Intrinsic value of Shenandoah Telecommunications - SHEN

Previous Close

$32.85

  Intrinsic Value

$11.60

stock screener

  Rating & Target

str. sell

-65%

Previous close

$32.85

 
Intrinsic value

$11.60

 
Up/down potential

-65%

 
Rating

str. sell

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

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Shenandoah Telecommunications (SHEN) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  56.43
  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
  535
  546
  558
  573
  589
  607
  626
  647
  671
  695
  722
  751
  781
  814
  848
  885
  923
  964
  1,008
  1,054
  1,102
  1,153
  1,207
  1,264
  1,324
  1,387
  1,453
  1,523
  1,596
  1,674
  1,755
Variable operating expenses, $m
 
  427
  436
  447
  460
  473
  488
  504
  521
  540
  560
  567
  590
  615
  641
  669
  698
  729
  762
  796
  833
  872
  912
  955
  1,001
  1,048
  1,098
  1,151
  1,207
  1,265
  1,327
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
  513
  427
  436
  447
  460
  473
  488
  504
  521
  540
  560
  567
  590
  615
  641
  669
  698
  729
  762
  796
  833
  872
  912
  955
  1,001
  1,048
  1,098
  1,151
  1,207
  1,265
  1,327
Operating income, $m
  23
  119
  122
  125
  129
  134
  138
  144
  149
  155
  162
  183
  191
  199
  207
  216
  225
  235
  246
  257
  269
  281
  295
  309
  323
  338
  355
  372
  390
  409
  428
EBITDA, $m
  181
  282
  288
  295
  304
  313
  323
  334
  346
  359
  373
  387
  403
  420
  438
  457
  477
  498
  520
  544
  569
  595
  623
  652
  683
  716
  750
  786
  824
  864
  906
Interest expense (income), $m
  21
  33
  34
  35
  36
  37
  39
  41
  43
  45
  47
  49
  52
  55
  57
  60
  64
  67
  71
  75
  79
  83
  88
  92
  97
  103
  108
  114
  120
  127
  134
Earnings before tax, $m
  2
  86
  88
  90
  93
  96
  99
  103
  106
  111
  115
  134
  139
  144
  150
  155
  162
  168
  175
  183
  190
  198
  207
  216
  226
  236
  246
  258
  269
  282
  295
Tax expense, $m
  3
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
Net income, $m
  -1
  63
  64
  66
  68
  70
  72
  75
  78
  81
  84
  98
  101
  105
  109
  113
  118
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  188
  197
  206
  215

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  36
  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
  1,484
  1,479
  1,513
  1,552
  1,595
  1,644
  1,697
  1,755
  1,817
  1,885
  1,957
  2,034
  2,117
  2,205
  2,298
  2,397
  2,502
  2,614
  2,731
  2,855
  2,987
  3,125
  3,271
  3,425
  3,587
  3,758
  3,938
  4,127
  4,326
  4,536
  4,756
Adjusted assets (=assets-cash), $m
  1,448
  1,479
  1,513
  1,552
  1,595
  1,644
  1,697
  1,755
  1,817
  1,885
  1,957
  2,034
  2,117
  2,205
  2,298
  2,397
  2,502
  2,614
  2,731
  2,855
  2,987
  3,125
  3,271
  3,425
  3,587
  3,758
  3,938
  4,127
  4,326
  4,536
  4,756
Revenue / Adjusted assets
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
Average production assets, $m
  815
  831
  850
  872
  897
  924
  954
  986
  1,021
  1,059
  1,100
  1,143
  1,190
  1,239
  1,292
  1,347
  1,406
  1,469
  1,535
  1,605
  1,678
  1,756
  1,838
  1,925
  2,016
  2,112
  2,213
  2,319
  2,431
  2,549
  2,673
Working capital, $m
  -3
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Total debt, $m
  829
  821
  848
  879
  914
  953
  995
  1,041
  1,091
  1,145
  1,203
  1,264
  1,330
  1,400
  1,475
  1,554
  1,638
  1,727
  1,820
  1,920
  2,024
  2,135
  2,251
  2,374
  2,504
  2,640
  2,783
  2,934
  3,093
  3,260
  3,436
Total liabilities, $m
  1,189
  1,180
  1,207
  1,238
  1,273
  1,312
  1,354
  1,400
  1,450
  1,504
  1,562
  1,623
  1,689
  1,759
  1,834
  1,913
  1,997
  2,086
  2,179
  2,279
  2,383
  2,494
  2,610
  2,733
  2,863
  2,999
  3,142
  3,293
  3,452
  3,619
  3,795
Total equity, $m
  296
  299
  306
  313
  322
  332
  343
  354
  367
  381
  395
  411
  428
  445
  464
  484
  505
  528
  552
  577
  603
  631
  661
  692
  725
  759
  795
  834
  874
  916
  961
Total liabilities and equity, $m
  1,485
  1,479
  1,513
  1,551
  1,595
  1,644
  1,697
  1,754
  1,817
  1,885
  1,957
  2,034
  2,117
  2,204
  2,298
  2,397
  2,502
  2,614
  2,731
  2,856
  2,986
  3,125
  3,271
  3,425
  3,588
  3,758
  3,937
  4,127
  4,326
  4,535
  4,756
Debt-to-equity ratio
  2.801
  2.750
  2.780
  2.810
  2.840
  2.870
  2.900
  2.940
  2.970
  3.010
  3.040
  3.080
  3.110
  3.140
  3.180
  3.210
  3.240
  3.270
  3.300
  3.330
  3.360
  3.380
  3.410
  3.430
  3.460
  3.480
  3.500
  3.520
  3.540
  3.560
  3.580
Adjusted equity ratio
  0.180
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  63
  64
  66
  68
  70
  72
  75
  78
  81
  84
  98
  101
  105
  109
  113
  118
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  188
  197
  206
  215
Depreciation, amort., depletion, $m
  158
  163
  166
  170
  175
  179
  185
  191
  197
  204
  211
  204
  212
  221
  231
  241
  251
  262
  274
  287
  300
  314
  328
  344
  360
  377
  395
  414
  434
  455
  477
Funds from operations, $m
  203
  226
  231
  236
  243
  250
  257
  266
  275
  284
  295
  302
  314
  326
  340
  354
  369
  385
  402
  420
  439
  459
  479
  502
  525
  549
  575
  602
  631
  661
  692
Change in working capital, $m
  41
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  162
  226
  231
  236
  243
  250
  258
  266
  275
  285
  295
  302
  314
  327
  340
  355
  370
  386
  403
  420
  439
  459
  480
  502
  526
  550
  576
  603
  632
  662
  693
Maintenance CAPEX, $m
  0
  -146
  -148
  -152
  -156
  -160
  -165
  -170
  -176
  -182
  -189
  -196
  -204
  -212
  -221
  -231
  -241
  -251
  -262
  -274
  -287
  -300
  -314
  -328
  -344
  -360
  -377
  -395
  -414
  -434
  -455
New CAPEX, $m
  -173
  -16
  -19
  -22
  -25
  -27
  -30
  -32
  -35
  -38
  -41
  -43
  -46
  -49
  -53
  -56
  -59
  -62
  -66
  -70
  -74
  -78
  -82
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
Cash from investing activities, $m
  -820
  -162
  -167
  -174
  -181
  -187
  -195
  -202
  -211
  -220
  -230
  -239
  -250
  -261
  -274
  -287
  -300
  -313
  -328
  -344
  -361
  -378
  -396
  -414
  -435
  -456
  -478
  -501
  -526
  -552
  -579
Free cash flow, $m
  -658
  64
  63
  63
  63
  63
  63
  63
  64
  64
  65
  62
  64
  65
  67
  68
  70
  72
  74
  77
  79
  82
  84
  88
  91
  94
  98
  102
  106
  110
  114
Issuance/(repayment) of debt, $m
  646
  24
  27
  31
  35
  39
  42
  46
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  94
  99
  105
  110
  117
  123
  129
  136
  143
  151
  159
  167
  176
Issuance/(repurchase) of shares, $m
  -2
  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  
  630
  24
  27
  31
  35
  39
  42
  46
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  94
  99
  105
  110
  117
  123
  129
  136
  143
  151
  159
  167
  176
Total cash flow (excl. dividends), $m
  -29
  88
  90
  94
  97
  101
  105
  109
  114
  118
  123
  124
  130
  135
  141
  147
  154
  161
  168
  176
  184
  192
  201
  210
  220
  230
  241
  253
  265
  277
  290
Retained Cash Flow (-), $m
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
Prev. year cash balance distribution, $m
 
  4
  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
 
  86
  84
  86
  89
  91
  94
  98
  101
  105
  108
  109
  113
  117
  122
  127
  133
  138
  144
  151
  157
  164
  172
  179
  187
  196
  205
  214
  224
  235
  246
Discount rate, %
 
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
 
  78
  68
  62
  56
  50
  45
  39
  34
  29
  24
  19
  16
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
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

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 (SHEN)

Valuation Ratios
P/E Ratio -1607.7
Price to Sales 3
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow -146.2
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 $535 million for the last fiscal year's total revenue generated by Shenandoah Telecommunications. The default revenue input number comes from 2016 income statement of Shenandoah Telecommunications. 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 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 10.4%, whose default value for SHEN is calculated based on our internal credit rating of Shenandoah Telecommunications, 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.
    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 78.3%.

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 4.1% for Shenandoah Telecommunications.

Corporate tax rate of 27% is the nominal tax rate for Shenandoah Telecommunications. 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 152.3%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Shenandoah Telecommunications 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 -1.3%. 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 - $296 million for Shenandoah Telecommunications - 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 49.112 million for Shenandoah Telecommunications 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 at the current share price and the inputted number of shares is $1.6 billion.

RELATED COMPANIES Price Int.Val. Rating
S Sprint 5.39 0.76  str.sell
VZ Verizon Commun 50.15 42.47  hold
T AT&T 37.14 38.35  hold
CTL CenturyLink 18.93 19.51  hold
USM U.S. Cellular 34.41 11.82  str.sell
PDVW pdvWireless 32.70 3.92  str.sell
FTR Frontier Commu 9.22 47.45  str.buy
TDS Telephone&Data 25.68 19.26  sell

COMPANY NEWS

▶ Shenandoah Telecom posts 3Q profit   [Nov-02-17 09:38AM  Associated Press]
▶ Shenandoah Telecom posts 2Q loss   [12:16AM  Associated Press]
▶ Shenandoah Telecom posts 1Q profit   [May-04-17 08:31AM  Associated Press]
▶ Shenandoah Telecom posts 4Q loss   [09:38AM  Associated Press]
Financial statements of SHEN
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

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

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