Intrinsic value of NTT DoCoMo ADR - DCM

Previous Close

$23.58

  Intrinsic Value

$11.31

stock screener

  Rating & Target

str. sell

-52%

  Value-price divergence*

-88%

Previous close

$23.58

 
Intrinsic value

$11.31

 
Up/down potential

-52%

 
Rating

str. sell

 
Value-price divergence*

-88%

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

We calculate the intrinsic value of DCM 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 2017), $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 91.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.27
  2.50
  2.75
  2.97
  3.18
  3.36
  3.52
  3.67
  3.80
  3.92
  4.03
  4.13
  4.22
  4.29
  4.36
  4.43
  4.49
  4.54
  4.58
  4.62
  4.66
  4.70
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
Revenue, $m
  39,911
  40,909
  42,034
  43,284
  44,660
  46,160
  47,787
  49,541
  51,426
  53,444
  55,598
  57,893
  60,334
  62,925
  65,671
  68,579
  71,655
  74,906
  78,339
  81,962
  85,783
  89,811
  94,056
  98,528
  103,236
  108,191
  113,407
  118,894
  124,666
  130,736
  137,119
Variable operating expenses, $m
 
  33,827
  34,751
  35,779
  36,910
  38,143
  39,480
  40,922
  42,471
  44,130
  45,901
  47,586
  49,592
  51,722
  53,979
  56,369
  58,898
  61,570
  64,391
  67,369
  70,510
  73,821
  77,311
  80,986
  84,856
  88,929
  93,216
  97,726
  102,471
  107,460
  112,706
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
  31,686
  33,827
  34,751
  35,779
  36,910
  38,143
  39,480
  40,922
  42,471
  44,130
  45,901
  47,586
  49,592
  51,722
  53,979
  56,369
  58,898
  61,570
  64,391
  67,369
  70,510
  73,821
  77,311
  80,986
  84,856
  88,929
  93,216
  97,726
  102,471
  107,460
  112,706
Operating income, $m
  8,224
  7,082
  7,283
  7,505
  7,750
  8,017
  8,307
  8,619
  8,955
  9,314
  9,698
  10,307
  10,742
  11,203
  11,692
  12,210
  12,757
  13,336
  13,947
  14,592
  15,273
  15,990
  16,746
  17,542
  18,380
  19,262
  20,191
  21,168
  22,195
  23,276
  24,412
EBITDA, $m
  12,162
  11,026
  11,329
  11,666
  12,037
  12,441
  12,880
  13,353
  13,861
  14,404
  14,985
  15,604
  16,262
  16,960
  17,700
  18,484
  19,313
  20,189
  21,114
  22,091
  23,121
  24,206
  25,351
  26,556
  27,825
  29,160
  30,566
  32,045
  33,601
  35,237
  36,957
Interest expense (income), $m
  0
  49
  63
  79
  97
  117
  138
  161
  186
  213
  242
  272
  305
  340
  376
  415
  457
  500
  547
  595
  647
  701
  759
  819
  882
  949
  1,020
  1,094
  1,172
  1,254
  1,340
Earnings before tax, $m
  8,266
  7,033
  7,219
  7,426
  7,653
  7,900
  8,169
  8,458
  8,769
  9,101
  9,456
  10,035
  10,437
  10,863
  11,316
  11,794
  12,301
  12,836
  13,401
  13,997
  14,626
  15,289
  15,987
  16,723
  17,497
  18,313
  19,171
  20,074
  21,023
  22,022
  23,072
Tax expense, $m
  2,504
  1,899
  1,949
  2,005
  2,066
  2,133
  2,206
  2,284
  2,368
  2,457
  2,553
  2,709
  2,818
  2,933
  3,055
  3,184
  3,321
  3,466
  3,618
  3,779
  3,949
  4,128
  4,317
  4,515
  4,724
  4,944
  5,176
  5,420
  5,676
  5,946
  6,229
Net income, $m
  5,681
  5,134
  5,270
  5,421
  5,587
  5,767
  5,963
  6,174
  6,401
  6,644
  6,903
  7,326
  7,619
  7,930
  8,260
  8,610
  8,979
  9,370
  9,782
  10,218
  10,677
  11,161
  11,671
  12,208
  12,773
  13,368
  13,995
  14,654
  15,347
  16,076
  16,843

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,512
  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
  64,883
  62,937
  64,667
  66,591
  68,707
  71,016
  73,518
  76,217
  79,117
  82,221
  85,536
  89,067
  92,821
  96,807
  101,032
  105,506
  110,238
  115,240
  120,521
  126,095
  131,974
  138,171
  144,702
  151,581
  158,824
  166,448
  174,472
  182,914
  191,794
  201,132
  210,952
Adjusted assets (=assets-cash), $m
  61,371
  62,937
  64,667
  66,591
  68,707
  71,016
  73,518
  76,217
  79,117
  82,221
  85,536
  89,067
  92,821
  96,807
  101,032
  105,506
  110,238
  115,240
  120,521
  126,095
  131,974
  138,171
  144,702
  151,581
  158,824
  166,448
  174,472
  182,914
  191,794
  201,132
  210,952
Revenue / Adjusted assets
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
Average production assets, $m
  27,010
  27,695
  28,457
  29,303
  30,235
  31,250
  32,352
  33,539
  34,815
  36,181
  37,640
  39,194
  40,846
  42,600
  44,459
  46,428
  48,510
  50,711
  53,035
  55,488
  58,075
  60,802
  63,676
  66,703
  69,890
  73,246
  76,776
  80,491
  84,399
  88,508
  92,830
Working capital, $m
  13,591
  10,882
  11,181
  11,514
  11,879
  12,279
  12,711
  13,178
  13,679
  14,216
  14,789
  15,400
  16,049
  16,738
  17,468
  18,242
  19,060
  19,925
  20,838
  21,802
  22,818
  23,890
  25,019
  26,208
  27,461
  28,779
  30,166
  31,626
  33,161
  34,776
  36,474
Total debt, $m
  1,932
  1,811
  2,268
  2,776
  3,335
  3,944
  4,605
  5,317
  6,083
  6,902
  7,777
  8,710
  9,701
  10,753
  11,869
  13,050
  14,299
  15,619
  17,014
  18,485
  20,037
  21,673
  23,397
  25,213
  27,126
  29,138
  31,257
  33,485
  35,830
  38,295
  40,887
Total liabilities, $m
  16,736
  16,615
  17,072
  17,580
  18,139
  18,748
  19,409
  20,121
  20,887
  21,706
  22,581
  23,514
  24,505
  25,557
  26,673
  27,854
  29,103
  30,423
  31,818
  33,289
  34,841
  36,477
  38,201
  40,017
  41,930
  43,942
  46,061
  48,289
  50,634
  53,099
  55,691
Total equity, $m
  48,147
  46,321
  47,595
  49,011
  50,568
  52,267
  54,109
  56,096
  58,230
  60,515
  62,954
  65,553
  68,317
  71,250
  74,360
  77,652
  81,135
  84,816
  88,703
  92,806
  97,133
  101,694
  106,501
  111,563
  116,894
  122,506
  128,411
  134,625
  141,160
  148,033
  155,261
Total liabilities and equity, $m
  64,883
  62,936
  64,667
  66,591
  68,707
  71,015
  73,518
  76,217
  79,117
  82,221
  85,535
  89,067
  92,822
  96,807
  101,033
  105,506
  110,238
  115,239
  120,521
  126,095
  131,974
  138,171
  144,702
  151,580
  158,824
  166,448
  174,472
  182,914
  191,794
  201,132
  210,952
Debt-to-equity ratio
  0.040
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.210
  0.210
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
Adjusted equity ratio
  0.728
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736
  0.736

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,681
  5,134
  5,270
  5,421
  5,587
  5,767
  5,963
  6,174
  6,401
  6,644
  6,903
  7,326
  7,619
  7,930
  8,260
  8,610
  8,979
  9,370
  9,782
  10,218
  10,677
  11,161
  11,671
  12,208
  12,773
  13,368
  13,995
  14,654
  15,347
  16,076
  16,843
Depreciation, amort., depletion, $m
  3,938
  3,944
  4,047
  4,161
  4,287
  4,424
  4,573
  4,733
  4,906
  5,090
  5,288
  5,296
  5,520
  5,757
  6,008
  6,274
  6,555
  6,853
  7,167
  7,498
  7,848
  8,217
  8,605
  9,014
  9,445
  9,898
  10,375
  10,877
  11,405
  11,961
  12,545
Funds from operations, $m
  11,388
  9,078
  9,317
  9,582
  9,873
  10,191
  10,536
  10,908
  11,307
  11,734
  12,190
  12,622
  13,139
  13,687
  14,268
  14,884
  15,535
  16,223
  16,949
  17,716
  18,525
  19,377
  20,275
  21,222
  22,218
  23,266
  24,370
  25,531
  26,752
  28,037
  29,387
Change in working capital, $m
  -37
  265
  299
  333
  366
  399
  433
  467
  501
  537
  573
  611
  649
  689
  731
  774
  818
  865
  913
  964
  1,016
  1,072
  1,129
  1,189
  1,252
  1,318
  1,387
  1,460
  1,535
  1,615
  1,698
Cash from operations, $m
  11,425
  8,813
  9,017
  9,249
  9,508
  9,792
  10,103
  10,441
  10,806
  11,197
  11,617
  12,012
  12,490
  12,998
  13,538
  14,110
  14,717
  15,358
  16,036
  16,752
  17,508
  18,306
  19,146
  20,032
  20,965
  21,948
  22,983
  24,071
  25,217
  26,422
  27,689
Maintenance CAPEX, $m
  0
  -3,650
  -3,743
  -3,846
  -3,960
  -4,086
  -4,223
  -4,372
  -4,532
  -4,705
  -4,889
  -5,086
  -5,296
  -5,520
  -5,757
  -6,008
  -6,274
  -6,555
  -6,853
  -7,167
  -7,498
  -7,848
  -8,217
  -8,605
  -9,014
  -9,445
  -9,898
  -10,375
  -10,877
  -11,405
  -11,961
New CAPEX, $m
  -5,602
  -686
  -762
  -847
  -931
  -1,016
  -1,101
  -1,188
  -1,276
  -1,366
  -1,459
  -1,554
  -1,652
  -1,754
  -1,859
  -1,969
  -2,082
  -2,201
  -2,324
  -2,453
  -2,587
  -2,727
  -2,874
  -3,027
  -3,187
  -3,355
  -3,531
  -3,715
  -3,908
  -4,110
  -4,321
Cash from investing activities, $m
  -8,210
  -4,336
  -4,505
  -4,693
  -4,891
  -5,102
  -5,324
  -5,560
  -5,808
  -6,071
  -6,348
  -6,640
  -6,948
  -7,274
  -7,616
  -7,977
  -8,356
  -8,756
  -9,177
  -9,620
  -10,085
  -10,575
  -11,091
  -11,632
  -12,201
  -12,800
  -13,429
  -14,090
  -14,785
  -15,515
  -16,282
Free cash flow, $m
  3,215
  4,477
  4,513
  4,557
  4,617
  4,691
  4,779
  4,881
  4,997
  5,127
  5,269
  5,371
  5,541
  5,724
  5,922
  6,134
  6,360
  6,602
  6,859
  7,133
  7,423
  7,730
  8,056
  8,400
  8,764
  9,148
  9,554
  9,981
  10,432
  10,907
  11,408
Issuance/(repayment) of debt, $m
  -11
  417
  457
  508
  559
  609
  661
  713
  765
  820
  875
  932
  991
  1,052
  1,115
  1,181
  1,249
  1,320
  1,394
  1,471
  1,552
  1,636
  1,724
  1,816
  1,912
  2,013
  2,118
  2,229
  2,344
  2,465
  2,592
Issuance/(repurchase) of shares, $m
  -1,302
  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  
  -1,328
  417
  457
  508
  559
  609
  661
  713
  765
  820
  875
  932
  991
  1,052
  1,115
  1,181
  1,249
  1,320
  1,394
  1,471
  1,552
  1,636
  1,724
  1,816
  1,912
  2,013
  2,118
  2,229
  2,344
  2,465
  2,592
Total cash flow (excl. dividends), $m
  1,878
  4,894
  4,970
  5,065
  5,175
  5,300
  5,440
  5,594
  5,763
  5,946
  6,144
  6,303
  6,532
  6,777
  7,037
  7,315
  7,610
  7,922
  8,254
  8,604
  8,975
  9,367
  9,780
  10,216
  10,676
  11,161
  11,672
  12,210
  12,777
  13,373
  14,000
Retained Cash Flow (-), $m
  -1,988
  -1,148
  -1,274
  -1,416
  -1,557
  -1,699
  -1,842
  -1,987
  -2,134
  -2,285
  -2,440
  -2,599
  -2,763
  -2,933
  -3,110
  -3,293
  -3,483
  -3,681
  -3,887
  -4,102
  -4,327
  -4,561
  -4,807
  -5,063
  -5,331
  -5,612
  -5,905
  -6,213
  -6,536
  -6,873
  -7,227
Prev. year cash balance distribution, $m
 
  2,974
  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
 
  6,720
  3,696
  3,649
  3,618
  3,601
  3,598
  3,607
  3,629
  3,661
  3,705
  3,704
  3,769
  3,843
  3,928
  4,022
  4,127
  4,241
  4,366
  4,502
  4,648
  4,805
  4,974
  5,153
  5,345
  5,550
  5,767
  5,997
  6,241
  6,499
  6,773
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,443
  3,384
  3,176
  2,979
  2,791
  2,611
  2,437
  2,268
  2,103
  1,942
  1,759
  1,608
  1,461
  1,319
  1,181
  1,049
  923
  804
  693
  591
  497
  413
  338
  272
  216
  168
  129
  97
  71
  51
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

NTT DOCOMO, INC. (DOCOMO) is a mobile telecommunications carrier. The Company operates through three segments: telecommunications business, smart life business and other businesses. The telecommunications business segment includes mobile phone services (long-term evolution (LTE) (Xi) services and freedom of mobile multimedia access (FOMA) services), optical-fiber broadband service, satellite mobile communications services, international services and equipment sales related to these services. The smart life business segment includes video and music distribution, electronic books and other services offered through its dmarket portal, as well as finance/payment services, shopping services and various other services to support the Company's customers' daily lives. Its other businesses segment primarily includes Mobile Device Protection Service, as well as the development, sale and maintenance of information technology (IT) systems.

FINANCIAL RATIOS  of  NTT DoCoMo ADR (DCM)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 2.2
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate 1.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.8%
Cap. Spend. - 3 Yr. Gr. Rate -2%
Financial Strength
Quick Ratio 7
Current Ratio 1
LT Debt to Equity 2.9%
Total Debt to Equity 4%
Interest Coverage 0
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 7.4%
Return On Total Capital 11.6%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 9.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.6%
Gross Margin - 3 Yr. Avg. 53.5%
EBITDA Margin 30.6%
EBITDA Margin - 3 Yr. Avg. 30.5%
Operating Margin 20.6%
Oper. Margin - 3 Yr. Avg. 17.5%
Pre-Tax Margin 20.7%
Pre-Tax Margin - 3 Yr. Avg. 17.5%
Net Profit Margin 14.2%
Net Profit Margin - 3 Yr. Avg. 11.9%
Effective Tax Rate 30.3%
Eff/ Tax Rate - 3 Yr. Avg. 31.5%
Payout Ratio 43%

DCM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DCM stock intrinsic value calculation we used $39911 million for the last fiscal year's total revenue generated by NTT DoCoMo ADR. The default revenue input number comes from 2017 income statement of NTT DoCoMo ADR. 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 DCM stock valuation model: a) initial revenue growth rate of 2.5% 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 4.3%, whose default value for DCM is calculated based on our internal credit rating of NTT DoCoMo ADR, 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 NTT DoCoMo ADR.
    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 DCM stock the variable cost ratio is equal to 82.7%.

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 DCM 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 3.5% for NTT DoCoMo ADR.

Corporate tax rate of 27% is the nominal tax rate for NTT DoCoMo ADR. 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 DCM 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 DCM are equal to 67.7%.

Life of production assets of 7.4 years is the average useful life of capital assets used in NTT DoCoMo ADR 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 DCM is equal to 26.6%. 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 - $48147 million for NTT DoCoMo ADR - 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 3878.59 million for NTT DoCoMo ADR 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 NTT DoCoMo ADR at the current share price and the inputted number of shares is $91.5 billion.

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COMPANY NEWS

▶ NTT Docomo posts 1Q profit   [Jul-28-17 01:32AM  Associated Press]
▶ ETFs with exposure to NTT DoCoMo, Inc. : July 11, 2017   [Jul-11-17 02:25PM  Capital Cube]
▶ SoftBank partners with ZTE on 5G trials   [Jun-13-17 02:58AM  ZDNet]
▶ Why the next billboard is a flying drone   [11:33AM  TechRepublic]
▶ 5 Stocks to Buy as Japan Revises Q4 GDP Upward   [Mar-10-17 09:46AM  Zacks]
▶ DOCOMO Develops eSIM Platform for Consumer Devices   [Feb-23-17 03:00AM  ACN Newswire]
▶ 4 Cheap Stocks Among Recent Economic Moat Changes   [Jan-10-17 06:00AM  Morningstar]
▶ Is NTT Docomo Inc (ADR) (DCM) A Good Stock To Buy?   [Dec-16-16 12:34AM  Insider Monkey]
▶ Is NTT Docomo Inc (ADR) (DCM) A Good Stock To Buy?   [12:34AM  at Insider Monkey]
▶ Is It Time To Buy BP plc (ADR) (BP)?   [Dec-01-16 12:57PM  at Insider Monkey]
▶ Is Kraft Heinz Co (KHC) a Good Stock To Buy?   [Nov-29-16 02:37PM  at Insider Monkey]
▶ New Faces, a Show of Hands and the Evolution of Emoji   [12:26AM  at The Wall Street Journal]
▶ Apple Promotes A Cashless Society In Japan   [Oct-18-16 10:53AM  at Investopedia]
▶ 4 Fintech Firms Emerging in San Francisco (PYPL, BBVA)   [Aug-23-16 12:00PM  at Investopedia]
▶ NTT Docomo posts 1Q profit   [Jul-29-16 05:15AM  AP]
Financial statements of DCM
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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