BCE Inc. (BCE)

Discount cash flow analysis

Sell Overvalued by 48.3%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for BCE Inc., based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $31.71 $31.15 $30.60
Terminal Growth% 0 $31.86 $31.29 $30.74
  +1% $32.01 $31.44 $30.88

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $0.00 (overvalued by 100.0%) - 1 year ago
  • GordonGekko created a new valuation of $30.85 (undervalued by 18.61%) - over 8 years ago
  • Rayban10 created a new valuation of $29.69 (undervalued by 23.97%) - over 8 years ago
  • KiwiEMH created a new valuation of $31.29 (overvalued by 4.14%) - over 9 years ago
  • GordonGekko created a new valuation of $34.21 (overvalued by 1.13%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 57,440
Net Debt (Long-term borrowings less cash): 8,680
Equity Value: 26,284
Number of Shares Outstanding: 805,000,000
Calculated value per share: $31.29

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.