Intrinsic value of Intelsat S.A. - I

Previous Close

$19.63

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$19.63

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of I 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 2.7

 

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, %
  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
  2,204
  2,255
  2,313
  2,378
  2,450
  2,529
  2,615
  2,708
  2,809
  2,917
  3,032
  3,155
  3,286
  3,425
  3,573
  3,730
  3,895
  4,071
  4,256
  4,452
  4,658
  4,875
  5,105
  5,347
  5,601
  5,869
  6,151
  6,448
  6,760
  7,089
Variable operating expenses, $m
  1,259
  1,275
  1,294
  1,316
  1,339
  1,365
  1,393
  1,424
  1,456
  1,492
  991
  1,031
  1,074
  1,119
  1,168
  1,219
  1,273
  1,330
  1,391
  1,455
  1,522
  1,593
  1,668
  1,747
  1,830
  1,918
  2,010
  2,107
  2,209
  2,317
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
  1,259
  1,275
  1,294
  1,316
  1,339
  1,365
  1,393
  1,424
  1,456
  1,492
  991
  1,031
  1,074
  1,119
  1,168
  1,219
  1,273
  1,330
  1,391
  1,455
  1,522
  1,593
  1,668
  1,747
  1,830
  1,918
  2,010
  2,107
  2,209
  2,317
Operating income, $m
  945
  979
  1,019
  1,062
  1,111
  1,164
  1,222
  1,285
  1,352
  1,425
  2,041
  2,124
  2,212
  2,306
  2,405
  2,511
  2,622
  2,740
  2,865
  2,997
  3,136
  3,282
  3,437
  3,599
  3,771
  3,951
  4,141
  4,341
  4,551
  4,772
EBITDA, $m
  2,014
  2,060
  2,113
  2,173
  2,239
  2,311
  2,390
  2,475
  2,566
  2,665
  2,770
  2,883
  3,002
  3,130
  3,265
  3,408
  3,559
  3,719
  3,889
  4,067
  4,256
  4,455
  4,664
  4,885
  5,118
  5,362
  5,620
  5,891
  6,177
  6,477
Interest expense (income), $m
  870
  1,206
  765
  787
  813
  841
  873
  907
  945
  986
  1,030
  1,077
  1,127
  1,181
  1,238
  1,299
  1,364
  1,432
  1,505
  1,581
  1,662
  1,748
  1,838
  1,933
  2,034
  2,139
  2,251
  2,368
  2,491
  2,621
  2,757
Earnings before tax, $m
  -261
  214
  231
  250
  270
  291
  315
  340
  367
  395
  964
  997
  1,031
  1,068
  1,106
  1,147
  1,190
  1,236
  1,284
  1,334
  1,388
  1,444
  1,503
  1,566
  1,631
  1,700
  1,773
  1,850
  1,930
  2,015
Tax expense, $m
  0
  58
  62
  67
  73
  79
  85
  92
  99
  107
  260
  269
  278
  288
  299
  310
  321
  334
  347
  360
  375
  390
  406
  423
  440
  459
  479
  499
  521
  544
Net income, $m
  -261
  156
  169
  182
  197
  213
  230
  248
  268
  289
  704
  728
  753
  779
  808
  837
  869
  902
  937
  974
  1,013
  1,054
  1,097
  1,143
  1,191
  1,241
  1,294
  1,350
  1,409
  1,471

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
  12,453
  12,740
  13,067
  13,435
  13,842
  14,289
  14,775
  15,302
  15,870
  16,479
  17,130
  17,826
  18,566
  19,353
  20,187
  21,072
  22,008
  22,999
  24,045
  25,150
  26,316
  27,545
  28,841
  30,206
  31,644
  33,158
  34,752
  36,429
  38,193
  40,049
Adjusted assets (=assets-cash), $m
  12,453
  12,740
  13,067
  13,435
  13,842
  14,289
  14,775
  15,302
  15,870
  16,479
  17,130
  17,826
  18,566
  19,353
  20,187
  21,072
  22,008
  22,999
  24,045
  25,150
  26,316
  27,545
  28,841
  30,206
  31,644
  33,158
  34,752
  36,429
  38,193
  40,049
Revenue / Adjusted assets
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
  0.177
Average production assets, $m
  8,588
  8,785
  9,011
  9,264
  9,545
  9,853
  10,189
  10,552
  10,944
  11,364
  11,813
  12,292
  12,803
  13,345
  13,921
  14,531
  15,177
  15,860
  16,581
  17,343
  18,147
  18,995
  19,889
  20,830
  21,822
  22,866
  23,965
  25,121
  26,338
  27,618
Working capital, $m
  -326
  -334
  -342
  -352
  -363
  -374
  -387
  -401
  -416
  -432
  -449
  -467
  -486
  -507
  -529
  -552
  -577
  -602
  -630
  -659
  -689
  -722
  -756
  -791
  -829
  -869
  -910
  -954
  -1,001
  -1,049
Total debt, $m
  8,898
  9,156
  9,450
  9,781
  10,148
  10,550
  10,988
  11,462
  11,973
  12,521
  13,107
  13,733
  14,399
  15,107
  15,858
  16,655
  17,497
  18,389
  19,330
  20,325
  21,374
  22,480
  23,647
  24,876
  26,170
  27,532
  28,967
  30,476
  32,064
  33,734
Total liabilities, $m
  11,208
  11,466
  11,760
  12,091
  12,458
  12,860
  13,298
  13,772
  14,283
  14,831
  15,417
  16,043
  16,709
  17,417
  18,169
  18,965
  19,808
  20,699
  21,641
  22,635
  23,684
  24,791
  25,957
  27,186
  28,480
  29,843
  31,277
  32,786
  34,374
  36,044
Total equity, $m
  1,245
  1,274
  1,307
  1,343
  1,384
  1,429
  1,478
  1,530
  1,587
  1,648
  1,713
  1,783
  1,857
  1,935
  2,019
  2,107
  2,201
  2,300
  2,405
  2,515
  2,632
  2,755
  2,884
  3,021
  3,164
  3,316
  3,475
  3,643
  3,819
  4,005
Total liabilities and equity, $m
  12,453
  12,740
  13,067
  13,434
  13,842
  14,289
  14,776
  15,302
  15,870
  16,479
  17,130
  17,826
  18,566
  19,352
  20,188
  21,072
  22,009
  22,999
  24,046
  25,150
  26,316
  27,546
  28,841
  30,207
  31,644
  33,159
  34,752
  36,429
  38,193
  40,049
Debt-to-equity ratio
  7.140
  7.190
  7.230
  7.280
  7.330
  7.380
  7.440
  7.490
  7.540
  7.600
  7.650
  7.700
  7.760
  7.810
  7.860
  7.900
  7.950
  8.000
  8.040
  8.080
  8.120
  8.160
  8.200
  8.240
  8.270
  8.300
  8.340
  8.370
  8.400
  8.420
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
  -261
  156
  169
  182
  197
  213
  230
  248
  268
  289
  704
  728
  753
  779
  808
  837
  869
  902
  937
  974
  1,013
  1,054
  1,097
  1,143
  1,191
  1,241
  1,294
  1,350
  1,409
  1,471
Depreciation, amort., depletion, $m
  1,069
  1,081
  1,095
  1,110
  1,128
  1,147
  1,167
  1,190
  1,214
  1,240
  729
  759
  790
  824
  859
  897
  937
  979
  1,024
  1,071
  1,120
  1,173
  1,228
  1,286
  1,347
  1,411
  1,479
  1,551
  1,626
  1,705
Funds from operations, $m
  808
  1,237
  1,263
  1,293
  1,325
  1,359
  1,397
  1,438
  1,482
  1,529
  1,433
  1,486
  1,543
  1,603
  1,667
  1,734
  1,806
  1,881
  1,961
  2,045
  2,133
  2,227
  2,325
  2,429
  2,538
  2,653
  2,774
  2,901
  3,035
  3,175
Change in working capital, $m
  -6
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
Cash from operations, $m
  814
  1,245
  1,272
  1,302
  1,335
  1,371
  1,410
  1,452
  1,497
  1,545
  1,450
  1,505
  1,562
  1,624
  1,689
  1,757
  1,830
  1,907
  1,988
  2,074
  2,164
  2,259
  2,359
  2,464
  2,576
  2,692
  2,815
  2,945
  3,081
  3,224
Maintenance CAPEX, $m
  -520
  -530
  -542
  -556
  -572
  -589
  -608
  -629
  -651
  -676
  -701
  -729
  -759
  -790
  -824
  -859
  -897
  -937
  -979
  -1,024
  -1,071
  -1,120
  -1,173
  -1,228
  -1,286
  -1,347
  -1,411
  -1,479
  -1,551
  -1,626
New CAPEX, $m
  -168
  -198
  -226
  -253
  -281
  -308
  -336
  -363
  -391
  -420
  -449
  -479
  -510
  -543
  -576
  -610
  -646
  -683
  -722
  -762
  -804
  -848
  -894
  -942
  -992
  -1,044
  -1,099
  -1,156
  -1,217
  -1,280
Cash from investing activities, $m
  -688
  -728
  -768
  -809
  -853
  -897
  -944
  -992
  -1,042
  -1,096
  -1,150
  -1,208
  -1,269
  -1,333
  -1,400
  -1,469
  -1,543
  -1,620
  -1,701
  -1,786
  -1,875
  -1,968
  -2,067
  -2,170
  -2,278
  -2,391
  -2,510
  -2,635
  -2,768
  -2,906
Free cash flow, $m
  126
  517
  504
  492
  482
  474
  466
  460
  454
  449
  299
  296
  293
  291
  289
  288
  287
  287
  287
  288
  289
  291
  293
  295
  298
  301
  305
  309
  314
  319
Issuance/(repayment) of debt, $m
  -5,131
  258
  295
  331
  367
  402
  438
  474
  511
  548
  586
  626
  666
  708
  751
  796
  843
  891
  942
  994
  1,049
  1,106
  1,166
  1,229
  1,294
  1,363
  1,434
  1,509
  1,588
  1,670
Issuance/(repurchase) of shares, $m
  5,603
  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  
  472
  258
  295
  331
  367
  402
  438
  474
  511
  548
  586
  626
  666
  708
  751
  796
  843
  891
  942
  994
  1,049
  1,106
  1,166
  1,229
  1,294
  1,363
  1,434
  1,509
  1,588
  1,670
Total cash flow (excl. dividends), $m
  599
  775
  799
  823
  849
  876
  904
  934
  965
  997
  886
  922
  959
  999
  1,041
  1,084
  1,130
  1,178
  1,229
  1,282
  1,338
  1,397
  1,459
  1,524
  1,592
  1,664
  1,739
  1,818
  1,901
  1,989
Retained Cash Flow (-), $m
  -5,603
  -29
  -33
  -37
  -41
  -45
  -49
  -53
  -57
  -61
  -65
  -70
  -74
  -79
  -83
  -88
  -94
  -99
  -105
  -110
  -117
  -123
  -130
  -137
  -144
  -151
  -159
  -168
  -176
  -186
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
  -5,004
  746
  766
  787
  808
  831
  855
  881
  908
  936
  821
  852
  885
  920
  957
  996
  1,037
  1,079
  1,125
  1,172
  1,222
  1,274
  1,330
  1,388
  1,448
  1,513
  1,580
  1,651
  1,725
  1,803
Discount rate, %
  15.40
  16.17
  16.98
  17.83
  18.72
  19.65
  20.64
  21.67
  22.75
  23.89
  25.08
  26.34
  27.66
  29.04
  30.49
  32.02
  33.62
  35.30
  37.06
  38.92
  40.86
  42.90
  45.05
  47.30
  49.67
  52.15
  54.76
  57.50
  60.37
  63.39
PV of cash for distribution, $m
  -4,337
  553
  478
  408
  343
  283
  230
  183
  143
  110
  70
  52
  37
  26
  18
  12
  8
  5
  3
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Intelsat S.A. operates in satellite services business. The Company provides satellite services to its communications customers around the world. It provides communications services to media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications in the air and on the seas, multinational corporations and Internet service providers (ISPs). The Company is also a provider of commercial satellite communication services to the United States Government and other select military organizations and their contractors. The Company focuses on business-to-business services, indirectly enable enterprise, government and consumer applications through its customers. The Company has operations in North America, Europe, Latin America and Caribbean, Africa and Middle East, and Asia Pacific.

FINANCIAL RATIOS  of  Intelsat S.A. (I)

Valuation Ratios
P/E Ratio 2.3
Price to Sales 1.1
Price to Book -0.6
Price to Tangible Book
Price to Cash Flow 3.4
Price to Free Cash Flow -74.7
Growth Rates
Sales Growth Rate -7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.2%
Cap. Spend. - 3 Yr. Gr. Rate 3.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -390.7%
Total Debt to Equity -390.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 14.7%
Ret/ On Assets - 3 Yr. Avg. 0.1%
Return On Total Capital 9.6%
Ret/ On T. Cap. - 3 Yr. Avg. -7.2%
Return On Equity -23.9%
Return On Equity - 3 Yr. Avg. 31.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 84.4%
Gross Margin - 3 Yr. Avg. 85.5%
EBITDA Margin 117.7%
EBITDA Margin - 3 Yr. Avg. 31.9%
Operating Margin 89.2%
Oper. Margin - 3 Yr. Avg. 3.2%
Pre-Tax Margin 46.2%
Pre-Tax Margin - 3 Yr. Avg. -36.6%
Net Profit Margin 45.2%
Net Profit Margin - 3 Yr. Avg. -37.4%
Effective Tax Rate 1.6%
Eff/ Tax Rate - 3 Yr. Avg. 3.4%
Payout Ratio 0.5%

I stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the I stock intrinsic value calculation we used $2161 million for the last fiscal year's total revenue generated by Intelsat S.A.. The default revenue input number comes from 0001 income statement of Intelsat S.A.. 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 I 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 15.4%, whose default value for I is calculated based on our internal credit rating of Intelsat S.A., 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 Intelsat S.A..
    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 I stock the variable cost ratio is equal to 57.6%.

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 I 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 8.6% for Intelsat S.A..

Corporate tax rate of 27% is the nominal tax rate for Intelsat S.A.. 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 I 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 I are equal to 389.6%.

Life of production assets of 16.2 years is the average useful life of capital assets used in Intelsat S.A. 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 I is equal to -14.8%. 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 - $-4097.005 million for Intelsat S.A. - 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 138.031 million for Intelsat S.A. 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 Intelsat S.A. at the current share price and the inputted number of shares is $2.7 billion.

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