Intrinsic value of AMC Entertainment Holding - AMC

Previous Close

$15.25

  Intrinsic Value

$182.23

stock screener

  Rating & Target

str. buy

+999%

Previous close

$15.25

 
Intrinsic value

$182.23

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AMC 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 2016), $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 2.0

 

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, %
  9.81
  57.30
  52.07
  47.36
  43.13
  39.31
  35.88
  32.79
  30.01
  27.51
  25.26
  23.24
  21.41
  19.77
  18.29
  16.96
  15.77
  14.69
  13.72
  12.85
  12.06
  11.36
  10.72
  10.15
  9.64
  9.17
  8.75
  8.38
  8.04
  7.74
  7.46
Revenue, $m
  3,236
  5,090
  7,741
  11,407
  16,326
  22,745
  30,906
  41,042
  53,361
  68,042
  85,231
  105,035
  127,525
  152,739
  180,681
  211,332
  244,655
  280,598
  319,103
  360,107
  403,554
  449,391
  497,578
  548,084
  600,893
  656,006
  713,437
  773,217
  835,393
  900,028
  967,201
Variable operating expenses, $m
 
  4,473
  6,597
  9,536
  13,478
  18,622
  25,164
  33,287
  43,160
  54,926
  68,703
  84,182
  102,207
  122,414
  144,808
  169,375
  196,082
  224,889
  255,748
  288,612
  323,433
  360,170
  398,789
  439,268
  481,593
  525,763
  571,792
  619,703
  669,535
  721,337
  775,174
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
  3,023
  4,473
  6,597
  9,536
  13,478
  18,622
  25,164
  33,287
  43,160
  54,926
  68,703
  84,182
  102,207
  122,414
  144,808
  169,375
  196,082
  224,889
  255,748
  288,612
  323,433
  360,170
  398,789
  439,268
  481,593
  525,763
  571,792
  619,703
  669,535
  721,337
  775,174
Operating income, $m
  213
  617
  1,144
  1,871
  2,848
  4,122
  5,743
  7,755
  10,201
  13,116
  16,528
  20,854
  25,319
  30,325
  35,872
  41,958
  48,574
  55,710
  63,354
  71,495
  80,121
  89,222
  98,789
  108,816
  119,301
  130,243
  141,645
  153,514
  165,858
  178,691
  192,027
EBITDA, $m
  481
  1,199
  1,824
  2,688
  3,847
  5,360
  7,283
  9,671
  12,574
  16,034
  20,084
  24,751
  30,050
  35,992
  42,576
  49,799
  57,651
  66,121
  75,194
  84,856
  95,094
  105,895
  117,250
  129,151
  141,596
  154,582
  168,115
  182,202
  196,853
  212,084
  227,913
Interest expense (income), $m
  105
  160
  291
  479
  739
  1,087
  1,541
  2,119
  2,837
  3,710
  4,749
  5,966
  7,369
  8,962
  10,747
  12,726
  14,896
  17,256
  19,802
  22,528
  25,432
  28,509
  31,755
  35,167
  38,744
  42,484
  46,387
  50,454
  54,687
  59,090
  63,667
Earnings before tax, $m
  150
  457
  852
  1,392
  2,110
  3,036
  4,201
  5,636
  7,364
  9,406
  11,779
  14,887
  17,950
  21,363
  25,125
  29,232
  33,677
  38,453
  43,553
  48,967
  54,689
  60,713
  67,034
  73,649
  80,557
  87,759
  95,258
  103,060
  111,171
  119,601
  128,360
Tax expense, $m
  38
  123
  230
  376
  570
  820
  1,134
  1,522
  1,988
  2,540
  3,180
  4,020
  4,846
  5,768
  6,784
  7,893
  9,093
  10,382
  11,759
  13,221
  14,766
  16,392
  18,099
  19,885
  21,750
  23,695
  25,720
  27,826
  30,016
  32,292
  34,657
Net income, $m
  112
  334
  622
  1,017
  1,540
  2,216
  3,067
  4,114
  5,375
  6,866
  8,599
  10,868
  13,103
  15,595
  18,341
  21,339
  24,584
  28,071
  31,793
  35,746
  39,923
  44,320
  48,935
  53,764
  58,806
  64,064
  69,539
  75,234
  81,155
  87,308
  93,703

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  252
  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
  8,642
  13,187
  20,054
  29,552
  42,296
  58,925
  80,068
  106,326
  138,240
  176,275
  220,805
  272,112
  330,377
  395,696
  468,084
  547,493
  633,822
  726,939
  826,691
  932,920
  1,045,476
  1,164,226
  1,289,062
  1,419,906
  1,556,718
  1,699,497
  1,848,282
  2,003,152
  2,164,230
  2,331,679
  2,505,701
Adjusted assets (=assets-cash), $m
  8,390
  13,187
  20,054
  29,552
  42,296
  58,925
  80,068
  106,326
  138,240
  176,275
  220,805
  272,112
  330,377
  395,696
  468,084
  547,493
  633,822
  726,939
  826,691
  932,920
  1,045,476
  1,164,226
  1,289,062
  1,419,906
  1,556,718
  1,699,497
  1,848,282
  2,003,152
  2,164,230
  2,331,679
  2,505,701
Revenue / Adjusted assets
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
Average production assets, $m
  2,568
  4,042
  6,146
  9,057
  12,963
  18,059
  24,540
  32,587
  42,368
  54,025
  67,673
  83,398
  101,255
  121,274
  143,460
  167,798
  194,256
  222,795
  253,367
  285,925
  320,422
  356,817
  395,077
  435,178
  477,109
  520,869
  566,469
  613,934
  663,302
  714,622
  767,957
Working capital, $m
  -505
  -1,064
  -1,618
  -2,384
  -3,412
  -4,754
  -6,459
  -8,578
  -11,152
  -14,221
  -17,813
  -21,952
  -26,653
  -31,922
  -37,762
  -44,168
  -51,133
  -58,645
  -66,692
  -75,262
  -84,343
  -93,923
  -103,994
  -114,549
  -125,587
  -137,105
  -149,108
  -161,602
  -174,597
  -188,106
  -202,145
Total debt, $m
  4,653
  8,321
  13,684
  21,102
  31,055
  44,042
  60,555
  81,063
  105,988
  135,693
  170,471
  210,541
  256,046
  307,061
  363,596
  425,614
  493,037
  565,761
  643,667
  726,632
  814,539
  907,283
  1,004,779
  1,106,969
  1,213,819
  1,325,329
  1,441,530
  1,562,484
  1,688,286
  1,819,063
  1,954,975
Total liabilities, $m
  6,631
  10,299
  15,662
  23,080
  33,033
  46,020
  62,533
  83,041
  107,966
  137,671
  172,449
  212,519
  258,024
  309,039
  365,574
  427,592
  495,015
  567,739
  645,645
  728,610
  816,517
  909,261
  1,006,757
  1,108,947
  1,215,797
  1,327,307
  1,443,508
  1,564,462
  1,690,264
  1,821,041
  1,956,953
Total equity, $m
  2,011
  2,888
  4,392
  6,472
  9,263
  12,905
  17,535
  23,285
  30,275
  38,604
  48,356
  59,592
  72,353
  86,657
  102,510
  119,901
  138,807
  159,200
  181,045
  204,309
  228,959
  254,966
  282,305
  310,959
  340,921
  372,190
  404,774
  438,690
  473,966
  510,638
  548,749
Total liabilities and equity, $m
  8,642
  13,187
  20,054
  29,552
  42,296
  58,925
  80,068
  106,326
  138,241
  176,275
  220,805
  272,111
  330,377
  395,696
  468,084
  547,493
  633,822
  726,939
  826,690
  932,919
  1,045,476
  1,164,227
  1,289,062
  1,419,906
  1,556,718
  1,699,497
  1,848,282
  2,003,152
  2,164,230
  2,331,679
  2,505,702
Debt-to-equity ratio
  2.314
  2.880
  3.120
  3.260
  3.350
  3.410
  3.450
  3.480
  3.500
  3.510
  3.530
  3.530
  3.540
  3.540
  3.550
  3.550
  3.550
  3.550
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
  3.560
Adjusted equity ratio
  0.210
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  112
  334
  622
  1,017
  1,540
  2,216
  3,067
  4,114
  5,375
  6,866
  8,599
  10,868
  13,103
  15,595
  18,341
  21,339
  24,584
  28,071
  31,793
  35,746
  39,923
  44,320
  48,935
  53,764
  58,806
  64,064
  69,539
  75,234
  81,155
  87,308
  93,703
Depreciation, amort., depletion, $m
  268
  582
  681
  817
  999
  1,237
  1,540
  1,916
  2,373
  2,918
  3,556
  3,897
  4,732
  5,667
  6,704
  7,841
  9,077
  10,411
  11,840
  13,361
  14,973
  16,674
  18,462
  20,335
  22,295
  24,340
  26,471
  28,689
  30,995
  33,394
  35,886
Funds from operations, $m
  349
  916
  1,303
  1,833
  2,539
  3,453
  4,607
  6,030
  7,749
  9,784
  12,154
  14,765
  17,835
  21,262
  25,045
  29,180
  33,662
  38,482
  43,633
  49,107
  54,896
  60,994
  67,396
  74,099
  81,101
  88,404
  96,009
  103,922
  112,150
  120,702
  129,588
Change in working capital, $m
  -83
  -388
  -554
  -766
  -1,028
  -1,341
  -1,706
  -2,118
  -2,575
  -3,068
  -3,592
  -4,139
  -4,700
  -5,270
  -5,840
  -6,406
  -6,965
  -7,512
  -8,047
  -8,570
  -9,080
  -9,580
  -10,071
  -10,556
  -11,037
  -11,519
  -12,003
  -12,494
  -12,995
  -13,509
  -14,039
Cash from operations, $m
  432
  1,304
  1,857
  2,599
  3,567
  4,795
  6,313
  8,148
  10,323
  12,853
  15,747
  18,904
  22,535
  26,532
  30,885
  35,586
  40,626
  45,994
  51,680
  57,677
  63,976
  70,574
  77,467
  84,655
  92,139
  99,922
  108,012
  116,416
  125,145
  134,211
  143,628
Maintenance CAPEX, $m
  0
  -120
  -189
  -287
  -423
  -606
  -844
  -1,147
  -1,523
  -1,980
  -2,525
  -3,162
  -3,897
  -4,732
  -5,667
  -6,704
  -7,841
  -9,077
  -10,411
  -11,840
  -13,361
  -14,973
  -16,674
  -18,462
  -20,335
  -22,295
  -24,340
  -26,471
  -28,689
  -30,995
  -33,394
New CAPEX, $m
  -422
  -1,474
  -2,104
  -2,911
  -3,906
  -5,096
  -6,480
  -8,048
  -9,781
  -11,657
  -13,648
  -15,724
  -17,857
  -20,019
  -22,186
  -24,337
  -26,459
  -28,539
  -30,572
  -32,558
  -34,497
  -36,395
  -38,260
  -40,102
  -41,931
  -43,759
  -45,600
  -47,465
  -49,368
  -51,320
  -53,335
Cash from investing activities, $m
  -1,355
  -1,594
  -2,293
  -3,198
  -4,329
  -5,702
  -7,324
  -9,195
  -11,304
  -13,637
  -16,173
  -18,886
  -21,754
  -24,751
  -27,853
  -31,041
  -34,300
  -37,616
  -40,983
  -44,398
  -47,858
  -51,368
  -54,934
  -58,564
  -62,266
  -66,054
  -69,940
  -73,936
  -78,057
  -82,315
  -86,729
Free cash flow, $m
  -923
  -290
  -437
  -599
  -762
  -907
  -1,011
  -1,046
  -981
  -784
  -426
  17
  781
  1,781
  3,032
  4,545
  6,327
  8,378
  10,697
  13,280
  16,119
  19,206
  22,533
  26,092
  29,872
  33,868
  38,073
  42,481
  47,089
  51,895
  56,899
Issuance/(repayment) of debt, $m
  1,065
  3,749
  5,363
  7,418
  9,954
  12,987
  16,513
  20,507
  24,925
  29,705
  34,778
  40,070
  45,505
  51,014
  56,535
  62,018
  67,423
  72,724
  77,906
  82,965
  87,907
  92,744
  97,497
  102,189
  106,851
  111,510
  116,201
  120,954
  125,802
  130,778
  135,912
Issuance/(repurchase) of shares, $m
  0
  714
  882
  1,064
  1,251
  1,426
  1,563
  1,636
  1,614
  1,463
  1,153
  368
  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  
  998
  4,463
  6,245
  8,482
  11,205
  14,413
  18,076
  22,143
  26,539
  31,168
  35,931
  40,438
  45,505
  51,014
  56,535
  62,018
  67,423
  72,724
  77,906
  82,965
  87,907
  92,744
  97,497
  102,189
  106,851
  111,510
  116,201
  120,954
  125,802
  130,778
  135,912
Total cash flow (excl. dividends), $m
  76
  4,173
  5,808
  7,883
  10,443
  13,505
  17,065
  21,098
  25,558
  30,384
  35,506
  40,455
  46,286
  52,795
  59,567
  66,563
  73,750
  81,102
  88,603
  96,245
  104,025
  111,950
  120,030
  128,281
  136,723
  145,378
  154,273
  163,434
  172,891
  182,672
  192,810
Retained Cash Flow (-), $m
  -471
  -1,048
  -1,504
  -2,080
  -2,791
  -3,642
  -4,630
  -5,750
  -6,989
  -8,330
  -9,752
  -11,236
  -12,760
  -14,305
  -15,853
  -17,390
  -18,906
  -20,393
  -21,846
  -23,264
  -24,650
  -26,006
  -27,339
  -28,655
  -29,962
  -31,269
  -32,584
  -33,917
  -35,276
  -36,671
  -38,111
Prev. year cash balance distribution, $m
 
  171
  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
 
  3,296
  4,304
  5,803
  7,652
  9,863
  12,435
  15,348
  18,569
  22,054
  25,754
  29,219
  33,526
  38,490
  43,714
  49,173
  54,844
  60,709
  66,758
  72,980
  79,375
  85,944
  92,691
  99,626
  106,761
  114,110
  121,689
  129,518
  137,615
  146,001
  154,700
Discount rate, %
 
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
 
  2,988
  3,505
  4,202
  4,876
  5,469
  5,927
  6,208
  6,288
  6,163
  5,849
  5,305
  4,784
  4,238
  3,643
  3,039
  2,460
  1,932
  1,471
  1,086
  777
  538
  360
  233
  146
  88
  51
  28
  15
  8
  4
Current shareholders' claim on cash, %
  100
  71.9
  54.9
  44.2
  36.9
  32.0
  28.5
  26.0
  24.3
  23.2
  22.5
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4
  22.4

AMC Entertainment Holdings, Inc. is a holding company. The Company, through its subsidiaries, including AMC Entertainment Inc. (AMCE), American Multi-Cinema, Inc. (OpCo) and its subsidiaries, is engaged in the theatrical exhibition business. It operates through theatrical exhibition operations segment. It licenses first-run motion pictures from distributors owned by film production companies and from independent distributors. The Company also offers a range of food and beverage items, which include popcorn; soft drinks; candy; hot dogs; specialty drinks, including beers, wine and mixed drinks, and made to order hot foods, including menu choices, such as curly fries, chicken tenders and mozzarella sticks. It operates over 900 theatres with approximately 10,000 screens globally, including over 661 theatres with approximately 8,200 screens in the United States and over 244 theatres with approximately 2,200 screens in Europe. The Company’s subsidiary also includes Carmike Cinemas, Inc.

FINANCIAL RATIOS  of  AMC Entertainment Holding (AMC)

Valuation Ratios
P/E Ratio 15
Price to Sales 0.5
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 167.8
Growth Rates
Sales Growth Rate 9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.7%
Cap. Spend. - 3 Yr. Gr. Rate 10.1%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 227.3%
Total Debt to Equity 231.4%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.2%
Return On Equity 6.3%
Return On Equity - 3 Yr. Avg. 5.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 61.4%
EBITDA Margin 16.2%
EBITDA Margin - 3 Yr. Avg. 16.3%
Operating Margin 6.6%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin 4.6%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 25.3%
Eff/ Tax Rate - 3 Yr. Avg. 32%
Payout Ratio 71.4%

AMC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMC stock intrinsic value calculation we used $3236 million for the last fiscal year's total revenue generated by AMC Entertainment Holding. The default revenue input number comes from 2016 income statement of AMC Entertainment Holding. 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 AMC stock valuation model: a) initial revenue growth rate of 57.3% 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 10.3%, whose default value for AMC is calculated based on our internal credit rating of AMC Entertainment Holding, 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 AMC Entertainment Holding.
    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 AMC stock the variable cost ratio is equal to 92.3%.

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 AMC 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 3.5% for AMC Entertainment Holding.

Corporate tax rate of 27% is the nominal tax rate for AMC Entertainment Holding. 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 AMC 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 AMC are equal to 79.4%.

Life of production assets of 21.4 years is the average useful life of capital assets used in AMC Entertainment Holding 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 AMC is equal to -20.9%. 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 - $2011 million for AMC Entertainment Holding - 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 130.714 million for AMC Entertainment Holding 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 AMC Entertainment Holding at the current share price and the inputted number of shares is $2.0 billion.

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COMPANY NEWS

▶ [$$] Cineworld to Buy Regal in $3.6 Billion Movie Theater Deal   [Dec-06-17 06:08AM  The Wall Street Journal]
▶ 10 Losers That Will Be 2018s Best Stocks to Buy   [Dec-04-17 02:10PM  InvestorPlace]
▶ Global merger may rewrite competition script for AMC Entertainment   [Dec-01-17 02:30PM  American City Business Journals]
▶ AMC Entertainment May Hit Up European Investors for Cash   [Nov-25-17 02:09PM  Motley Fool]
▶ How Major Theater Companies Are Reacting to MoviePass   [Nov-18-17 10:50AM  Motley Fool]
▶ 3 Growth Stocks at Deep-Value Prices   [Nov-15-17 01:59PM  Motley Fool]
▶ IIROC Trading Halt - AMC   [09:03AM  PR Newswire]
▶ IIROC Trading Halt - AMC   [09:03AM  CNW Group]
▶ AMC Entertainment reports 3Q loss   [Nov-06-17 05:49PM  Associated Press]
▶ Disneys big demands for theaters showing Star Wars   [10:51AM  Yahoo Finance Video]
▶ At the Movies: 6 Top Theater Turnarounds   [Nov-01-17 07:37AM  Investopedia]
▶ Will Moviepass Save The Movie Theater?   [Oct-31-17 03:28PM  Forbes]
▶ AMC CEO: We are significantly getting into streaming   [Oct-19-17 08:46AM  CNBC Videos]
▶ 10 Ideas for Generating Monthly Dividends   [Oct-12-17 04:44PM  TheStreet.com]
▶ Yahoo Finance Live: Midday Movers   [Oct-03-17 09:20AM  Yahoo Finance Video]
▶ AMC banks $20M on new virtual-reality experience   [10:32AM  American City Business Journals]
▶ Ikea opening second Arizona store   [Sep-26-17 01:20PM  American City Business Journals]
Financial statements of AMC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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