Intrinsic value of GTT Communications, Inc. - GTT

Previous Close

$33.40

  Intrinsic Value

$325.45

stock screener

  Rating & Target

str. buy

+874%

Previous close

$33.40

 
Intrinsic value

$325.45

 
Up/down potential

+874%

 
Rating

str. buy

We calculate the intrinsic value of GTT 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 1.9

 

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
  2,386
  3,686
  5,512
  7,998
  11,284
  15,512
  20,822
  27,341
  35,181
  44,436
  55,180
  67,463
  81,315
  96,749
  113,760
  132,330
  152,433
  174,036
  197,105
  221,605
  247,503
  274,773
  303,394
  333,353
  364,645
  397,275
  431,256
  466,612
  503,373
  541,582
Variable operating expenses, $m
  2,174
  3,234
  4,724
  6,750
  9,430
  12,878
  17,208
  22,523
  28,916
  36,463
  44,994
  55,010
  66,305
  78,890
  92,761
  107,903
  124,295
  141,911
  160,722
  180,699
  201,817
  224,053
  247,391
  271,820
  297,336
  323,943
  351,652
  380,481
  410,457
  441,613
Fixed operating expenses, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Total operating expenses, $m
  2,173
  3,233
  4,723
  6,749
  9,429
  12,877
  17,207
  22,522
  28,915
  36,462
  44,993
  55,009
  66,304
  78,889
  92,760
  107,902
  124,294
  141,910
  160,720
  180,697
  201,815
  224,051
  247,389
  271,818
  297,334
  323,941
  351,650
  380,479
  410,455
  441,611
Operating income, $m
  212
  452
  790
  1,248
  1,855
  2,636
  3,616
  4,819
  6,266
  7,975
  10,187
  12,454
  15,011
  17,860
  21,000
  24,428
  28,139
  32,126
  36,385
  40,907
  45,688
  50,721
  56,005
  61,535
  67,311
  73,334
  79,607
  86,133
  92,919
  99,972
EBITDA, $m
  681
  1,052
  1,573
  2,281
  3,218
  4,424
  5,938
  7,796
  10,032
  12,670
  15,733
  19,235
  23,185
  27,585
  32,435
  37,730
  43,461
  49,620
  56,197
  63,182
  70,566
  78,341
  86,501
  95,043
  103,964
  113,268
  122,956
  133,036
  143,517
  154,411
Interest expense (income), $m
  26
  213
  372
  607
  936
  1,385
  1,979
  2,742
  3,701
  4,878
  6,293
  7,964
  9,904
  12,121
  14,622
  17,409
  20,480
  23,833
  27,463
  31,363
  35,528
  39,951
  44,627
  49,551
  54,718
  60,127
  65,777
  71,668
  77,803
  84,187
  90,824
Earnings before tax, $m
  -1
  80
  183
  312
  470
  657
  874
  1,118
  1,389
  1,682
  2,223
  2,550
  2,890
  3,238
  3,591
  3,948
  4,306
  4,664
  5,022
  5,379
  5,736
  6,094
  6,454
  6,817
  7,184
  7,557
  7,938
  8,329
  8,732
  9,148
Tax expense, $m
  0
  22
  49
  84
  127
  177
  236
  302
  375
  454
  600
  689
  780
  874
  970
  1,066
  1,163
  1,259
  1,356
  1,452
  1,549
  1,645
  1,743
  1,840
  1,940
  2,040
  2,143
  2,249
  2,358
  2,470
Net income, $m
  -1
  59
  133
  228
  343
  480
  638
  816
  1,014
  1,228
  1,623
  1,862
  2,109
  2,363
  2,621
  2,882
  3,143
  3,405
  3,666
  3,927
  4,188
  4,449
  4,711
  4,976
  5,244
  5,517
  5,795
  6,081
  6,374
  6,678

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
  7,251
  11,203
  16,754
  24,309
  34,297
  47,150
  63,289
  83,103
  106,933
  135,065
  167,720
  205,053
  247,158
  294,070
  345,774
  402,218
  463,321
  528,985
  599,103
  673,570
  752,288
  835,176
  922,170
  1,013,230
  1,108,344
  1,207,523
  1,310,810
  1,418,273
  1,530,011
  1,646,147
Adjusted assets (=assets-cash), $m
  7,251
  11,203
  16,754
  24,309
  34,297
  47,150
  63,289
  83,103
  106,933
  135,065
  167,720
  205,053
  247,158
  294,070
  345,774
  402,218
  463,321
  528,985
  599,103
  673,570
  752,288
  835,176
  922,170
  1,013,230
  1,108,344
  1,207,523
  1,310,810
  1,418,273
  1,530,011
  1,646,147
Revenue / Adjusted assets
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
Average production assets, $m
  3,237
  5,002
  7,480
  10,853
  15,312
  21,050
  28,256
  37,101
  47,740
  60,300
  74,879
  91,547
  110,345
  131,288
  154,372
  179,571
  206,851
  236,167
  267,471
  300,717
  335,861
  372,867
  411,705
  452,360
  494,823
  539,102
  585,215
  633,192
  683,078
  734,927
Working capital, $m
  -282
  -435
  -650
  -944
  -1,331
  -1,830
  -2,457
  -3,226
  -4,151
  -5,243
  -6,511
  -7,961
  -9,595
  -11,416
  -13,424
  -15,615
  -17,987
  -20,536
  -23,258
  -26,149
  -29,205
  -32,423
  -35,800
  -39,336
  -43,028
  -46,878
  -50,888
  -55,060
  -59,398
  -63,907
Total debt, $m
  5,636
  9,193
  14,189
  20,989
  29,977
  41,545
  56,071
  73,903
  95,350
  120,669
  150,058
  183,659
  221,553
  263,773
  310,307
  361,107
  416,100
  475,197
  538,303
  605,323
  676,170
  750,769
  829,063
  911,018
  996,620
  1,085,881
  1,178,839
  1,275,556
  1,376,120
  1,480,643
Total liabilities, $m
  6,526
  10,083
  15,079
  21,878
  30,867
  42,435
  56,960
  74,792
  96,239
  121,558
  150,948
  184,548
  222,443
  264,663
  311,196
  361,996
  416,989
  476,087
  539,193
  606,213
  677,059
  751,658
  829,953
  911,907
  997,509
  1,086,771
  1,179,729
  1,276,446
  1,377,010
  1,481,532
Total equity, $m
  725
  1,120
  1,675
  2,431
  3,430
  4,715
  6,329
  8,310
  10,693
  13,506
  16,772
  20,505
  24,716
  29,407
  34,577
  40,222
  46,332
  52,899
  59,910
  67,357
  75,229
  83,518
  92,217
  101,323
  110,834
  120,752
  131,081
  141,827
  153,001
  164,615
Total liabilities and equity, $m
  7,251
  11,203
  16,754
  24,309
  34,297
  47,150
  63,289
  83,102
  106,932
  135,064
  167,720
  205,053
  247,159
  294,070
  345,773
  402,218
  463,321
  528,986
  599,103
  673,570
  752,288
  835,176
  922,170
  1,013,230
  1,108,343
  1,207,523
  1,310,810
  1,418,273
  1,530,011
  1,646,147
Debt-to-equity ratio
  7.770
  8.210
  8.470
  8.630
  8.740
  8.810
  8.860
  8.890
  8.920
  8.930
  8.950
  8.960
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  59
  133
  228
  343
  480
  638
  816
  1,014
  1,228
  1,623
  1,862
  2,109
  2,363
  2,621
  2,882
  3,143
  3,405
  3,666
  3,927
  4,188
  4,449
  4,711
  4,976
  5,244
  5,517
  5,795
  6,081
  6,374
  6,678
Depreciation, amort., depletion, $m
  469
  599
  783
  1,033
  1,363
  1,788
  2,322
  2,977
  3,765
  4,696
  5,547
  6,781
  8,174
  9,725
  11,435
  13,302
  15,322
  17,494
  19,813
  22,275
  24,879
  27,620
  30,497
  33,508
  36,654
  39,934
  43,349
  46,903
  50,598
  54,439
Funds from operations, $m
  468
  658
  916
  1,261
  1,706
  2,268
  2,960
  3,794
  4,779
  5,923
  7,169
  8,643
  10,283
  12,088
  14,056
  16,183
  18,465
  20,899
  23,479
  26,202
  29,066
  32,069
  35,208
  38,484
  41,898
  45,450
  49,144
  52,984
  56,973
  61,117
Change in working capital, $m
  -106
  -153
  -216
  -293
  -388
  -499
  -627
  -769
  -925
  -1,092
  -1,268
  -1,449
  -1,635
  -1,821
  -2,007
  -2,191
  -2,372
  -2,549
  -2,722
  -2,891
  -3,056
  -3,218
  -3,377
  -3,535
  -3,692
  -3,850
  -4,010
  -4,172
  -4,338
  -4,509
Cash from operations, $m
  573
  812
  1,132
  1,554
  2,094
  2,767
  3,586
  4,563
  5,704
  7,015
  8,437
  10,092
  11,918
  13,910
  16,064
  18,375
  20,838
  23,448
  26,201
  29,093
  32,122
  35,286
  38,585
  42,019
  45,590
  49,301
  53,154
  57,156
  61,311
  65,626
Maintenance CAPEX, $m
  -150
  -240
  -370
  -554
  -804
  -1,134
  -1,559
  -2,093
  -2,748
  -3,536
  -4,467
  -5,547
  -6,781
  -8,174
  -9,725
  -11,435
  -13,302
  -15,322
  -17,494
  -19,813
  -22,275
  -24,879
  -27,620
  -30,497
  -33,508
  -36,654
  -39,934
  -43,349
  -46,903
  -50,598
New CAPEX, $m
  -1,214
  -1,764
  -2,478
  -3,373
  -4,459
  -5,738
  -7,205
  -8,846
  -10,639
  -12,560
  -14,579
  -16,668
  -18,798
  -20,944
  -23,083
  -25,200
  -27,280
  -29,316
  -31,304
  -33,246
  -35,144
  -37,005
  -38,839
  -40,654
  -42,464
  -44,279
  -46,113
  -47,977
  -49,885
  -51,850
Cash from investing activities, $m
  -1,364
  -2,004
  -2,848
  -3,927
  -5,263
  -6,872
  -8,764
  -10,939
  -13,387
  -16,096
  -19,046
  -22,215
  -25,579
  -29,118
  -32,808
  -36,635
  -40,582
  -44,638
  -48,798
  -53,059
  -57,419
  -61,884
  -66,459
  -71,151
  -75,972
  -80,933
  -86,047
  -91,326
  -96,788
  -102,448
Free cash flow, $m
  -791
  -1,193
  -1,717
  -2,373
  -3,169
  -4,106
  -5,178
  -6,376
  -7,683
  -9,081
  -10,609
  -12,122
  -13,661
  -15,208
  -16,745
  -18,260
  -19,744
  -21,190
  -22,598
  -23,966
  -25,297
  -26,598
  -27,873
  -29,132
  -30,382
  -31,632
  -32,892
  -34,171
  -35,478
  -36,822
Issuance/(repayment) of debt, $m
  2,403
  3,557
  4,996
  6,800
  8,989
  11,568
  14,525
  17,832
  21,447
  25,319
  29,390
  33,600
  37,894
  42,220
  46,534
  50,800
  54,993
  59,098
  63,106
  67,020
  70,846
  74,599
  78,295
  81,955
  85,602
  89,262
  92,958
  96,717
  100,564
  104,523
Issuance/(repurchase) of shares, $m
  311
  336
  422
  528
  656
  806
  976
  1,165
  1,369
  1,586
  1,643
  1,872
  2,101
  2,328
  2,549
  2,763
  2,967
  3,162
  3,346
  3,520
  3,684
  3,840
  3,988
  4,130
  4,267
  4,401
  4,534
  4,666
  4,799
  4,936
Cash from financing (excl. dividends), $m  
  2,714
  3,893
  5,418
  7,328
  9,645
  12,374
  15,501
  18,997
  22,816
  26,905
  31,033
  35,472
  39,995
  44,548
  49,083
  53,563
  57,960
  62,260
  66,452
  70,540
  74,530
  78,439
  82,283
  86,085
  89,869
  93,663
  97,492
  101,383
  105,363
  109,459
Total cash flow (excl. dividends), $m
  1,924
  2,701
  3,701
  4,954
  6,476
  8,268
  10,323
  12,621
  15,133
  17,824
  20,424
  23,350
  26,334
  29,340
  32,338
  35,302
  38,216
  41,069
  43,855
  46,574
  49,233
  51,841
  54,409
  56,953
  59,488
  62,031
  64,600
  67,212
  69,885
  72,636
Retained Cash Flow (-), $m
  -311
  -395
  -555
  -756
  -999
  -1,285
  -1,614
  -1,981
  -2,383
  -2,813
  -3,266
  -3,733
  -4,210
  -4,691
  -5,170
  -5,644
  -6,110
  -6,566
  -7,012
  -7,447
  -7,872
  -8,289
  -8,699
  -9,106
  -9,511
  -9,918
  -10,329
  -10,746
  -11,174
  -11,614
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
  1,612
  2,305
  3,146
  4,199
  5,477
  6,983
  8,709
  10,640
  12,750
  15,011
  17,158
  19,617
  22,124
  24,649
  27,167
  29,658
  32,106
  34,502
  36,843
  39,128
  41,362
  43,552
  45,710
  47,847
  49,976
  52,113
  54,271
  56,465
  58,711
  61,023
Discount rate, %
  13.60
  14.28
  14.99
  15.74
  16.53
  17.36
  18.23
  19.14
  20.09
  21.10
  22.15
  23.26
  24.42
  25.64
  26.93
  28.27
  29.69
  31.17
  32.73
  34.37
  36.08
  37.89
  39.78
  41.77
  43.86
  46.05
  48.36
  50.78
  53.31
  55.98
PV of cash for distribution, $m
  1,419
  1,765
  2,069
  2,340
  2,549
  2,673
  2,698
  2,622
  2,454
  2,213
  1,899
  1,595
  1,292
  1,009
  760
  552
  387
  261
  170
  106
  64
  37
  21
  11
  6
  3
  1
  1
  0
  0
Current shareholders' claim on cash, %
  85.7
  77.7
  71.7
  67.0
  63.2
  60.1
  57.4
  55.2
  53.2
  51.5
  50.2
  49.0
  47.9
  46.9
  46.0
  45.2
  44.5
  43.8
  43.2
  42.6
  42.1
  41.7
  41.2
  40.8
  40.4
  40.1
  39.8
  39.4
  39.1
  38.9

GTT Communications, Inc. provides cloud networking services to a range of clients. The Company offers a portfolio of global communications services, wide area network (WAN) services; Internet services; managed network and security services, and voice and unified communication services. It provides Layer 2 (Ethernet) and Layer 3 (multiprotocol label switching (MPLS)) WAN solutions for multinational clients. It offers customers with high-bandwidth global Internet connectivity and Internet protocol (IP) transit with availability and packet delivery. The Company offers managed network services, including managed equipment, managed security services and managed remote access. Its Session Initiation Protocol (SIP) Trunking service is an enterprise-built unified communications offering that integrates voice, video and chat onto a single IP connection. As of December 31, 2016, it had provided services to multinational enterprises, carriers and government customers in over 100 countries.

FINANCIAL RATIOS  of  GTT Communications, Inc. (GTT)

Valuation Ratios
P/E Ratio 248.7
Price to Sales 2.4
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 20.4
Price to Free Cash Flow 73.1
Growth Rates
Sales Growth Rate 41.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 214.3%
Cap. Spend. - 3 Yr. Gr. Rate 40.6%
Financial Strength
Quick Ratio 6
Current Ratio 0.1
LT Debt to Equity 567.2%
Total Debt to Equity 571.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. -1.1%
Return On Total Capital 0.7%
Ret/ On T. Cap. - 3 Yr. Avg. -3%
Return On Equity 4.2%
Return On Equity - 3 Yr. Avg. -9.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 47.5%
Gross Margin - 3 Yr. Avg. 43.5%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 12.3%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 1.7%
Pre-Tax Margin - 3 Yr. Avg. -4.2%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. -1.7%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 87.2%
Payout Ratio 0%

GTT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GTT stock intrinsic value calculation we used $1491 million for the last fiscal year's total revenue generated by GTT Communications, Inc.. The default revenue input number comes from 0001 income statement of GTT Communications, Inc.. 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 GTT stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 13.6%, whose default value for GTT is calculated based on our internal credit rating of GTT Communications, Inc., 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 GTT Communications, Inc..
    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 GTT stock the variable cost ratio is equal to 96.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $-1 million in the base year in the intrinsic value calculation for GTT 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 6.6% for GTT Communications, Inc..

Corporate tax rate of 27% is the nominal tax rate for GTT Communications, Inc.. 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 GTT 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 GTT are equal to 135.7%.

Life of production assets of 13.5 years is the average useful life of capital assets used in GTT Communications, Inc. 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 GTT is equal to -11.8%. 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 - $414.7 million for GTT Communications, Inc. - 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 55.884 million for GTT Communications, Inc. 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 GTT Communications, Inc. at the current share price and the inputted number of shares is $1.9 billion.

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