Intrinsic value of Entercom Communications Corp. - ETM

Previous Close

$5.83

  Intrinsic Value

$10.99

stock screener

  Rating & Target

str. buy

+89%

Previous close

$5.83

 
Intrinsic value

$10.99

 
Up/down potential

+89%

 
Rating

str. buy

We calculate the intrinsic value of ETM 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 0001), $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 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  2,341
  3,617
  5,409
  7,848
  11,072
  15,221
  20,431
  26,827
  34,520
  43,602
  54,144
  66,196
  79,788
  94,932
  111,623
  129,845
  149,570
  170,768
  193,404
  217,443
  242,855
  269,613
  297,696
  327,093
  357,797
  389,815
  423,158
  457,849
  493,920
  531,412
Variable operating expenses, $m
  2,099
  3,076
  4,449
  6,318
  8,788
  11,967
  15,958
  20,858
  26,752
  33,710
  41,480
  50,713
  61,127
  72,729
  85,516
  99,476
  114,588
  130,828
  148,169
  166,586
  186,055
  206,554
  228,069
  250,590
  274,114
  298,642
  324,187
  350,765
  378,399
  407,122
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
  2,099
  3,076
  4,449
  6,318
  8,788
  11,967
  15,958
  20,858
  26,752
  33,710
  41,480
  50,713
  61,127
  72,729
  85,516
  99,476
  114,588
  130,828
  148,169
  166,586
  186,055
  206,554
  228,069
  250,590
  274,114
  298,642
  324,187
  350,765
  378,399
  407,122
Operating income, $m
  242
  540
  959
  1,530
  2,284
  3,254
  4,473
  5,969
  7,768
  9,892
  12,663
  15,482
  18,661
  22,203
  26,107
  30,369
  34,982
  39,940
  45,234
  50,857
  56,800
  63,059
  69,627
  76,502
  83,684
  91,172
  98,971
  107,084
  115,521
  124,290
EBITDA, $m
  653
  1,008
  1,508
  2,188
  3,087
  4,244
  5,697
  7,481
  9,626
  12,158
  15,098
  18,459
  22,249
  26,472
  31,126
  36,208
  41,708
  47,619
  53,931
  60,635
  67,721
  75,182
  83,013
  91,211
  99,773
  108,701
  117,999
  127,672
  137,731
  148,186
Interest expense (income), $m
  35
  101
  188
  315
  492
  734
  1,054
  1,465
  1,981
  2,615
  3,378
  4,278
  5,323
  6,518
  7,865
  9,366
  11,021
  12,827
  14,782
  16,883
  19,127
  21,510
  24,029
  26,681
  29,465
  32,379
  35,422
  38,596
  41,901
  45,340
  48,915
Earnings before tax, $m
  141
  352
  645
  1,038
  1,550
  2,201
  3,008
  3,988
  5,153
  6,514
  8,385
  10,159
  12,144
  14,338
  16,741
  19,348
  22,156
  25,158
  28,351
  31,730
  35,291
  39,030
  42,946
  47,038
  51,305
  55,750
  60,375
  65,184
  70,181
  75,375
Tax expense, $m
  38
  95
  174
  280
  418
  594
  812
  1,077
  1,391
  1,759
  2,264
  2,743
  3,279
  3,871
  4,520
  5,224
  5,982
  6,793
  7,655
  8,567
  9,528
  10,538
  11,595
  12,700
  13,852
  15,053
  16,301
  17,600
  18,949
  20,351
Net income, $m
  103
  257
  471
  757
  1,131
  1,607
  2,196
  2,911
  3,762
  4,756
  6,121
  7,416
  8,865
  10,467
  12,221
  14,124
  16,174
  18,366
  20,696
  23,163
  25,762
  28,492
  31,351
  34,337
  37,453
  40,698
  44,074
  47,584
  51,232
  55,023

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  6,413
  9,908
  14,818
  21,500
  30,333
  41,701
  55,976
  73,499
  94,576
  119,457
  148,339
  181,358
  218,597
  260,088
  305,817
  355,739
  409,781
  467,857
  529,873
  595,734
  665,356
  738,665
  815,606
  896,144
  980,267
  1,067,985
  1,159,336
  1,254,381
  1,353,207
  1,455,923
Adjusted assets (=assets-cash), $m
  6,413
  9,908
  14,818
  21,500
  30,333
  41,701
  55,976
  73,499
  94,576
  119,457
  148,339
  181,358
  218,597
  260,088
  305,817
  355,739
  409,781
  467,857
  529,873
  595,734
  665,356
  738,665
  815,606
  896,144
  980,267
  1,067,985
  1,159,336
  1,254,381
  1,353,207
  1,455,923
Revenue / Adjusted assets
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
Average production assets, $m
  3,158
  4,879
  7,296
  10,586
  14,936
  20,533
  27,562
  36,190
  46,568
  58,819
  73,040
  89,298
  107,634
  128,063
  150,580
  175,160
  201,770
  230,366
  260,901
  293,331
  327,611
  363,708
  401,592
  441,248
  482,669
  525,860
  570,840
  617,639
  666,299
  716,875
Working capital, $m
  302
  467
  698
  1,012
  1,428
  1,964
  2,636
  3,461
  4,453
  5,625
  6,985
  8,539
  10,293
  12,246
  14,399
  16,750
  19,295
  22,029
  24,949
  28,050
  31,328
  34,780
  38,403
  42,195
  46,156
  50,286
  54,587
  59,063
  63,716
  68,552
Total debt, $m
  3,483
  5,825
  9,114
  13,591
  19,509
  27,126
  36,690
  48,431
  62,552
  79,222
  98,573
  120,696
  145,646
  173,445
  204,084
  237,531
  273,739
  312,650
  354,201
  398,328
  444,975
  494,092
  545,642
  599,603
  655,965
  714,736
  775,941
  839,622
  905,835
  974,654
Total liabilities, $m
  4,297
  6,639
  9,928
  14,405
  20,323
  27,940
  37,504
  49,245
  63,366
  80,036
  99,387
  121,510
  146,460
  174,259
  204,897
  238,345
  274,553
  313,464
  355,015
  399,142
  445,788
  494,906
  546,456
  600,417
  656,779
  715,550
  776,755
  840,436
  906,649
  975,468
Total equity, $m
  2,116
  3,270
  4,890
  7,095
  10,010
  13,761
  18,472
  24,255
  31,210
  39,421
  48,952
  59,848
  72,137
  85,829
  100,920
  117,394
  135,228
  154,393
  174,858
  196,592
  219,567
  243,759
  269,150
  295,728
  323,488
  352,435
  382,581
  413,946
  446,558
  480,455
Total liabilities and equity, $m
  6,413
  9,909
  14,818
  21,500
  30,333
  41,701
  55,976
  73,500
  94,576
  119,457
  148,339
  181,358
  218,597
  260,088
  305,817
  355,739
  409,781
  467,857
  529,873
  595,734
  665,355
  738,665
  815,606
  896,145
  980,267
  1,067,985
  1,159,336
  1,254,382
  1,353,207
  1,455,923
Debt-to-equity ratio
  1.650
  1.780
  1.860
  1.920
  1.950
  1.970
  1.990
  2.000
  2.000
  2.010
  2.010
  2.020
  2.020
  2.020
  2.020
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
Adjusted equity ratio
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  103
  257
  471
  757
  1,131
  1,607
  2,196
  2,911
  3,762
  4,756
  6,121
  7,416
  8,865
  10,467
  12,221
  14,124
  16,174
  18,366
  20,696
  23,163
  25,762
  28,492
  31,351
  34,337
  37,453
  40,698
  44,074
  47,584
  51,232
  55,023
Depreciation, amort., depletion, $m
  411
  468
  549
  658
  803
  990
  1,224
  1,512
  1,858
  2,266
  2,435
  2,977
  3,588
  4,269
  5,019
  5,839
  6,726
  7,679
  8,697
  9,778
  10,920
  12,124
  13,386
  14,708
  16,089
  17,529
  19,028
  20,588
  22,210
  23,896
Funds from operations, $m
  514
  725
  1,020
  1,416
  1,935
  2,597
  3,420
  4,423
  5,619
  7,022
  8,556
  10,393
  12,453
  14,736
  17,240
  19,963
  22,899
  26,044
  29,393
  32,941
  36,683
  40,615
  44,737
  49,046
  53,542
  58,226
  63,102
  68,172
  73,442
  78,919
Change in working capital, $m
  113
  165
  231
  315
  416
  535
  672
  825
  992
  1,172
  1,360
  1,555
  1,753
  1,954
  2,153
  2,351
  2,545
  2,735
  2,920
  3,101
  3,278
  3,452
  3,623
  3,792
  3,961
  4,130
  4,301
  4,475
  4,653
  4,836
Cash from operations, $m
  400
  561
  788
  1,101
  1,519
  2,061
  2,748
  3,598
  4,627
  5,850
  7,196
  8,838
  10,699
  12,782
  15,087
  17,612
  20,355
  23,310
  26,473
  29,839
  33,404
  37,164
  41,114
  45,254
  49,581
  54,096
  58,800
  63,697
  68,789
  74,083
Maintenance CAPEX, $m
  -66
  -105
  -163
  -243
  -353
  -498
  -684
  -919
  -1,206
  -1,552
  -1,961
  -2,435
  -2,977
  -3,588
  -4,269
  -5,019
  -5,839
  -6,726
  -7,679
  -8,697
  -9,778
  -10,920
  -12,124
  -13,386
  -14,708
  -16,089
  -17,529
  -19,028
  -20,588
  -22,210
New CAPEX, $m
  -1,184
  -1,721
  -2,417
  -3,290
  -4,349
  -5,597
  -7,028
  -8,628
  -10,378
  -12,251
  -14,221
  -16,258
  -18,336
  -20,429
  -22,516
  -24,581
  -26,610
  -28,596
  -30,535
  -32,429
  -34,281
  -36,096
  -37,885
  -39,656
  -41,421
  -43,191
  -44,980
  -46,799
  -48,660
  -50,576
Cash from investing activities, $m
  -1,250
  -1,826
  -2,580
  -3,533
  -4,702
  -6,095
  -7,712
  -9,547
  -11,584
  -13,803
  -16,182
  -18,693
  -21,313
  -24,017
  -26,785
  -29,600
  -32,449
  -35,322
  -38,214
  -41,126
  -44,059
  -47,016
  -50,009
  -53,042
  -56,129
  -59,280
  -62,509
  -65,827
  -69,248
  -72,786
Free cash flow, $m
  -849
  -1,265
  -1,792
  -2,432
  -3,183
  -4,034
  -4,965
  -5,949
  -6,957
  -7,953
  -8,985
  -9,855
  -10,613
  -11,235
  -11,698
  -11,988
  -12,094
  -12,012
  -11,741
  -11,286
  -10,654
  -9,853
  -8,894
  -7,788
  -6,548
  -5,184
  -3,708
  -2,130
  -459
  1,297
Issuance/(repayment) of debt, $m
  1,611
  2,342
  3,289
  4,477
  5,918
  7,617
  9,564
  11,741
  14,121
  16,670
  19,351
  22,123
  24,950
  27,799
  30,639
  33,447
  36,208
  38,911
  41,550
  44,127
  46,647
  49,117
  51,551
  53,960
  56,362
  58,771
  61,205
  63,680
  66,213
  68,820
Issuance/(repurchase) of shares, $m
  693
  896
  1,149
  1,448
  1,784
  2,145
  2,515
  2,872
  3,194
  3,455
  3,410
  3,480
  3,424
  3,225
  2,870
  2,350
  1,660
  800
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,304
  3,238
  4,438
  5,925
  7,702
  9,762
  12,079
  14,613
  17,315
  20,125
  22,761
  25,603
  28,374
  31,024
  33,509
  35,797
  37,868
  39,711
  41,550
  44,127
  46,647
  49,117
  51,551
  53,960
  56,362
  58,771
  61,205
  63,680
  66,213
  68,820
Total cash flow (excl. dividends), $m
  1,454
  1,973
  2,647
  3,493
  4,519
  5,728
  7,114
  8,663
  10,358
  12,172
  13,775
  15,748
  17,761
  19,789
  21,810
  23,810
  25,775
  27,699
  29,809
  32,841
  35,993
  39,264
  42,657
  46,172
  49,814
  53,587
  57,497
  61,550
  65,754
  70,117
Retained Cash Flow (-), $m
  -796
  -1,153
  -1,620
  -2,205
  -2,915
  -3,751
  -4,710
  -5,783
  -6,955
  -8,211
  -9,531
  -10,896
  -12,289
  -13,692
  -15,091
  -16,474
  -17,834
  -19,165
  -20,465
  -21,734
  -22,975
  -24,192
  -25,391
  -26,578
  -27,760
  -28,947
  -30,146
  -31,365
  -32,612
  -33,896
Prev. year cash balance distribution, $m
  14
  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
  672
  819
  1,027
  1,287
  1,604
  1,976
  2,403
  2,881
  3,403
  3,962
  4,244
  4,852
  5,472
  6,097
  6,720
  7,336
  7,941
  8,534
  9,344
  11,106
  13,017
  15,072
  17,266
  19,594
  22,054
  24,640
  27,351
  30,185
  33,142
  36,221
Discount rate, %
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
  615
  681
  769
  859
  944
  1,015
  1,065
  1,088
  1,081
  1,043
  913
  840
  750
  649
  546
  446
  354
  273
  209
  170
  133
  100
  72
  50
  33
  21
  13
  8
  4
  2
Current shareholders' claim on cash, %
  57.2
  35.6
  23.7
  16.7
  12.3
  9.4
  7.4
  6.1
  5.1
  4.4
  3.9
  3.6
  3.3
  3.1
  3.0
  2.9
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8

Entercom Communications Corp. is a radio broadcasting company. The Company sells advertising time to local, regional and national advertisers and national network advertisers, purchasing spot commercials in varying lengths. It focuses on station-related digital platforms, which allow for audience interaction and participation, and integrated local digital marketing solutions and station events. Its stations are classified by their format, such as news, sports, talk, classic rock, urban, adult contemporary, alternative and country, among others. As of December 31, 2016, it had a portfolio of radio stations in 28 markets across the United States. It operates in various markets, which include Boston, Buffalo, Denver, Kansas City, Miami, Sacramento, San Francisco and Seattle. Its radio stations include KSWD Frequency Modulation (FM), KOSI FM, KYGO FM, KEPN AM, KKFN FM, KQKS FM, KRWZ Amplitude Modulation (AM), WSTR FM, WAXY AM/FM, WLYF FM, WMXJ FM, KBZT FM, KSON FM/KSOQ FM and KIFM FM.

FINANCIAL RATIOS  of  Entercom Communications Corp. (ETM)

Valuation Ratios
P/E Ratio 6.2
Price to Sales 0.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 3.3
Price to Free Cash Flow 3.7
Growth Rates
Sales Growth Rate 11.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -92.3%
Cap. Spend. - 3 Yr. Gr. Rate 11.8%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 110.9%
Total Debt to Equity 112.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.7%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 8.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 30.9%
Gross Margin - 3 Yr. Avg. 31%
EBITDA Margin 21.3%
EBITDA Margin - 3 Yr. Avg. 22.5%
Operating Margin 18.9%
Oper. Margin - 3 Yr. Avg. 20.7%
Pre-Tax Margin 11.5%
Pre-Tax Margin - 3 Yr. Avg. 11.9%
Net Profit Margin 8.3%
Net Profit Margin - 3 Yr. Avg. 7.5%
Effective Tax Rate 28.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 26.3%

ETM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ETM stock intrinsic value calculation we used $1463 million for the last fiscal year's total revenue generated by Entercom Communications Corp.. The default revenue input number comes from 0001 income statement of Entercom Communications Corp.. 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 ETM 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 9.2%, whose default value for ETM is calculated based on our internal credit rating of Entercom Communications Corp., 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 Entercom Communications Corp..
    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 ETM stock the variable cost ratio is equal to 97.5%.

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 ETM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Entercom Communications Corp..

Corporate tax rate of 27% is the nominal tax rate for Entercom Communications Corp.. 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 ETM 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 ETM are equal to 134.9%.

Life of production assets of 81.6 years is the average useful life of capital assets used in Entercom Communications Corp. 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 ETM is equal to 12.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1334.26 million for Entercom Communications Corp. - 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 141.776 million for Entercom Communications Corp. 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 Entercom Communications Corp. at the current share price and the inputted number of shares is $0.8 billion.

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