Intrinsic value of Shenandoah Telecommunications Co - SHEN

Previous Close

$46.58

  Intrinsic Value

$9.39

stock screener

  Rating & Target

str. sell

-80%

Previous close

$46.58

 
Intrinsic value

$9.39

 
Up/down potential

-80%

 
Rating

str. sell

We calculate the intrinsic value of SHEN 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 2.3

 

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, %
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  666
  702
  740
  780
  821
  865
  910
  958
  1,008
  1,060
  1,115
  1,173
  1,233
  1,296
  1,362
  1,432
  1,505
  1,581
  1,661
  1,746
  1,834
  1,927
  2,024
  2,126
  2,233
  2,346
  2,464
  2,588
  2,718
  2,854
Variable operating expenses, $m
  612
  643
  675
  708
  743
  780
  818
  858
  901
  945
  940
  988
  1,039
  1,092
  1,148
  1,207
  1,268
  1,332
  1,400
  1,471
  1,546
  1,624
  1,706
  1,792
  1,882
  1,977
  2,076
  2,181
  2,290
  2,405
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
  612
  643
  675
  708
  743
  780
  818
  858
  901
  945
  940
  988
  1,039
  1,092
  1,148
  1,207
  1,268
  1,332
  1,400
  1,471
  1,546
  1,624
  1,706
  1,792
  1,882
  1,977
  2,076
  2,181
  2,290
  2,405
Operating income, $m
  53
  59
  65
  71
  78
  85
  92
  99
  107
  115
  175
  184
  194
  204
  214
  225
  237
  249
  261
  275
  288
  303
  318
  334
  351
  369
  388
  407
  427
  449
EBITDA, $m
  243
  256
  270
  284
  299
  315
  332
  349
  367
  386
  406
  427
  449
  472
  496
  522
  548
  576
  605
  636
  668
  702
  738
  775
  814
  855
  898
  943
  990
  1,040
Interest expense (income), $m
  21
  42
  45
  48
  51
  55
  58
  62
  66
  70
  75
  79
  84
  89
  94
  100
  106
  112
  118
  125
  132
  139
  147
  155
  164
  173
  182
  192
  202
  213
  225
Earnings before tax, $m
  12
  14
  17
  20
  23
  26
  30
  33
  37
  41
  96
  100
  105
  109
  114
  119
  125
  130
  136
  143
  149
  156
  163
  171
  178
  187
  195
  205
  214
  224
Tax expense, $m
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
Net income, $m
  9
  11
  13
  15
  17
  19
  22
  24
  27
  30
  70
  73
  76
  80
  83
  87
  91
  95
  100
  104
  109
  114
  119
  124
  130
  136
  143
  149
  156
  164

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
  1,548
  1,633
  1,721
  1,813
  1,910
  2,011
  2,117
  2,228
  2,344
  2,465
  2,593
  2,727
  2,867
  3,014
  3,168
  3,330
  3,499
  3,677
  3,864
  4,060
  4,265
  4,481
  4,707
  4,944
  5,194
  5,455
  5,730
  6,018
  6,320
  6,638
Adjusted assets (=assets-cash), $m
  1,548
  1,633
  1,721
  1,813
  1,910
  2,011
  2,117
  2,228
  2,344
  2,465
  2,593
  2,727
  2,867
  3,014
  3,168
  3,330
  3,499
  3,677
  3,864
  4,060
  4,265
  4,481
  4,707
  4,944
  5,194
  5,455
  5,730
  6,018
  6,320
  6,638
Revenue / Adjusted assets
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
Average production assets, $m
  1,007
  1,061
  1,119
  1,179
  1,242
  1,307
  1,376
  1,448
  1,524
  1,603
  1,686
  1,773
  1,864
  1,960
  2,060
  2,165
  2,275
  2,391
  2,512
  2,639
  2,773
  2,913
  3,060
  3,215
  3,377
  3,547
  3,725
  3,912
  4,109
  4,316
Working capital, $m
  61
  64
  67
  71
  75
  79
  83
  87
  92
  96
  101
  107
  112
  118
  124
  130
  137
  144
  151
  159
  167
  175
  184
  193
  203
  213
  224
  235
  247
  260
Total debt, $m
  827
  886
  948
  1,012
  1,080
  1,150
  1,224
  1,302
  1,383
  1,468
  1,557
  1,651
  1,749
  1,852
  1,959
  2,072
  2,191
  2,315
  2,446
  2,583
  2,726
  2,877
  3,035
  3,201
  3,375
  3,558
  3,750
  3,951
  4,163
  4,385
Total liabilities, $m
  1,082
  1,141
  1,203
  1,267
  1,335
  1,406
  1,480
  1,557
  1,638
  1,723
  1,813
  1,906
  2,004
  2,107
  2,214
  2,328
  2,446
  2,570
  2,701
  2,838
  2,981
  3,132
  3,290
  3,456
  3,630
  3,813
  4,005
  4,206
  4,418
  4,640
Total equity, $m
  466
  491
  518
  546
  575
  605
  637
  671
  705
  742
  781
  821
  863
  907
  954
  1,002
  1,053
  1,107
  1,163
  1,222
  1,284
  1,349
  1,417
  1,488
  1,563
  1,642
  1,725
  1,811
  1,902
  1,998
Total liabilities and equity, $m
  1,548
  1,632
  1,721
  1,813
  1,910
  2,011
  2,117
  2,228
  2,343
  2,465
  2,594
  2,727
  2,867
  3,014
  3,168
  3,330
  3,499
  3,677
  3,864
  4,060
  4,265
  4,481
  4,707
  4,944
  5,193
  5,455
  5,730
  6,017
  6,320
  6,638
Debt-to-equity ratio
  1.770
  1.800
  1.830
  1.850
  1.880
  1.900
  1.920
  1.940
  1.960
  1.980
  2.000
  2.010
  2.030
  2.040
  2.050
  2.070
  2.080
  2.090
  2.100
  2.110
  2.120
  2.130
  2.140
  2.150
  2.160
  2.170
  2.170
  2.180
  2.190
  2.190
Adjusted equity ratio
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  11
  13
  15
  17
  19
  22
  24
  27
  30
  70
  73
  76
  80
  83
  87
  91
  95
  100
  104
  109
  114
  119
  124
  130
  136
  143
  149
  156
  164
Depreciation, amort., depletion, $m
  189
  197
  205
  213
  221
  230
  240
  250
  260
  271
  231
  243
  255
  268
  282
  297
  312
  328
  344
  362
  380
  399
  419
  440
  463
  486
  510
  536
  563
  591
Funds from operations, $m
  198
  207
  217
  227
  238
  250
  262
  274
  287
  301
  301
  316
  332
  348
  366
  384
  403
  423
  444
  466
  489
  513
  538
  565
  593
  622
  653
  685
  719
  755
Change in working capital, $m
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Cash from operations, $m
  195
  204
  214
  224
  235
  246
  257
  270
  282
  296
  296
  311
  326
  343
  360
  377
  396
  416
  436
  458
  481
  504
  529
  556
  583
  612
  642
  674
  707
  742
Maintenance CAPEX, $m
  -131
  -138
  -145
  -153
  -161
  -170
  -179
  -189
  -198
  -209
  -220
  -231
  -243
  -255
  -268
  -282
  -297
  -312
  -328
  -344
  -362
  -380
  -399
  -419
  -440
  -463
  -486
  -510
  -536
  -563
New CAPEX, $m
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
  -121
  -127
  -134
  -140
  -147
  -154
  -162
  -170
  -178
  -187
  -197
  -206
Cash from investing activities, $m
  -184
  -193
  -202
  -213
  -224
  -236
  -248
  -261
  -274
  -288
  -303
  -318
  -334
  -351
  -368
  -387
  -407
  -428
  -449
  -471
  -496
  -520
  -546
  -573
  -602
  -633
  -664
  -697
  -733
  -769
Free cash flow, $m
  11
  11
  11
  11
  10
  10
  9
  9
  9
  8
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -13
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
Issuance/(repayment) of debt, $m
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  103
  108
  113
  119
  124
  130
  137
  144
  151
  158
  166
  174
  183
  192
  201
  211
  222
Issuance/(repurchase) of shares, $m
  15
  15
  14
  13
  12
  11
  10
  9
  8
  7
  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  
  72
  74
  76
  78
  80
  82
  84
  87
  89
  92
  89
  93
  98
  103
  108
  113
  119
  124
  130
  137
  144
  151
  158
  166
  174
  183
  192
  201
  211
  222
Total cash flow (excl. dividends), $m
  83
  85
  87
  88
  90
  92
  94
  96
  98
  100
  83
  86
  90
  94
  99
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  162
  170
  178
  186
  195
Retained Cash Flow (-), $m
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
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
  59
  60
  60
  60
  61
  61
  62
  62
  63
  63
  44
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  95
  99
Discount rate, %
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
  56
  52
  48
  45
  41
  37
  34
  30
  27
  24
  14
  13
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  99.4
  98.8
  98.2
  97.7
  97.3
  97.0
  96.7
  96.4
  96.2
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0
  96.0

Shenandoah Telecommunications Company is a telecommunications holding company. The Company's segments are Wireless, Cable, Wireline and Other. The Company, through its operating subsidiaries, provides both regulated and unregulated telecommunications services to end user customers and other telecommunications providers in Virginia, West Virginia, central Pennsylvania, western Maryland, and portions of Kentucky and Ohio. The business of the Wireless segment is conducted principally by the Company's subsidiary, Shenandoah Personal Communications, LLC (PCS). The business of the Company's Cable segment is conducted through Shenandoah Cable Television, LLC (Shenandoah Cable). The Wireline segment provides regulated and unregulated voice services, digital subscriber line (DSL) Internet access, cable modem and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia.

FINANCIAL RATIOS  of  Shenandoah Telecommunications Co (SHEN)

Valuation Ratios
P/E Ratio -2279.6
Price to Sales 4.3
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow -207.2
Growth Rates
Sales Growth Rate 56.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 147.1%
Cap. Spend. - 3 Yr. Gr. Rate 8.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 269.3%
Total Debt to Equity 280.1%
Interest Coverage 1
Management Effectiveness
Return On Assets -1.1%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital -0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.2%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 63.9%
Gross Margin - 3 Yr. Avg. 62.9%
EBITDA Margin 33.8%
EBITDA Margin - 3 Yr. Avg. 38.8%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 14.9%
Pre-Tax Margin 0.4%
Pre-Tax Margin - 3 Yr. Avg. 12.6%
Net Profit Margin -0.2%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 150%
Eff/ Tax Rate - 3 Yr. Avg. 76.6%
Payout Ratio -1200%

SHEN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHEN stock intrinsic value calculation we used $631 million for the last fiscal year's total revenue generated by Shenandoah Telecommunications Co. The default revenue input number comes from 0001 income statement of Shenandoah Telecommunications Co. 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 SHEN stock valuation model: a) initial revenue growth rate of 5.5% 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 6.7%, whose default value for SHEN is calculated based on our internal credit rating of Shenandoah Telecommunications Co, 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 Shenandoah Telecommunications Co.
    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 SHEN stock the variable cost ratio is equal to 92.4%.

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 SHEN 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 Shenandoah Telecommunications Co.

Corporate tax rate of 27% is the nominal tax rate for Shenandoah Telecommunications Co. 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 SHEN 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 SHEN are equal to 151.2%.

Life of production assets of 7.3 years is the average useful life of capital assets used in Shenandoah Telecommunications Co 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 SHEN is equal to 9.1%. 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 - $442.247 million for Shenandoah Telecommunications Co - 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 49.775 million for Shenandoah Telecommunications Co 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 Shenandoah Telecommunications Co at the current share price and the inputted number of shares is $2.3 billion.

RELATED COMPANIES Price Int.Val. Rating
T AT&T Inc. 30.80 141.37  str.buy
CTL CenturyLink, I 12.07 38.99  str.buy
PDVW pdvWireless, I 39.63 1.73  str.sell

CONTACT US       ASSET ALLOCATION

About X-FIN       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2019. All rigths reserved.