Intrinsic value of AT&T Inc. - T

Previous Close

$34.97

  Intrinsic Value

$132.44

stock screener

  Rating & Target

str. buy

+279%

Previous close

$34.97

 
Intrinsic value

$132.44

 
Up/down potential

+279%

 
Rating

str. buy

We calculate the intrinsic value of T 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 254.9

 

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, %
  15.20
  14.18
  13.26
  12.44
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
Revenue, $m
  196,711
  224,605
  254,392
  286,027
  319,470
  354,685
  391,646
  430,335
  470,747
  512,887
  556,772
  602,432
  649,909
  699,254
  750,534
  803,822
  859,206
  916,782
  976,657
  1,038,947
  1,103,778
  1,171,286
  1,241,615
  1,314,920
  1,391,365
  1,471,121
  1,554,373
  1,641,311
  1,732,138
  1,827,067
Variable operating expenses, $m
  74,229
  80,598
  87,399
  94,623
  102,259
  110,300
  118,739
  127,573
  136,801
  146,423
  127,131
  137,556
  148,397
  159,664
  171,373
  183,541
  196,187
  209,334
  223,005
  237,228
  252,031
  267,446
  283,504
  300,243
  317,698
  335,909
  354,918
  374,769
  395,508
  417,184
Fixed operating expenses, $m
  79,755
  81,509
  83,303
  85,135
  87,008
  88,922
  90,879
  92,878
  94,921
  97,010
  99,144
  101,325
  103,554
  105,832
  108,161
  110,540
  112,972
  115,458
  117,998
  120,594
  123,247
  125,958
  128,729
  131,561
  134,455
  137,414
  140,437
  143,526
  146,684
  149,911
Total operating expenses, $m
  153,984
  162,107
  170,702
  179,758
  189,267
  199,222
  209,618
  220,451
  231,722
  243,433
  226,275
  238,881
  251,951
  265,496
  279,534
  294,081
  309,159
  324,792
  341,003
  357,822
  375,278
  393,404
  412,233
  431,804
  452,153
  473,323
  495,355
  518,295
  542,192
  567,095
Operating income, $m
  42,727
  62,497
  83,690
  106,269
  130,203
  155,463
  182,028
  209,884
  239,025
  269,454
  330,498
  363,551
  397,957
  433,758
  471,000
  509,741
  550,047
  591,991
  635,654
  681,125
  728,500
  777,882
  829,382
  883,117
  939,212
  997,799
  1,059,018
  1,123,016
  1,189,946
  1,259,972
EBITDA, $m
  94,163
  117,070
  141,612
  167,750
  195,444
  224,665
  255,387
  287,594
  321,279
  356,448
  393,114
  431,303
  471,049
  512,398
  555,407
  600,142
  646,677
  695,096
  745,493
  797,969
  852,635
  909,609
  969,018
  1,030,998
  1,095,690
  1,163,247
  1,233,829
  1,307,604
  1,384,749
  1,465,451
Interest expense (income), $m
  5,696
  9,531
  12,393
  15,462
  18,739
  22,220
  25,899
  29,773
  33,840
  38,096
  42,542
  47,179
  52,007
  57,030
  62,254
  67,682
  73,324
  79,187
  85,280
  91,615
  98,202
  105,055
  112,188
  119,615
  127,352
  135,417
  143,828
  152,602
  161,761
  171,326
  181,319
Earnings before tax, $m
  33,196
  50,104
  68,227
  87,530
  107,983
  129,564
  152,254
  176,044
  200,928
  226,912
  283,319
  311,544
  340,927
  371,504
  403,317
  436,417
  470,860
  506,711
  544,040
  582,923
  623,445
  665,694
  709,767
  755,764
  803,795
  853,972
  906,416
  961,254
  1,018,620
  1,078,653
Tax expense, $m
  8,963
  13,528
  18,421
  23,633
  29,155
  34,982
  41,109
  47,532
  54,251
  61,266
  76,496
  84,117
  92,050
  100,306
  108,896
  117,833
  127,132
  136,812
  146,891
  157,389
  168,330
  179,737
  191,637
  204,056
  217,025
  230,572
  244,732
  259,539
  275,027
  291,236
Net income, $m
  24,233
  36,576
  49,806
  63,897
  78,828
  94,582
  111,146
  128,512
  146,678
  165,646
  206,823
  227,427
  248,877
  271,198
  294,422
  318,584
  343,728
  369,899
  397,149
  425,534
  455,115
  485,957
  518,130
  551,708
  586,770
  623,399
  661,684
  701,715
  743,592
  787,417

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
  612,807
  699,703
  792,497
  891,050
  995,234
  1,104,939
  1,220,081
  1,340,608
  1,466,502
  1,597,778
  1,734,493
  1,876,736
  2,024,637
  2,178,362
  2,338,111
  2,504,119
  2,676,655
  2,856,019
  3,042,545
  3,236,594
  3,438,560
  3,648,865
  3,867,960
  4,096,325
  4,334,470
  4,582,933
  4,842,283
  5,113,118
  5,396,068
  5,691,796
Adjusted assets (=assets-cash), $m
  612,807
  699,703
  792,497
  891,050
  995,234
  1,104,939
  1,220,081
  1,340,608
  1,466,502
  1,597,778
  1,734,493
  1,876,736
  2,024,637
  2,178,362
  2,338,111
  2,504,119
  2,676,655
  2,856,019
  3,042,545
  3,236,594
  3,438,560
  3,648,865
  3,867,960
  4,096,325
  4,334,470
  4,582,933
  4,842,283
  5,113,118
  5,396,068
  5,691,796
Revenue / Adjusted assets
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
Average production assets, $m
  305,295
  348,586
  394,816
  443,914
  495,818
  550,472
  607,835
  667,880
  730,599
  796,000
  864,110
  934,975
  1,008,658
  1,085,243
  1,164,828
  1,247,532
  1,333,488
  1,422,846
  1,515,771
  1,612,445
  1,713,063
  1,817,836
  1,926,987
  2,040,757
  2,159,398
  2,283,181
  2,412,386
  2,547,314
  2,688,278
  2,835,607
Working capital, $m
  -9,245
  -10,556
  -11,956
  -13,443
  -15,015
  -16,670
  -18,407
  -20,226
  -22,125
  -24,106
  -26,168
  -28,314
  -30,546
  -32,865
  -35,275
  -37,780
  -40,383
  -43,089
  -45,903
  -48,830
  -51,878
  -55,050
  -58,356
  -61,801
  -65,394
  -69,143
  -73,056
  -77,142
  -81,410
  -85,872
Total debt, $m
  229,506
  286,335
  347,023
  411,477
  479,613
  551,360
  626,663
  705,488
  787,822
  873,677
  963,088
  1,056,115
  1,152,843
  1,253,379
  1,357,855
  1,466,424
  1,579,262
  1,696,567
  1,818,554
  1,945,463
  2,077,549
  2,215,088
  2,358,376
  2,507,727
  2,663,473
  2,825,968
  2,995,583
  3,172,709
  3,357,759
  3,551,165
Total liabilities, $m
  400,776
  457,605
  518,293
  582,747
  650,883
  722,630
  797,933
  876,758
  959,092
  1,044,947
  1,134,358
  1,227,385
  1,324,113
  1,424,649
  1,529,125
  1,637,694
  1,750,532
  1,867,837
  1,989,824
  2,116,733
  2,248,819
  2,386,358
  2,529,646
  2,678,997
  2,834,743
  2,997,238
  3,166,853
  3,343,979
  3,529,029
  3,722,435
Total equity, $m
  212,031
  242,097
  274,204
  308,303
  344,351
  382,309
  422,148
  463,850
  507,410
  552,831
  600,134
  649,351
  700,525
  753,713
  808,986
  866,425
  926,123
  988,183
  1,052,721
  1,119,862
  1,189,742
  1,262,507
  1,338,314
  1,417,329
  1,499,727
  1,585,695
  1,675,430
  1,769,139
  1,867,040
  1,969,361
Total liabilities and equity, $m
  612,807
  699,702
  792,497
  891,050
  995,234
  1,104,939
  1,220,081
  1,340,608
  1,466,502
  1,597,778
  1,734,492
  1,876,736
  2,024,638
  2,178,362
  2,338,111
  2,504,119
  2,676,655
  2,856,020
  3,042,545
  3,236,595
  3,438,561
  3,648,865
  3,867,960
  4,096,326
  4,334,470
  4,582,933
  4,842,283
  5,113,118
  5,396,069
  5,691,796
Debt-to-equity ratio
  1.080
  1.180
  1.270
  1.330
  1.390
  1.440
  1.480
  1.520
  1.550
  1.580
  1.600
  1.630
  1.650
  1.660
  1.680
  1.690
  1.710
  1.720
  1.730
  1.740
  1.750
  1.750
  1.760
  1.770
  1.780
  1.780
  1.790
  1.790
  1.800
  1.800
Adjusted equity ratio
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24,233
  36,576
  49,806
  63,897
  78,828
  94,582
  111,146
  128,512
  146,678
  165,646
  206,823
  227,427
  248,877
  271,198
  294,422
  318,584
  343,728
  369,899
  397,149
  425,534
  455,115
  485,957
  518,130
  551,708
  586,770
  623,399
  661,684
  701,715
  743,592
  787,417
Depreciation, amort., depletion, $m
  51,436
  54,573
  57,923
  61,480
  65,242
  69,202
  73,359
  77,710
  82,255
  86,994
  62,617
  67,752
  73,091
  78,641
  84,408
  90,401
  96,630
  103,105
  109,839
  116,844
  124,135
  131,727
  139,637
  147,881
  156,478
  165,448
  174,811
  184,588
  194,803
  205,479
Funds from operations, $m
  75,669
  91,148
  107,729
  125,377
  144,069
  163,784
  184,505
  206,222
  228,932
  252,640
  269,440
  295,179
  321,968
  349,839
  378,829
  408,985
  440,357
  473,004
  506,987
  542,378
  579,250
  617,684
  657,767
  699,589
  743,248
  788,847
  836,494
  886,303
  938,395
  992,896
Change in working capital, $m
  -1,220
  -1,311
  -1,400
  -1,487
  -1,572
  -1,655
  -1,737
  -1,818
  -1,899
  -1,981
  -2,063
  -2,146
  -2,231
  -2,319
  -2,410
  -2,505
  -2,603
  -2,706
  -2,814
  -2,928
  -3,047
  -3,173
  -3,305
  -3,445
  -3,593
  -3,749
  -3,913
  -4,086
  -4,269
  -4,462
Cash from operations, $m
  76,889
  92,459
  109,129
  126,864
  145,641
  165,439
  186,242
  208,040
  230,832
  254,620
  271,502
  297,325
  324,199
  352,158
  381,240
  411,490
  442,961
  475,710
  509,802
  545,305
  582,297
  620,857
  661,072
  703,034
  746,841
  792,596
  840,407
  890,390
  942,664
  997,357
Maintenance CAPEX, $m
  -19,210
  -22,123
  -25,260
  -28,610
  -32,168
  -35,929
  -39,889
  -44,046
  -48,397
  -52,942
  -57,681
  -62,617
  -67,752
  -73,091
  -78,641
  -84,408
  -90,401
  -96,630
  -103,105
  -109,839
  -116,844
  -124,135
  -131,727
  -139,637
  -147,881
  -156,478
  -165,448
  -174,811
  -184,588
  -194,803
New CAPEX, $m
  -40,200
  -43,291
  -46,230
  -49,098
  -51,903
  -54,654
  -57,363
  -60,046
  -62,719
  -65,401
  -68,110
  -70,865
  -73,683
  -76,584
  -79,586
  -82,704
  -85,956
  -89,358
  -92,926
  -96,674
  -100,618
  -104,772
  -109,151
  -113,770
  -118,642
  -123,782
  -129,206
  -134,928
  -140,964
  -147,329
Cash from investing activities, $m
  -59,410
  -65,414
  -71,490
  -77,708
  -84,071
  -90,583
  -97,252
  -104,092
  -111,116
  -118,343
  -125,791
  -133,482
  -141,435
  -149,675
  -158,227
  -167,112
  -176,357
  -185,988
  -196,031
  -206,513
  -217,462
  -228,907
  -240,878
  -253,407
  -266,523
  -280,260
  -294,654
  -309,739
  -325,552
  -342,132
Free cash flow, $m
  17,479
  27,046
  37,639
  49,156
  61,570
  74,856
  88,989
  103,949
  119,716
  136,277
  145,711
  163,844
  182,764
  202,482
  223,013
  244,378
  266,604
  289,722
  313,771
  338,793
  364,835
  391,950
  420,194
  449,628
  480,318
  512,335
  545,753
  580,651
  617,112
  655,225
Issuance/(repayment) of debt, $m
  53,001
  56,830
  60,688
  64,454
  68,136
  71,747
  75,303
  78,825
  82,334
  85,855
  89,411
  93,027
  96,728
  100,536
  104,476
  108,569
  112,838
  117,304
  121,988
  126,908
  132,086
  137,539
  143,288
  149,351
  155,747
  162,495
  169,615
  177,126
  185,050
  193,406
Issuance/(repurchase) of shares, $m
  3,709
  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  
  56,710
  56,830
  60,688
  64,454
  68,136
  71,747
  75,303
  78,825
  82,334
  85,855
  89,411
  93,027
  96,728
  100,536
  104,476
  108,569
  112,838
  117,304
  121,988
  126,908
  132,086
  137,539
  143,288
  149,351
  155,747
  162,495
  169,615
  177,126
  185,050
  193,406
Total cash flow (excl. dividends), $m
  74,188
  83,876
  98,327
  113,610
  129,706
  146,603
  164,293
  182,773
  202,050
  222,132
  235,122
  256,871
  279,492
  303,018
  327,489
  352,947
  379,442
  407,027
  435,759
  465,701
  496,921
  529,489
  563,482
  598,979
  636,065
  674,830
  715,368
  757,777
  802,162
  848,631
Retained Cash Flow (-), $m
  -27,942
  -30,066
  -32,107
  -34,099
  -36,048
  -37,958
  -39,839
  -41,702
  -43,559
  -45,422
  -47,303
  -49,216
  -51,174
  -53,189
  -55,273
  -57,439
  -59,697
  -62,060
  -64,538
  -67,141
  -69,880
  -72,765
  -75,807
  -79,014
  -82,398
  -85,968
  -89,735
  -93,709
  -97,901
  -102,322
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
  46,246
  53,810
  66,220
  79,510
  93,658
  108,645
  124,453
  141,071
  158,491
  176,710
  187,819
  207,655
  228,318
  249,830
  272,216
  295,509
  319,745
  344,967
  371,221
  398,560
  427,041
  456,724
  487,675
  519,964
  553,667
  588,862
  625,633
  664,068
  704,261
  746,309
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  43,180
  46,602
  52,820
  57,970
  61,915
  64,562
  65,872
  65,857
  64,580
  62,154
  56,354
  52,488
  47,973
  43,023
  37,849
  32,651
  27,606
  22,863
  18,534
  14,695
  11,386
  8,613
  6,355
  4,568
  3,196
  2,173
  1,435
  918
  569
  341
Current shareholders' claim on cash, %
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6
  98.6

AT&T Inc. is a holding company. The Company is a provider of communications and digital entertainment services in the United States and the world. The Company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The Company offers its services and products to consumers in the United States, Mexico and Latin America and to businesses and other providers of telecommunications services worldwide. It also owns and operates three regional TV sports networks, and retains non-controlling interests in another regional sports network and a network dedicated to game-related programming, as well as Internet interactive game playing. Its services and products include wireless communications, data/broadband and Internet services, digital video services, local and long-distance telephone services, telecommunications equipment, managed networking, and wholesale services. Its subsidiaries include AT&T Mobility and SKY Brasil Servicos Ltda.

FINANCIAL RATIOS  of  AT&T Inc. (T)

Valuation Ratios
P/E Ratio 16.5
Price to Sales 1.3
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 5.5
Price to Free Cash Flow 12
Growth Rates
Sales Growth Rate 11.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12%
Cap. Spend. - 3 Yr. Gr. Rate 0.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 92.3%
Total Debt to Equity 100.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 10.6%
Return On Equity - 3 Yr. Avg. 10.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 53.1%
Gross Margin - 3 Yr. Avg. 54%
EBITDA Margin 31.4%
EBITDA Margin - 3 Yr. Avg. 28.4%
Operating Margin 14.9%
Oper. Margin - 3 Yr. Avg. 13.7%
Pre-Tax Margin 12.1%
Pre-Tax Margin - 3 Yr. Avg. 11.3%
Net Profit Margin 7.9%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 32.7%
Eff/ Tax Rate - 3 Yr. Avg. 33.8%
Payout Ratio 90.9%

T stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the T stock intrinsic value calculation we used $170756 million for the last fiscal year's total revenue generated by AT&T Inc.. The default revenue input number comes from 0001 income statement of AT&T Inc.. 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 T stock valuation model: a) initial revenue growth rate of 15.2% 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 7.1%, whose default value for T is calculated based on our internal credit rating of AT&T Inc., 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 AT&T Inc..
    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 T stock the variable cost ratio is equal to 40%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $78038 million in the base year in the intrinsic value calculation for T 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 AT&T Inc..

Corporate tax rate of 27% is the nominal tax rate for AT&T Inc.. 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 T 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 T are equal to 155.2%.

Life of production assets of 13.8 years is the average useful life of capital assets used in AT&T Inc. 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 T is equal to -4.7%. 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 - $184089 million for AT&T Inc. - 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 7290.186 million for AT&T Inc. 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 AT&T Inc. at the current share price and the inputted number of shares is $254.9 billion.

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