), $m
  1,263
  2,884
  2,908
  2,994
  3,101
  3,229
  3,379
  3,550
  3,742
  3,957
  4,195
  3,927
  4,213
  4,525
  4,863
  5,229
  5,623
  6,047
  6,503
  6,992
  7,514
  8,073
  8,670
  9,306
  9,984
  10,706
  11,473
  12,289
  13,156
  14,076
  15,051
Retained Cash Flow (-), $m
  661
  -264
  -314
  -359
  -403
  -447
  -490
  -534
  -578
  -623
  -668
  -715
  -763
  -812
  -863
  -916
  -971
  -1,027
  -1,087
  -1,148
  -1,212
  -1,279
  -1,349
  -1,422
  -1,498
  -1,578
  -1,661
  -1,748
  -1,840
  -1,936
  -2,036
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
 
  2,620
  2,594
  2,635
  2,698
  2,783
  2,889
  3,016
  3,164
  3,335
  3,527
  3,212
  3,450
  3,712
  4,000
  4,313
  4,652
  5,020
  5,416
  5,843
  6,302
  6,794
  7,321
  7,884
  8,486
  9,128
  9,812
  10,541
  11,316
  12,140
  13,015
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  2,419
  2,194
  2,026
  1,869
  1,721
  1,579
  1,441
  1,308
  1,177
  1,051
  796
  702
  610
  522
  440
  364
  296
  236
  184
  140
  104
  75
  53
  36
  24
  16
  10
  6
  3
  2
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

CenturyLink, Inc. is an integrated communications company. The Company is engaged in providing an array of communications services to its residential and business customers. Its segments include business, which provides strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and consumer, which provides strategic and legacy products and services to residential customers. Its communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol (VoIP), information technology and other ancillary services. As of December 31, 2016, it served approximately 5.9 million broadband subscribers and 325,000 Prism TV subscribers.

FINANCIAL RATIOS  of  CenturyLink (CTL)

Valuation Ratios
P/E Ratio 14.6
Price to Sales 0.5
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 2
Price to Free Cash Flow 5.6
Growth Rates
Sales Growth Rate -2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.8%
Cap. Spend. - 3 Yr. Gr. Rate -0.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.5
LT Debt to Equity 135.7%
Total Debt to Equity 146.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.2%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 55.5%
Gross Margin - 3 Yr. Avg. 56.2%
EBITDA Margin 35.7%
EBITDA Margin - 3 Yr. Avg. 37.3%
Operating Margin 13.3%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin 5.8%
Pre-Tax Margin - 3 Yr. Avg. 6.4%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 4.3%
Effective Tax Rate 38.6%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 186.4%

CTL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CTL stock intrinsic value calculation we used $17470 million for the last fiscal year's total revenue generated by CenturyLink. The default revenue input number comes from 2016 income statement of CenturyLink. 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 CTL stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.3%, whose default value for CTL is calculated based on our internal credit rating of CenturyLink, 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 CenturyLink.
    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 CTL stock the variable cost ratio is equal to 36.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9021 million in the base year in the intrinsic value calculation for CTL 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 6.5% for CenturyLink.

Corporate tax rate of 27% is the nominal tax rate for CenturyLink. 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 CTL 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 CTL are equal to 128.6%.

Life of production assets of 10.9 years is the average useful life of capital assets used in CenturyLink 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 CTL is equal to 6.3%. 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 - $13399 million for CenturyLink - 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 549.37 million for CenturyLink 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 CenturyLink at the current share price and the inputted number of shares is $9.2 billion.

RELATED COMPANIES Price Int.Val. Rating
VZ Verizon Commun 52.89 42.87  hold
T AT&T 38.04 38.64  hold
CMCSA Comcast Cl A 38.58 31.96  hold
ALSK Alaska Communi 2.54 2.78  hold
LVLT Level 3 Commun 53.63 27.49  sell
LMOS Lumos Networks 17.98 10.36  sell
IBM International 153.91 173.22  hold
CABO Cable One 693.50 387.71  sell

COMPANY NEWS

▶ Why MercadoLibre, CenturyLink, and Goldcorp Jumped Today   [Dec-13-17 04:30PM  Motley Fool]
▶ The Hot Stock: CenturyLink Jumps 6.7%   [04:28PM  Barrons.com]
▶ The Hot Stock: CenturyLink Soars 8.2%   [Dec-11-17 05:45PM  Barrons.com]
▶ Weekly CEO Buys Highlight   [10:53AM  GuruFocus.com]
▶ Why Centurylink Inc. Stock Fell 23% in November   [Dec-07-17 02:33PM  Motley Fool]
▶ Whats CenturyLinks 2017 Capex Budget?   [Dec-06-17 10:31AM  Market Realist]
▶ CenturyLinks Core Revenues Remained under Pressure in 3Q17   [Dec-05-17 05:30PM  Market Realist]
▶ Why Did CenturyLinks Revenue Fall in 3Q17?   [04:00PM  Market Realist]
▶ Heres Why CenturyLink Stock Fell in November   [04:35PM  Market Realist]
▶ 3 Top Dividend Stocks to Buy Now   [Dec-03-17 08:15AM  Motley Fool]
▶ Behind Frontiers Valuation after 3Q17 Results   [07:37AM  Market Realist]
▶ CenturyLink: A Diamond in the Rough?   [09:52AM  Barrons.com]
▶ How Safe is CenturyLinks Dividend?   [Nov-27-17 04:39PM  Motley Fool]
▶ 3 Dividend Stocks That Are Too Unsafe   [10:00AM  Motley Fool]
▶ Stocks That Fell to 3-Year Lows in the Week of Nov. 24   [Nov-25-17 03:35PM  GuruFocus.com]
▶ What You Should Know About Net Neutrality   [01:09PM  Investopedia]
▶ 10 Blue-Chip Stocks That Could Wreck Your Retirement   [Nov-17-17 01:14PM  InvestorPlace]
▶ CenturyLink declares quarterly cash dividend   [Nov-14-17 04:18PM  PR Newswire]
▶ 9 More Companies Whose Dividend Is in Danger   [03:14PM  InvestorPlace]
▶ CentruyLink: Uh Oh. Dividend Trouble?   [03:38PM  Barrons.com]
▶ CenturyLink misses Street 3Q forecasts   [04:32PM  Associated Press]
Financial statements of CTL
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.