Intrinsic value of Internet Gold Golden Lines Ltd. - IGLD

Previous Close

$0.57

  Intrinsic Value

$16.43

stock screener

  Rating & Target

str. buy

+999%

Previous close

$0.57

 
Intrinsic value

$16.43

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of IGLD 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 0.0

 

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, %
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
Revenue, $m
  3,036
  3,262
  3,496
  3,740
  3,993
  4,256
  4,530
  4,815
  5,112
  5,421
  5,743
  6,079
  6,429
  6,795
  7,176
  7,575
  7,992
  8,427
  8,883
  9,359
  9,858
  10,380
  10,927
  11,499
  12,099
  12,727
  13,386
  14,076
  14,800
  15,559
Variable operating expenses, $m
  2,462
  2,630
  2,805
  2,986
  3,175
  3,371
  3,575
  3,788
  4,009
  4,239
  4,279
  4,529
  4,790
  5,063
  5,347
  5,644
  5,955
  6,279
  6,618
  6,974
  7,345
  7,734
  8,141
  8,568
  9,015
  9,483
  9,974
  10,488
  11,027
  11,593
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
  2,462
  2,630
  2,805
  2,986
  3,175
  3,371
  3,575
  3,788
  4,009
  4,239
  4,279
  4,529
  4,790
  5,063
  5,347
  5,644
  5,955
  6,279
  6,618
  6,974
  7,345
  7,734
  8,141
  8,568
  9,015
  9,483
  9,974
  10,488
  11,027
  11,593
Operating income, $m
  574
  632
  691
  753
  818
  885
  955
  1,028
  1,103
  1,182
  1,464
  1,550
  1,639
  1,732
  1,829
  1,931
  2,037
  2,148
  2,264
  2,386
  2,513
  2,646
  2,785
  2,931
  3,084
  3,244
  3,412
  3,588
  3,773
  3,966
EBITDA, $m
  1,272
  1,367
  1,465
  1,567
  1,673
  1,783
  1,898
  2,018
  2,142
  2,271
  2,406
  2,547
  2,694
  2,847
  3,007
  3,174
  3,349
  3,531
  3,722
  3,922
  4,131
  4,349
  4,578
  4,818
  5,070
  5,333
  5,609
  5,898
  6,201
  6,519
Interest expense (income), $m
  262
  235
  228
  251
  274
  298
  323
  349
  376
  404
  434
  464
  496
  529
  564
  600
  638
  678
  719
  762
  807
  854
  904
  955
  1,009
  1,066
  1,125
  1,188
  1,253
  1,321
  1,393
Earnings before tax, $m
  339
  403
  441
  480
  520
  562
  606
  651
  699
  748
  1,000
  1,053
  1,109
  1,168
  1,229
  1,293
  1,360
  1,429
  1,502
  1,579
  1,659
  1,742
  1,830
  1,922
  2,018
  2,119
  2,225
  2,335
  2,452
  2,573
Tax expense, $m
  92
  109
  119
  129
  140
  152
  164
  176
  189
  202
  270
  284
  300
  315
  332
  349
  367
  386
  406
  426
  448
  470
  494
  519
  545
  572
  601
  631
  662
  695
Net income, $m
  248
  294
  322
  350
  380
  410
  442
  476
  510
  546
  730
  769
  810
  853
  897
  944
  993
  1,043
  1,097
  1,153
  1,211
  1,272
  1,336
  1,403
  1,473
  1,547
  1,624
  1,705
  1,790
  1,879

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
  6,183
  6,643
  7,120
  7,616
  8,132
  8,668
  9,226
  9,807
  10,411
  11,040
  11,696
  12,380
  13,094
  13,838
  14,616
  15,428
  16,276
  17,163
  18,091
  19,062
  20,077
  21,141
  22,254
  23,420
  24,641
  25,921
  27,262
  28,668
  30,142
  31,688
Adjusted assets (=assets-cash), $m
  6,183
  6,643
  7,120
  7,616
  8,132
  8,668
  9,226
  9,807
  10,411
  11,040
  11,696
  12,380
  13,094
  13,838
  14,616
  15,428
  16,276
  17,163
  18,091
  19,062
  20,077
  21,141
  22,254
  23,420
  24,641
  25,921
  27,262
  28,668
  30,142
  31,688
Revenue / Adjusted assets
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
Average production assets, $m
  3,039
  3,265
  3,500
  3,743
  3,997
  4,260
  4,535
  4,820
  5,117
  5,426
  5,749
  6,085
  6,435
  6,801
  7,184
  7,583
  8,000
  8,436
  8,892
  9,369
  9,868
  10,390
  10,938
  11,511
  12,111
  12,740
  13,399
  14,090
  14,815
  15,574
Working capital, $m
  27
  29
  31
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  115
  120
  127
  133
  140
Total debt, $m
  4,227
  4,641
  5,070
  5,517
  5,981
  6,464
  6,966
  7,488
  8,032
  8,599
  9,189
  9,804
  10,447
  11,117
  11,816
  12,547
  13,311
  14,109
  14,944
  15,818
  16,732
  17,689
  18,691
  19,740
  20,839
  21,991
  23,198
  24,464
  25,790
  27,181
Total liabilities, $m
  5,565
  5,979
  6,408
  6,855
  7,319
  7,802
  8,304
  8,826
  9,370
  9,936
  10,527
  11,142
  11,784
  12,455
  13,154
  13,885
  14,649
  15,447
  16,282
  17,156
  18,070
  19,027
  20,028
  21,078
  22,177
  23,329
  24,536
  25,801
  27,128
  28,519
Total equity, $m
  618
  664
  712
  762
  813
  867
  923
  981
  1,041
  1,104
  1,170
  1,238
  1,309
  1,384
  1,462
  1,543
  1,628
  1,716
  1,809
  1,906
  2,008
  2,114
  2,225
  2,342
  2,464
  2,592
  2,726
  2,867
  3,014
  3,169
Total liabilities and equity, $m
  6,183
  6,643
  7,120
  7,617
  8,132
  8,669
  9,227
  9,807
  10,411
  11,040
  11,697
  12,380
  13,093
  13,839
  14,616
  15,428
  16,277
  17,163
  18,091
  19,062
  20,078
  21,141
  22,253
  23,420
  24,641
  25,921
  27,262
  28,668
  30,142
  31,688
Debt-to-equity ratio
  6.840
  6.990
  7.120
  7.240
  7.350
  7.460
  7.550
  7.640
  7.710
  7.790
  7.860
  7.920
  7.980
  8.030
  8.080
  8.130
  8.180
  8.220
  8.260
  8.300
  8.330
  8.370
  8.400
  8.430
  8.460
  8.480
  8.510
  8.530
  8.560
  8.580
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
  248
  294
  322
  350
  380
  410
  442
  476
  510
  546
  730
  769
  810
  853
  897
  944
  993
  1,043
  1,097
  1,153
  1,211
  1,272
  1,336
  1,403
  1,473
  1,547
  1,624
  1,705
  1,790
  1,879
Depreciation, amort., depletion, $m
  698
  735
  774
  814
  855
  898
  943
  990
  1,039
  1,089
  942
  998
  1,055
  1,115
  1,178
  1,243
  1,311
  1,383
  1,458
  1,536
  1,618
  1,703
  1,793
  1,887
  1,985
  2,089
  2,197
  2,310
  2,429
  2,553
Funds from operations, $m
  946
  1,030
  1,095
  1,164
  1,235
  1,309
  1,386
  1,466
  1,549
  1,636
  1,672
  1,766
  1,865
  1,968
  2,075
  2,187
  2,304
  2,426
  2,554
  2,688
  2,829
  2,975
  3,129
  3,290
  3,459
  3,635
  3,821
  4,015
  4,218
  4,432
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
Cash from operations, $m
  944
  1,027
  1,093
  1,161
  1,232
  1,306
  1,383
  1,463
  1,546
  1,633
  1,669
  1,763
  1,862
  1,964
  2,071
  2,183
  2,300
  2,422
  2,550
  2,684
  2,824
  2,971
  3,124
  3,285
  3,453
  3,630
  3,815
  4,009
  4,212
  4,425
Maintenance CAPEX, $m
  -463
  -498
  -535
  -574
  -614
  -655
  -698
  -743
  -790
  -839
  -890
  -942
  -998
  -1,055
  -1,115
  -1,178
  -1,243
  -1,311
  -1,383
  -1,458
  -1,536
  -1,618
  -1,703
  -1,793
  -1,887
  -1,985
  -2,089
  -2,197
  -2,310
  -2,429
New CAPEX, $m
  -216
  -226
  -235
  -244
  -253
  -264
  -274
  -285
  -297
  -309
  -322
  -336
  -351
  -366
  -382
  -399
  -417
  -436
  -456
  -477
  -499
  -523
  -547
  -573
  -600
  -629
  -659
  -691
  -724
  -760
Cash from investing activities, $m
  -679
  -724
  -770
  -818
  -867
  -919
  -972
  -1,028
  -1,087
  -1,148
  -1,212
  -1,278
  -1,349
  -1,421
  -1,497
  -1,577
  -1,660
  -1,747
  -1,839
  -1,935
  -2,035
  -2,141
  -2,250
  -2,366
  -2,487
  -2,614
  -2,748
  -2,888
  -3,034
  -3,189
Free cash flow, $m
  265
  303
  323
  344
  365
  387
  410
  434
  459
  485
  457
  485
  514
  543
  574
  607
  640
  675
  711
  749
  789
  830
  874
  919
  966
  1,015
  1,067
  1,121
  1,177
  1,237
Issuance/(repayment) of debt, $m
  -123
  413
  430
  447
  464
  483
  502
  522
  544
  567
  590
  616
  642
  670
  700
  731
  764
  798
  835
  873
  914
  957
  1,002
  1,049
  1,099
  1,152
  1,207
  1,265
  1,327
  1,391
Issuance/(repurchase) of shares, $m
  320
  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  
  197
  413
  430
  447
  464
  483
  502
  522
  544
  567
  590
  616
  642
  670
  700
  731
  764
  798
  835
  873
  914
  957
  1,002
  1,049
  1,099
  1,152
  1,207
  1,265
  1,327
  1,391
Total cash flow (excl. dividends), $m
  461
  717
  753
  790
  829
  870
  913
  957
  1,003
  1,051
  1,048
  1,100
  1,156
  1,213
  1,274
  1,337
  1,404
  1,473
  1,546
  1,623
  1,703
  1,787
  1,876
  1,968
  2,065
  2,167
  2,274
  2,386
  2,504
  2,628
Retained Cash Flow (-), $m
  -567
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -66
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -106
  -111
  -117
  -122
  -128
  -134
  -141
  -147
  -155
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
  -106
  671
  705
  741
  778
  816
  857
  899
  942
  988
  982
  1,032
  1,084
  1,139
  1,196
  1,256
  1,319
  1,385
  1,454
  1,526
  1,602
  1,681
  1,764
  1,852
  1,943
  2,039
  2,140
  2,246
  2,357
  2,473
Discount rate, %
  9.40
  9.87
  10.36
  10.88
  11.43
  12.00
  12.60
  13.23
  13.89
  14.58
  15.31
  16.08
  16.88
  17.73
  18.61
  19.54
  20.52
  21.54
  22.62
  23.75
  24.94
  26.19
  27.50
  28.87
  30.32
  31.83
  33.42
  35.09
  36.85
  38.69
PV of cash for distribution, $m
  -97
  556
  525
  490
  453
  414
  373
  333
  292
  253
  205
  172
  143
  116
  92
  72
  55
  41
  30
  21
  15
  10
  7
  4
  3
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0
  10.0

Internet Gold-Golden Lines Ltd. is a communications company. The Company's subsidiary is B Communications Ltd. (B Communications). Its principal asset is its controlling interest through B Communications in Bezeq-The Israel Telecommunications Corp., Ltd. (Bezeq). Its segments include Domestic Fixed-Line Communications (Bezeq), which is the provider of fixed-line telephony and fixed-line broadband Internet infrastructure access services; Cellular Communications (Pelephone Communications Ltd.), which is a cellular telephony services provider; International Communications and Internet Services (Bezeq International Ltd.), which is the provider of Internet service provider (ISP) services and provider of international telephony and international and domestic data transfer, and network services, and Multi-Channel Television (DBS Satellite Services (1998) Ltd.), which offers nationwide coverage through its Direct to Home technology and provides multi-channel pay television broadcasts.

FINANCIAL RATIOS  of  Internet Gold Golden Lines Ltd. (IGLD)

Valuation Ratios
P/E Ratio -0.2
Price to Sales 0
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate 1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.3%
Cap. Spend. - 3 Yr. Gr. Rate 2.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 6367.3%
Total Debt to Equity 7501.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 2.1%
Return On Total Capital -1.4%
Ret/ On T. Cap. - 3 Yr. Avg. -0.5%
Return On Equity -407.4%
Return On Equity - 3 Yr. Avg. -131.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 39.8%
EBITDA Margin - 3 Yr. Avg. 43.9%
Operating Margin 18.5%
Oper. Margin - 3 Yr. Avg. 22.4%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 14%
Net Profit Margin -2%
Net Profit Margin - 3 Yr. Avg. -0.8%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

IGLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IGLD stock intrinsic value calculation we used $2819 million for the last fiscal year's total revenue generated by Internet Gold Golden Lines Ltd.. The default revenue input number comes from 0001 income statement of Internet Gold Golden Lines Ltd.. 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 IGLD stock valuation model: a) initial revenue growth rate of 7.7% 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 9.4%, whose default value for IGLD is calculated based on our internal credit rating of Internet Gold Golden Lines Ltd., 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 Internet Gold Golden Lines Ltd..
    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 IGLD stock the variable cost ratio is equal to 81.6%.

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 IGLD 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 Internet Gold Golden Lines Ltd..

Corporate tax rate of 27% is the nominal tax rate for Internet Gold Golden Lines Ltd.. 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 IGLD 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 IGLD are equal to 100.1%.

Life of production assets of 6.1 years is the average useful life of capital assets used in Internet Gold Golden Lines Ltd. 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 IGLD is equal to 0.9%. 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 - $50.9792626728 million for Internet Gold Golden Lines Ltd. - 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 27.998 million for Internet Gold Golden Lines Ltd. 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 Internet Gold Golden Lines Ltd. at the current share price and the inputted number of shares is $0.0 billion.

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