Intrinsic value of Orange ADR - ORAN

Previous Close

$17.42

  Intrinsic Value

$21.85

stock screener

  Rating & Target

buy

+25%

Previous close

$17.42

 
Intrinsic value

$21.85

 
Up/down potential

+25%

 
Rating

buy

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

We calculate the intrinsic value of ORAN 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 2016), $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 46.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.70
  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
  43,186
  44,050
  45,063
  46,221
  47,521
  48,962
  50,543
  52,264
  54,127
  56,135
  58,289
  60,594
  63,053
  65,671
  68,454
  71,407
  74,536
  77,849
  81,352
  85,053
  88,961
  93,084
  97,433
  102,017
  106,846
  111,933
  117,289
  122,926
  128,858
  135,098
  141,662
Variable operating expenses, $m
 
  38,795
  39,621
  40,565
  41,626
  42,801
  44,090
  45,494
  47,014
  48,651
  50,408
  49,422
  51,428
  53,564
  55,833
  58,242
  60,794
  63,496
  66,353
  69,372
  72,559
  75,923
  79,470
  83,208
  87,148
  91,296
  95,665
  100,262
  105,101
  110,191
  115,544
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
  38,883
  38,795
  39,621
  40,565
  41,626
  42,801
  44,090
  45,494
  47,014
  48,651
  50,408
  49,422
  51,428
  53,564
  55,833
  58,242
  60,794
  63,496
  66,353
  69,372
  72,559
  75,923
  79,470
  83,208
  87,148
  91,296
  95,665
  100,262
  105,101
  110,191
  115,544
Operating income, $m
  4,303
  5,255
  5,442
  5,655
  5,895
  6,161
  6,452
  6,770
  7,113
  7,483
  7,880
  11,171
  11,625
  12,108
  12,621
  13,165
  13,742
  14,353
  14,998
  15,681
  16,401
  17,162
  17,963
  18,808
  19,699
  20,637
  21,624
  22,663
  23,757
  24,908
  26,118
EBITDA, $m
  11,404
  12,425
  12,711
  13,037
  13,404
  13,811
  14,256
  14,742
  15,267
  15,834
  16,441
  17,091
  17,785
  18,524
  19,309
  20,141
  21,024
  21,958
  22,947
  23,991
  25,093
  26,256
  27,483
  28,776
  30,138
  31,573
  33,083
  34,673
  36,346
  38,107
  39,958
Interest expense (income), $m
  1,408
  1,165
  1,209
  1,260
  1,319
  1,384
  1,457
  1,537
  1,624
  1,718
  1,819
  1,928
  2,044
  2,168
  2,300
  2,441
  2,590
  2,747
  2,915
  3,091
  3,278
  3,475
  3,683
  3,903
  4,134
  4,378
  4,634
  4,904
  5,189
  5,488
  5,803
Earnings before tax, $m
  2,090
  4,091
  4,233
  4,395
  4,576
  4,776
  4,995
  5,233
  5,489
  5,766
  6,061
  9,244
  9,581
  9,940
  10,320
  10,725
  11,152
  11,605
  12,084
  12,590
  13,123
  13,686
  14,280
  14,906
  15,565
  16,259
  16,990
  17,759
  18,568
  19,419
  20,315
Tax expense, $m
  1,024
  1,104
  1,143
  1,187
  1,236
  1,290
  1,349
  1,413
  1,482
  1,557
  1,637
  2,496
  2,587
  2,684
  2,787
  2,896
  3,011
  3,133
  3,263
  3,399
  3,543
  3,695
  3,856
  4,025
  4,203
  4,390
  4,587
  4,795
  5,013
  5,243
  5,485
Net income, $m
  3,098
  2,986
  3,090
  3,208
  3,341
  3,487
  3,646
  3,820
  4,007
  4,209
  4,425
  6,748
  6,994
  7,256
  7,534
  7,829
  8,141
  8,472
  8,821
  9,190
  9,580
  9,991
  10,424
  10,881
  11,362
  11,869
  12,403
  12,964
  13,555
  14,176
  14,830

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  8,667
  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
  99,915
  93,128
  95,270
  97,719
  100,468
  103,513
  106,855
  110,495
  114,434
  118,678
  123,232
  128,105
  133,304
  138,840
  144,723
  150,966
  157,582
  164,585
  171,991
  179,816
  188,078
  196,796
  205,990
  215,680
  225,891
  236,645
  247,968
  259,885
  272,426
  285,620
  299,497
Adjusted assets (=assets-cash), $m
  91,248
  93,128
  95,270
  97,719
  100,468
  103,513
  106,855
  110,495
  114,434
  118,678
  123,232
  128,105
  133,304
  138,840
  144,723
  150,966
  157,582
  164,585
  171,991
  179,816
  188,078
  196,796
  205,990
  215,680
  225,891
  236,645
  247,968
  259,885
  272,426
  285,620
  299,497
Revenue / Adjusted assets
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
Average production assets, $m
  42,198
  43,037
  44,026
  45,158
  46,428
  47,836
  49,380
  51,062
  52,882
  54,843
  56,948
  59,200
  61,603
  64,161
  66,880
  69,765
  72,822
  76,058
  79,480
  83,097
  86,915
  90,943
  95,192
  99,670
  104,389
  109,359
  114,591
  120,098
  125,894
  131,991
  138,404
Working capital, $m
  -6,926
  -6,652
  -6,804
  -6,979
  -7,176
  -7,393
  -7,632
  -7,892
  -8,173
  -8,476
  -8,802
  -9,150
  -9,521
  -9,916
  -10,337
  -10,782
  -11,255
  -11,755
  -12,284
  -12,843
  -13,433
  -14,056
  -14,712
  -15,405
  -16,134
  -16,902
  -17,711
  -18,562
  -19,457
  -20,400
  -21,391
Total debt, $m
  40,140
  32,682
  34,063
  35,643
  37,416
  39,380
  41,536
  43,883
  46,424
  49,161
  52,099
  55,242
  58,595
  62,166
  65,960
  69,987
  74,254
  78,771
  83,548
  88,595
  93,924
  99,547
  105,477
  111,728
  118,314
  125,250
  132,553
  140,240
  148,329
  156,839
  165,790
Total liabilities, $m
  67,526
  60,068
  61,449
  63,029
  64,802
  66,766
  68,922
  71,269
  73,810
  76,547
  79,485
  82,628
  85,981
  89,552
  93,346
  97,373
  101,640
  106,157
  110,934
  115,981
  121,310
  126,933
  132,863
  139,114
  145,700
  152,636
  159,939
  167,626
  175,715
  184,225
  193,176
Total equity, $m
  32,389
  33,061
  33,821
  34,690
  35,666
  36,747
  37,934
  39,226
  40,624
  42,131
  43,747
  45,477
  47,323
  49,288
  51,377
  53,593
  55,942
  58,428
  61,057
  63,835
  66,768
  69,862
  73,126
  76,567
  80,191
  84,009
  88,028
  92,259
  96,711
  101,395
  106,322
Total liabilities and equity, $m
  99,915
  93,129
  95,270
  97,719
  100,468
  103,513
  106,856
  110,495
  114,434
  118,678
  123,232
  128,105
  133,304
  138,840
  144,723
  150,966
  157,582
  164,585
  171,991
  179,816
  188,078
  196,795
  205,989
  215,681
  225,891
  236,645
  247,967
  259,885
  272,426
  285,620
  299,498
Debt-to-equity ratio
  1.239
  0.990
  1.010
  1.030
  1.050
  1.070
  1.090
  1.120
  1.140
  1.170
  1.190
  1.210
  1.240
  1.260
  1.280
  1.310
  1.330
  1.350
  1.370
  1.390
  1.410
  1.420
  1.440
  1.460
  1.480
  1.490
  1.510
  1.520
  1.530
  1.550
  1.560
Adjusted equity ratio
  0.269
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,098
  2,986
  3,090
  3,208
  3,341
  3,487
  3,646
  3,820
  4,007
  4,209
  4,425
  6,748
  6,994
  7,256
  7,534
  7,829
  8,141
  8,472
  8,821
  9,190
  9,580
  9,991
  10,424
  10,881
  11,362
  11,869
  12,403
  12,964
  13,555
  14,176
  14,830
Depreciation, amort., depletion, $m
  7,101
  7,170
  7,269
  7,382
  7,509
  7,650
  7,804
  7,972
  8,154
  8,350
  8,561
  5,920
  6,160
  6,416
  6,688
  6,976
  7,282
  7,606
  7,948
  8,310
  8,691
  9,094
  9,519
  9,967
  10,439
  10,936
  11,459
  12,010
  12,589
  13,199
  13,840
Funds from operations, $m
  4,452
  10,156
  10,359
  10,590
  10,850
  11,136
  11,451
  11,792
  12,162
  12,559
  12,986
  12,668
  13,154
  13,672
  14,222
  14,805
  15,423
  16,078
  16,769
  17,500
  18,272
  19,085
  19,944
  20,848
  21,801
  22,805
  23,862
  24,974
  26,144
  27,375
  28,670
Change in working capital, $m
  -4,783
  -130
  -153
  -175
  -196
  -218
  -239
  -260
  -281
  -303
  -325
  -348
  -371
  -395
  -420
  -446
  -473
  -500
  -529
  -559
  -590
  -623
  -657
  -692
  -729
  -768
  -809
  -851
  -896
  -942
  -991
Cash from operations, $m
  9,235
  10,286
  10,512
  10,765
  11,046
  11,354
  11,689
  12,052
  12,443
  12,862
  13,311
  13,016
  13,526
  14,067
  14,642
  15,251
  15,896
  16,578
  17,298
  18,059
  18,862
  19,708
  20,600
  21,540
  22,531
  23,573
  24,670
  25,825
  27,040
  28,318
  29,661
Maintenance CAPEX, $m
  0
  -4,220
  -4,304
  -4,403
  -4,516
  -4,643
  -4,784
  -4,938
  -5,106
  -5,288
  -5,484
  -5,695
  -5,920
  -6,160
  -6,416
  -6,688
  -6,976
  -7,282
  -7,606
  -7,948
  -8,310
  -8,691
  -9,094
  -9,519
  -9,967
  -10,439
  -10,936
  -11,459
  -12,010
  -12,589
  -13,199
New CAPEX, $m
  -8,963
  -839
  -990
  -1,131
  -1,270
  -1,408
  -1,544
  -1,682
  -1,820
  -1,961
  -2,105
  -2,252
  -2,403
  -2,558
  -2,719
  -2,885
  -3,057
  -3,236
  -3,422
  -3,616
  -3,818
  -4,029
  -4,249
  -4,478
  -4,719
  -4,970
  -5,232
  -5,507
  -5,795
  -6,097
  -6,413
Cash from investing activities, $m
  -5,149
  -5,059
  -5,294
  -5,534
  -5,786
  -6,051
  -6,328
  -6,620
  -6,926
  -7,249
  -7,589
  -7,947
  -8,323
  -8,718
  -9,135
  -9,573
  -10,033
  -10,518
  -11,028
  -11,564
  -12,128
  -12,720
  -13,343
  -13,997
  -14,686
  -15,409
  -16,168
  -16,966
  -17,805
  -18,686
  -19,612
Free cash flow, $m
  4,086
  5,228
  5,218
  5,231
  5,260
  5,304
  5,361
  5,432
  5,516
  5,613
  5,722
  5,069
  5,203
  5,349
  5,507
  5,678
  5,862
  6,059
  6,270
  6,495
  6,734
  6,988
  7,257
  7,543
  7,845
  8,165
  8,502
  8,859
  9,235
  9,631
  10,049
Issuance/(repayment) of debt, $m
  -35
  1,209
  1,382
  1,579
  1,773
  1,965
  2,156
  2,347
  2,541
  2,737
  2,938
  3,143
  3,353
  3,571
  3,795
  4,027
  4,267
  4,517
  4,777
  5,047
  5,329
  5,623
  5,930
  6,251
  6,586
  6,936
  7,303
  7,687
  8,089
  8,510
  8,951
Issuance/(repurchase) of shares, $m
  6
  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  
  -303
  1,209
  1,382
  1,579
  1,773
  1,965
  2,156
  2,347
  2,541
  2,737
  2,938
  3,143
  3,353
  3,571
  3,795
  4,027
  4,267
  4,517
  4,777
  5,047
  5,329
  5,623
  5,930
  6,251
  6,586
  6,936
  7,303
  7,687
  8,089
  8,510
  8,951
Total cash flow (excl. dividends), $m
  3,675
  6,437
  6,600
  6,810
  7,033
  7,268
  7,517
  7,780
  8,057
  8,350
  8,660
  8,212
  8,556
  8,919
  9,302
  9,705
  10,129
  10,576
  11,047
  11,542
  12,063
  12,611
  13,187
  13,794
  14,431
  15,101
  15,805
  16,545
  17,323
  18,141
  19,000
Retained Cash Flow (-), $m
  231
  -672
  -760
  -869
  -976
  -1,081
  -1,186
  -1,292
  -1,398
  -1,507
  -1,617
  -1,730
  -1,846
  -1,965
  -2,089
  -2,216
  -2,349
  -2,486
  -2,629
  -2,778
  -2,933
  -3,095
  -3,264
  -3,440
  -3,625
  -3,818
  -4,020
  -4,231
  -4,452
  -4,684
  -4,926
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
 
  5,765
  5,839
  5,941
  6,057
  6,187
  6,331
  6,488
  6,659
  6,844
  7,043
  6,482
  6,711
  6,954
  7,213
  7,489
  7,781
  8,090
  8,418
  8,764
  9,130
  9,516
  9,924
  10,353
  10,806
  11,283
  11,786
  12,315
  12,871
  13,457
  14,074
Discount rate, %
 
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
 
  5,449
  5,188
  4,933
  4,671
  4,401
  4,124
  3,842
  3,555
  3,265
  2,976
  2,401
  2,157
  1,918
  1,687
  1,466
  1,259
  1,066
  890
  732
  592
  471
  368
  282
  211
  155
  111
  78
  53
  35
  23
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

Orange SA is a telecommunications operator. The Company also provides telecommunication services to multinational companies, under the brand Orange Business Services. The Company's segments include France, Spain, Poland, Belgium and Luxembourg, Central European countries, Africa and Middle East, Enterprise, and International Carriers & Shared Services. The Company provides consumers, businesses and other telecommunications operators with a range of services, including fixed telephony and mobile telecommunications, data transmission and other value-added services, mainly in Europe, Africa and the Middle East. The Company offers fixed-line telephony, mobile telephony and Internet services in France. The Company offers fixed-line telephony, mobile telephony and Internet services in Spain. The Company offers fixed-line and mobile telephony, and Internet services in Poland. The Company operates through Mobistar and Groupama Banque SA.

FINANCIAL RATIOS  of  Orange ADR (ORAN)

Valuation Ratios
P/E Ratio 15
Price to Sales 1.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 170.4
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 95.9%
Total Debt to Equity 123.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 9.5%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 74.8%
Gross Margin - 3 Yr. Avg. 68.7%
EBITDA Margin 24.5%
EBITDA Margin - 3 Yr. Avg. 25.1%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 11.1%
Pre-Tax Margin 4.8%
Pre-Tax Margin - 3 Yr. Avg. 6.7%
Net Profit Margin 7.2%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate 49%
Eff/ Tax Rate - 3 Yr. Avg. 41.1%
Payout Ratio 54.4%

ORAN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ORAN stock intrinsic value calculation we used $43186 million for the last fiscal year's total revenue generated by Orange ADR. The default revenue input number comes from 2016 income statement of Orange 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 ORAN 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 5.8%, whose default value for ORAN is calculated based on our internal credit rating of Orange 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 Orange 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 ORAN stock the variable cost ratio is equal to 88.2%.

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 ORAN 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 3.7% for Orange ADR.

Corporate tax rate of 27% is the nominal tax rate for Orange 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 ORAN 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 ORAN are equal to 97.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Orange 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 ORAN is equal to -15.1%. 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 - $32389 million for Orange 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 2672.08 million for Orange 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 Orange ADR at the current share price and the inputted number of shares is $46.5 billion.

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COMPANY NEWS

▶ Orange CEO Interview - Investor Day 2017 (Video)   [Dec-07-17 06:49AM  PR Newswire]
▶ 10 Cheap Foreign Stocks With Moats   [Oct-30-17 06:00AM  Morningstar]
▶ ETFs with exposure to Orange SA : October 23, 2017   [Oct-23-17 10:54AM  Capital Cube]
▶ ETFs with exposure to Orange SA : September 7, 2017   [Sep-07-17 01:39PM  Capital Cube]
▶ 3 High-Yield International Stocks   [Aug-28-17 06:00AM  Motley Fool]
▶ ETFs with exposure to Orange SA : August 15, 2017   [Aug-15-17 04:45PM  Capital Cube]
▶ Top Ranked Income Stocks to Buy for July 20th   [Jul-20-17 11:55AM  Zacks]
▶ Top Ranked Income Stocks to Buy for July 18th   [Jul-18-17 05:46AM  Zacks]
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▶ Top Ranked Income Stocks to Buy for July 10th   [Jul-10-17 10:29AM  Zacks]
▶ Africa Defeats Worlds Biggest Mobile Carriers   [Jul-09-17 11:00PM  Bloomberg]
▶ New Strong Buy Stocks for July 7th   [Jul-07-17 10:31AM  Zacks]
▶ Top 10 Stocks Under $20   [Jun-13-17 04:03PM  Zacks]
▶ Top Ranked Income Stocks to Buy for May 12th   [May-12-17 11:10AM  Zacks]
▶ Top Ranked Income Stocks to Buy for May 2nd   [May-02-17 10:47AM  Zacks]
▶ 3 Stocks Wall Street Wants to Keep Secret   [Apr-18-17 12:38PM  Motley Fool]
▶ Are We Headed for a Bear Market? These 4 Charts Say No.   [Apr-13-17 07:00AM  TheStreet.com]
▶ Orange Certified as a Top Employer Global 2017   [Mar-01-17 04:58AM  Business Wire]
▶ A Billionaire in La La Land   [Feb-24-17 04:56AM  Bloomberg]
▶ Orange CEO Interview - 2016 Results (video)   [Feb-23-17 03:51PM  PR Newswire]
▶ Orange CEO: 'On Track' to Launch Banking Unit in France   [Jan-19-17 03:59AM  at Bloomberg]
▶ Sony Corp (ADR) (SNE): Are Hedge Funds Right About This Stock?   [Dec-07-16 08:36PM  at Insider Monkey]
Financial statements of ORAN
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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