Intrinsic value of Partner Communications ADR - PTNR

Previous Close

$4.99

  Intrinsic Value

$2.43

stock screener

  Rating & Target

str. sell

-51%

Previous close

$4.99

 
Intrinsic value

$2.43

 
Up/down potential

-51%

 
Rating

str. sell

We calculate the intrinsic value of PTNR 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, %
  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
  4.87
Revenue, $m
  963
  988
  1,015
  1,046
  1,080
  1,117
  1,157
  1,199
  1,246
  1,295
  1,347
  1,403
  1,463
  1,526
  1,593
  1,663
  1,738
  1,817
  1,901
  1,989
  2,082
  2,180
  2,283
  2,392
  2,506
  2,627
  2,753
  2,887
  3,027
  3,175
Variable operating expenses, $m
  923
  946
  971
  1,000
  1,031
  1,065
  1,102
  1,142
  1,184
  1,230
  1,247
  1,298
  1,353
  1,412
  1,474
  1,539
  1,608
  1,681
  1,759
  1,840
  1,926
  2,017
  2,112
  2,213
  2,319
  2,430
  2,547
  2,671
  2,801
  2,937
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
  923
  946
  971
  1,000
  1,031
  1,065
  1,102
  1,142
  1,184
  1,230
  1,247
  1,298
  1,353
  1,412
  1,474
  1,539
  1,608
  1,681
  1,759
  1,840
  1,926
  2,017
  2,112
  2,213
  2,319
  2,430
  2,547
  2,671
  2,801
  2,937
Operating income, $m
  40
  42
  44
  46
  49
  52
  55
  58
  61
  65
  101
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  187
  196
  206
  216
  226
  237
EBITDA, $m
  171
  175
  180
  186
  192
  198
  205
  213
  221
  230
  239
  249
  260
  271
  283
  295
  309
  323
  338
  353
  370
  387
  405
  425
  445
  466
  489
  513
  538
  564
Interest expense (income), $m
  29
  46
  48
  50
  52
  55
  58
  61
  64
  68
  71
  76
  80
  85
  90
  95
  100
  106
  113
  119
  126
  134
  141
  149
  158
  167
  177
  187
  197
  208
  220
Earnings before tax, $m
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  25
  25
  25
  25
  24
  24
  24
  23
  23
  23
  22
  22
  21
  21
  20
  20
  19
  19
  18
  17
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  7
  7
  7
  7
  7
  6
  6
  6
  6
  6
  6
  6
  6
  6
  5
  5
  5
  5
  5
  5
Net income, $m
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  18
  18
  18
  18
  18
  18
  17
  17
  17
  16
  16
  16
  16
  15
  15
  14
  14
  14
  13
  13

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
  1,391
  1,427
  1,467
  1,512
  1,561
  1,614
  1,671
  1,733
  1,800
  1,871
  1,947
  2,028
  2,114
  2,205
  2,302
  2,404
  2,512
  2,626
  2,747
  2,874
  3,009
  3,150
  3,299
  3,456
  3,622
  3,796
  3,979
  4,172
  4,374
  4,587
Adjusted assets (=assets-cash), $m
  1,391
  1,427
  1,467
  1,512
  1,561
  1,614
  1,671
  1,733
  1,800
  1,871
  1,947
  2,028
  2,114
  2,205
  2,302
  2,404
  2,512
  2,626
  2,747
  2,874
  3,009
  3,150
  3,299
  3,456
  3,622
  3,796
  3,979
  4,172
  4,374
  4,587
Revenue / Adjusted assets
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
Average production assets, $m
  495
  508
  522
  538
  555
  574
  594
  617
  640
  666
  693
  721
  752
  784
  819
  855
  893
  934
  977
  1,022
  1,070
  1,120
  1,173
  1,229
  1,288
  1,350
  1,415
  1,484
  1,556
  1,632
Working capital, $m
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
Total debt, $m
  576
  601
  629
  660
  694
  731
  771
  814
  861
  910
  963
  1,019
  1,079
  1,143
  1,210
  1,281
  1,356
  1,436
  1,520
  1,609
  1,702
  1,800
  1,904
  2,014
  2,129
  2,250
  2,377
  2,511
  2,653
  2,801
Total liabilities, $m
  968
  993
  1,021
  1,052
  1,086
  1,123
  1,163
  1,206
  1,253
  1,302
  1,355
  1,411
  1,471
  1,535
  1,602
  1,673
  1,748
  1,828
  1,912
  2,001
  2,094
  2,192
  2,296
  2,406
  2,521
  2,642
  2,769
  2,903
  3,045
  3,193
Total equity, $m
  423
  434
  446
  460
  474
  491
  508
  527
  547
  569
  592
  616
  643
  670
  700
  731
  764
  798
  835
  874
  915
  958
  1,003
  1,051
  1,101
  1,154
  1,210
  1,268
  1,330
  1,395
Total liabilities and equity, $m
  1,391
  1,427
  1,467
  1,512
  1,560
  1,614
  1,671
  1,733
  1,800
  1,871
  1,947
  2,027
  2,114
  2,205
  2,302
  2,404
  2,512
  2,626
  2,747
  2,875
  3,009
  3,150
  3,299
  3,457
  3,622
  3,796
  3,979
  4,171
  4,375
  4,588
Debt-to-equity ratio
  1.360
  1.390
  1.410
  1.440
  1.460
  1.490
  1.520
  1.550
  1.570
  1.600
  1.630
  1.650
  1.680
  1.700
  1.730
  1.750
  1.780
  1.800
  1.820
  1.840
  1.860
  1.880
  1.900
  1.920
  1.930
  1.950
  1.970
  1.980
  1.990
  2.010
Adjusted equity ratio
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  18
  18
  18
  18
  18
  18
  17
  17
  17
  16
  16
  16
  16
  15
  15
  14
  14
  14
  13
  13
Depreciation, amort., depletion, $m
  131
  133
  136
  139
  143
  147
  151
  155
  160
  165
  139
  144
  150
  157
  164
  171
  179
  187
  195
  204
  214
  224
  235
  246
  258
  270
  283
  297
  311
  326
Funds from operations, $m
  125
  128
  130
  134
  137
  141
  145
  149
  154
  158
  157
  163
  168
  175
  181
  189
  196
  204
  212
  221
  230
  240
  250
  261
  272
  284
  297
  310
  324
  339
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
Cash from operations, $m
  125
  127
  130
  133
  137
  140
  144
  149
  153
  158
  156
  162
  168
  174
  181
  188
  195
  203
  211
  220
  229
  239
  249
  260
  271
  283
  296
  309
  323
  337
Maintenance CAPEX, $m
  -97
  -99
  -102
  -104
  -108
  -111
  -115
  -119
  -123
  -128
  -133
  -139
  -144
  -150
  -157
  -164
  -171
  -179
  -187
  -195
  -204
  -214
  -224
  -235
  -246
  -258
  -270
  -283
  -297
  -311
New CAPEX, $m
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
Cash from investing activities, $m
  -108
  -112
  -116
  -120
  -125
  -130
  -135
  -141
  -147
  -153
  -160
  -168
  -175
  -182
  -191
  -200
  -209
  -220
  -230
  -240
  -252
  -264
  -277
  -291
  -305
  -320
  -335
  -352
  -369
  -387
Free cash flow, $m
  17
  16
  14
  13
  12
  10
  9
  8
  6
  5
  -4
  -5
  -7
  -9
  -11
  -12
  -14
  -16
  -18
  -21
  -23
  -25
  -28
  -31
  -34
  -36
  -40
  -43
  -46
  -50
Issuance/(repayment) of debt, $m
  23
  25
  28
  31
  34
  37
  40
  43
  46
  50
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  93
  99
  104
  109
  115
  121
  127
  134
  141
  148
Issuance/(repurchase) of shares, $m
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  5
  6
  8
  10
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  35
  39
  42
  45
  49
  52
Cash from financing (excl. dividends), $m  
  39
  42
  46
  50
  55
  59
  63
  68
  72
  78
  58
  62
  68
  73
  79
  85
  91
  98
  104
  111
  118
  126
  134
  142
  150
  160
  169
  179
  190
  200
Total cash flow (excl. dividends), $m
  55
  57
  60
  63
  66
  69
  73
  76
  79
  82
  54
  57
  61
  65
  68
  72
  77
  81
  85
  90
  95
  100
  106
  111
  117
  123
  130
  136
  143
  151
Retained Cash Flow (-), $m
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
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
  40
  40
  42
  44
  46
  47
  49
  51
  52
  54
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  38
  37
  37
  36
  35
  34
  33
  32
  30
  28
  15
  14
  13
  12
  11
  10
  10
  8
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  98.2
  96.3
  94.4
  92.4
  90.4
  88.4
  86.3
  84.3
  82.3
  80.3
  79.9
  79.5
  79.0
  78.4
  77.7
  77.0
  76.2
  75.4
  74.4
  73.5
  72.5
  71.4
  70.4
  69.2
  68.1
  67.0
  65.8
  64.6
  63.4
  62.2

Partner Communications Company Ltd. is a telecommunications company. The Company is engaged in the business of cellular telephony, provided on its second generation (2G), third generation (3G) and fourth generation (4G) networks. It operates through two segments: cellular segment and fixed-line segment. Its products and services are marketed under the Partner brand. The Company's cellular business segment includes basic cellular telephony services, text messaging, data, airtime, interconnect, roaming, content services and other value added services. The fixed-line segment includes a range of services provided over fixed-line networks, including Internet service provider (ISP) services, business information storage in a data center and cloud services. The Company also provides wireless fidelity (Wi-Fi) networks and fixed-line voice communication services. In addition, the fixed-line segment includes sales of related equipment. It also offers anti-virus and anti-spam filtering.

FINANCIAL RATIOS  of  Partner Communications ADR (PTNR)

Valuation Ratios
P/E Ratio 56
Price to Sales 0.8
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 3
Growth Rates
Sales Growth Rate -13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -45.4%
Cap. Spend. - 3 Yr. Gr. Rate -9.6%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 197.3%
Total Debt to Equity 242.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 2.9%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.4%
Return On Equity 4.9%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 17.5%
Gross Margin - 3 Yr. Avg. 18.4%
EBITDA Margin 21.5%
EBITDA Margin - 3 Yr. Avg. 20.9%
Operating Margin 5.5%
Oper. Margin - 3 Yr. Avg. 5.7%
Pre-Tax Margin 2.5%
Pre-Tax Margin - 3 Yr. Avg. 2.4%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. 1.4%
Effective Tax Rate 41.7%
Eff/ Tax Rate - 3 Yr. Avg. 21.3%
Payout Ratio 0%

PTNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTNR stock intrinsic value calculation we used $941.244239631 million for the last fiscal year's total revenue generated by Partner Communications ADR. The default revenue input number comes from 0001 income statement of Partner Communications 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 PTNR stock valuation model: a) initial revenue growth rate of 2.3% 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 4.3%, whose default value for PTNR is calculated based on our internal credit rating of Partner Communications 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 Partner Communications 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 PTNR stock the variable cost ratio is equal to 95.9%.

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 PTNR 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 8.3% for Partner Communications ADR.

Corporate tax rate of 27% is the nominal tax rate for Partner Communications 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 PTNR 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 PTNR are equal to 51.4%.

Life of production assets of 4.1 years is the average useful life of capital assets used in Partner Communications 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 PTNR is equal to 1.1%. 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 - $413.01843318 million for Partner Communications 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 168.244 million for Partner Communications 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 Partner Communications ADR at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
CEL Cellcom Israel 6.45 12.20  str.buy
BCOM B Communicatio 10.40 205.60  str.buy
IGLD Internet Gold- 2.58 63.26  str.buy
TKC Turkcell Ileti 5.32 29,358.63  str.buy
AAPL Apple 186.80 344.94  str.buy
VOD Vodafone Group 20.37 82.90  str.buy

COMPANY NEWS

▶ Partner Communications: 2Q Earnings Snapshot   [05:05AM  Associated Press]
▶ Partner Communications: 1Q Earnings Snapshot   [May-31-18 05:03AM  Associated Press]
▶ Partner Communications reports 4Q loss   [05:29AM  Associated Press]
▶ Best Undervalued Stock in March   [Mar-12-18 10:02AM  Simply Wall St.]
▶ Partner Communications posts 3Q profit   [05:00AM  Associated Press]
▶ Partner Communications posts 2Q profit   [Aug-16-17 08:09PM  Associated Press]
▶ Partner Communications posts 1Q profit   [May-22-17 05:00AM  Associated Press]
▶ Partner Communications reports 4Q loss   [Mar-30-17 05:02AM  Associated Press]
▶ Partner Comms says new CFO to start on April 2   [Mar-08-17 05:56AM  Reuters]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.