Intrinsic value of AMC Entertainment Holding - AMC

Previous Close

$13.00

  Intrinsic Value

$147.05

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+96%

Previous close

$13.00

 
Intrinsic value

$147.05

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+96%

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

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 1.7

 

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
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  3,236
  5,178
  7,999
  11,963
  17,358
  24,489
  33,667
  45,191
  59,339
  76,355
  96,443
  119,760
  146,418
  176,483
  209,980
  246,899
  287,202
  330,833
  377,720
  427,788
  480,961
  537,169
  596,355
  658,472
  723,494
  791,409
  862,228
  935,980
  1,012,714
  1,092,499
  1,175,426
Variable operating expenses, $m
 
  4,543
  6,805
  9,981
  14,305
  20,021
  27,376
  36,612
  47,951
  61,589
  77,688
  95,983
  117,348
  141,444
  168,290
  197,880
  230,182
  265,150
  302,728
  342,855
  385,471
  430,520
  477,955
  527,740
  579,852
  634,284
  691,042
  750,151
  811,651
  875,596
  942,058
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
  4,543
  6,805
  9,981
  14,305
  20,021
  27,376
  36,612
  47,951
  61,589
  77,688
  95,983
  117,348
  141,444
  168,290
  197,880
  230,182
  265,150
  302,728
  342,855
  385,471
  430,520
  477,955
  527,740
  579,852
  634,284
  691,042
  750,151
  811,651
  875,596
  942,058
Operating income, $m
  213
  635
  1,195
  1,982
  3,053
  4,469
  6,291
  8,579
  11,388
  14,766
  18,754
  23,777
  29,070
  35,039
  41,689
  49,019
  57,021
  65,683
  74,992
  84,933
  95,489
  106,649
  118,400
  130,732
  143,642
  157,126
  171,186
  185,828
  201,063
  216,904
  233,368
EBITDA, $m
  481
  1,220
  1,885
  2,819
  4,090
  5,771
  7,933
  10,649
  13,983
  17,992
  22,726
  28,220
  34,502
  41,587
  49,480
  58,180
  67,677
  77,958
  89,007
  100,805
  113,334
  126,579
  140,526
  155,164
  170,485
  186,489
  203,177
  220,556
  238,638
  257,438
  276,980
Interest expense (income), $m
  105
  160
  297
  497
  778
  1,160
  1,665
  2,315
  3,131
  4,133
  5,338
  6,760
  8,412
  10,300
  12,429
  14,801
  17,415
  20,269
  23,359
  26,679
  30,225
  33,991
  37,971
  42,162
  46,561
  51,166
  55,975
  60,990
  66,213
  71,647
  77,297
Earnings before tax, $m
  150
  475
  897
  1,485
  2,275
  3,309
  4,626
  6,264
  8,257
  10,633
  13,416
  17,017
  20,658
  24,739
  29,261
  34,218
  39,606
  45,414
  51,633
  58,253
  65,264
  72,658
  80,429
  88,570
  97,081
  105,960
  115,211
  124,838
  134,850
  145,257
  156,071
Tax expense, $m
  38
  128
  242
  401
  614
  893
  1,249
  1,691
  2,229
  2,871
  3,622
  4,594
  5,578
  6,680
  7,900
  9,239
  10,694
  12,262
  13,941
  15,728
  17,621
  19,618
  21,716
  23,914
  26,212
  28,609
  31,107
  33,706
  36,409
  39,219
  42,139
Net income, $m
  112
  346
  655
  1,084
  1,661
  2,415
  3,377
  4,573
  6,027
  7,762
  9,794
  12,422
  15,080
  18,060
  21,360
  24,979
  28,912
  33,152
  37,692
  42,525
  47,643
  53,041
  58,713
  64,656
  70,869
  77,351
  84,104
  91,132
  98,440
  106,037
  113,932

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
  13,413
  20,724
  30,992
  44,969
  63,444
  87,221
  117,076
  153,728
  197,811
  249,851
  310,259
  379,321
  457,209
  543,989
  639,634
  744,048
  857,081
  978,550
  1,108,259
  1,246,012
  1,391,630
  1,544,960
  1,705,887
  1,874,337
  2,050,284
  2,233,752
  2,424,818
  2,623,610
  2,830,309
  3,045,146
Adjusted assets (=assets-cash), $m
  8,390
  13,413
  20,724
  30,992
  44,969
  63,444
  87,221
  117,076
  153,728
  197,811
  249,851
  310,259
  379,321
  457,209
  543,989
  639,634
  744,048
  857,081
  978,550
  1,108,259
  1,246,012
  1,391,630
  1,544,960
  1,705,887
  1,874,337
  2,050,284
  2,233,752
  2,424,818
  2,623,610
  2,830,309
  3,045,146
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
  4,111
  6,352
  9,499
  13,782
  19,445
  26,732
  35,882
  47,115
  60,626
  76,575
  95,089
  116,256
  140,127
  166,724
  196,038
  228,039
  262,682
  299,910
  339,664
  381,883
  426,512
  473,506
  522,827
  574,454
  628,379
  684,609
  743,168
  804,095
  867,445
  933,288
Working capital, $m
  -505
  -518
  -800
  -1,196
  -1,736
  -2,449
  -3,367
  -4,519
  -5,934
  -7,636
  -9,644
  -11,976
  -14,642
  -17,648
  -20,998
  -24,690
  -28,720
  -33,083
  -37,772
  -42,779
  -48,096
  -53,717
  -59,635
  -65,847
  -72,349
  -79,141
  -86,223
  -93,598
  -101,271
  -109,250
  -117,543
Total debt, $m
  4,653
  8,498
  14,207
  22,227
  33,142
  47,572
  66,142
  89,458
  118,084
  152,512
  193,156
  240,334
  294,272
  355,102
  422,877
  497,576
  579,123
  667,402
  762,270
  863,572
  971,157
  1,084,885
  1,204,636
  1,330,320
  1,461,879
  1,599,294
  1,742,582
  1,891,805
  2,047,062
  2,208,494
  2,376,281
Total liabilities, $m
  6,631
  10,476
  16,185
  24,205
  35,120
  49,550
  68,120
  91,436
  120,062
  154,490
  195,134
  242,312
  296,250
  357,080
  424,855
  499,554
  581,101
  669,380
  764,248
  865,550
  973,135
  1,086,863
  1,206,614
  1,332,298
  1,463,857
  1,601,272
  1,744,560
  1,893,783
  2,049,040
  2,210,472
  2,378,259
Total equity, $m
  2,011
  2,938
  4,539
  6,787
  9,848
  13,894
  19,101
  25,640
  33,666
  43,321
  54,717
  67,947
  83,071
  100,129
  119,133
  140,080
  162,946
  187,701
  214,302
  242,709
  272,877
  304,767
  338,346
  373,589
  410,480
  449,012
  489,192
  531,035
  574,571
  619,838
  666,887
Total liabilities and equity, $m
  8,642
  13,414
  20,724
  30,992
  44,968
  63,444
  87,221
  117,076
  153,728
  197,811
  249,851
  310,259
  379,321
  457,209
  543,988
  639,634
  744,047
  857,081
  978,550
  1,108,259
  1,246,012
  1,391,630
  1,544,960
  1,705,887
  1,874,337
  2,050,284
  2,233,752
  2,424,818
  2,623,611
  2,830,310
  3,045,146
Debt-to-equity ratio
  2.314
  2.890
  3.130
  3.270
  3.370
  3.420
  3.460
  3.490
  3.510
  3.520
  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
  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
  346
  655
  1,084
  1,661
  2,415
  3,377
  4,573
  6,027
  7,762
  9,794
  12,422
  15,080
  18,060
  21,360
  24,979
  28,912
  33,152
  37,692
  42,525
  47,643
  53,041
  58,713
  64,656
  70,869
  77,351
  84,104
  91,132
  98,440
  106,037
  113,932
Depreciation, amort., depletion, $m
  268
  585
  690
  837
  1,037
  1,302
  1,642
  2,070
  2,595
  3,226
  3,972
  4,443
  5,433
  6,548
  7,791
  9,161
  10,656
  12,275
  14,014
  15,872
  17,845
  19,930
  22,126
  24,431
  26,844
  29,364
  31,991
  34,727
  37,575
  40,535
  43,612
Funds from operations, $m
  349
  932
  1,345
  1,921
  2,698
  3,717
  5,019
  6,643
  8,622
  10,989
  13,766
  16,865
  20,513
  24,608
  29,151
  34,140
  39,568
  45,427
  51,707
  58,397
  65,488
  72,971
  80,839
  89,087
  97,712
  106,714
  116,095
  125,859
  136,015
  146,572
  157,543
Change in working capital, $m
  -83
  -194
  -282
  -396
  -539
  -713
  -918
  -1,152
  -1,415
  -1,702
  -2,009
  -2,332
  -2,666
  -3,006
  -3,350
  -3,692
  -4,030
  -4,363
  -4,689
  -5,007
  -5,317
  -5,621
  -5,919
  -6,212
  -6,502
  -6,792
  -7,082
  -7,375
  -7,673
  -7,979
  -8,293
Cash from operations, $m
  432
  1,126
  1,627
  2,317
  3,238
  4,431
  5,937
  7,795
  10,037
  12,690
  15,774
  19,197
  23,179
  27,614
  32,501
  37,832
  43,599
  49,790
  56,395
  63,404
  70,805
  78,592
  86,758
  95,299
  104,215
  113,506
  123,177
  133,234
  143,688
  154,551
  165,836
Maintenance CAPEX, $m
  0
  -120
  -192
  -297
  -444
  -644
  -909
  -1,249
  -1,677
  -2,202
  -2,833
  -3,578
  -4,443
  -5,433
  -6,548
  -7,791
  -9,161
  -10,656
  -12,275
  -14,014
  -15,872
  -17,845
  -19,930
  -22,126
  -24,431
  -26,844
  -29,364
  -31,991
  -34,727
  -37,575
  -40,535
New CAPEX, $m
  -422
  -1,543
  -2,241
  -3,147
  -4,283
  -5,662
  -7,287
  -9,150
  -11,233
  -13,511
  -15,950
  -18,514
  -21,166
  -23,872
  -26,597
  -29,314
  -32,001
  -34,643
  -37,228
  -39,754
  -42,219
  -44,630
  -46,993
  -49,321
  -51,627
  -53,925
  -56,230
  -58,559
  -60,927
  -63,350
  -65,844
Cash from investing activities, $m
  -1,355
  -1,663
  -2,433
  -3,444
  -4,727
  -6,306
  -8,196
  -10,399
  -12,910
  -15,713
  -18,783
  -22,092
  -25,609
  -29,305
  -33,145
  -37,105
  -41,162
  -45,299
  -49,503
  -53,768
  -58,091
  -62,475
  -66,923
  -71,447
  -76,058
  -80,769
  -85,594
  -90,550
  -95,654
  -100,925
  -106,379
Free cash flow, $m
  -923
  -537
  -805
  -1,127
  -1,490
  -1,876
  -2,259
  -2,604
  -2,873
  -3,022
  -3,008
  -2,895
  -2,431
  -1,690
  -644
  727
  2,437
  4,491
  6,892
  9,636
  12,714
  16,117
  19,834
  23,851
  28,156
  32,737
  37,583
  42,685
  48,034
  53,626
  59,457
Issuance/(repayment) of debt, $m
  1,065
  3,926
  5,709
  8,020
  10,915
  14,429
  18,570
  23,317
  28,625
  34,429
  40,644
  47,178
  53,938
  60,831
  67,775
  74,699
  81,547
  88,279
  94,868
  101,303
  107,585
  113,728
  119,751
  125,684
  131,559
  137,415
  143,289
  149,223
  155,257
  161,432
  167,787
Issuance/(repurchase) of shares, $m
  0
  751
  946
  1,165
  1,400
  1,631
  1,830
  1,966
  1,999
  1,892
  1,603
  807
  44
  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
  4,677
  6,655
  9,185
  12,315
  16,060
  20,400
  25,283
  30,624
  36,321
  42,247
  47,985
  53,982
  60,831
  67,775
  74,699
  81,547
  88,279
  94,868
  101,303
  107,585
  113,728
  119,751
  125,684
  131,559
  137,415
  143,289
  149,223
  155,257
  161,432
  167,787
Total cash flow (excl. dividends), $m
  76
  4,140
  5,850
  8,058
  10,826
  14,184
  18,141
  22,678
  27,752
  33,298
  39,238
  45,090
  51,551
  59,141
  67,131
  75,426
  83,984
  92,770
  101,760
  110,938
  120,299
  129,845
  139,585
  149,535
  159,716
  170,152
  180,872
  191,907
  203,291
  215,058
  227,244
Retained Cash Flow (-), $m
  -471
  -1,098
  -1,601
  -2,249
  -3,061
  -4,046
  -5,207
  -6,538
  -8,027
  -9,654
  -11,397
  -13,229
  -15,125
  -17,058
  -19,005
  -20,946
  -22,867
  -24,754
  -26,602
  -28,406
  -30,168
  -31,890
  -33,579
  -35,243
  -36,891
  -38,532
  -40,180
  -41,843
  -43,536
  -45,267
  -47,049
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
 
  3,213
  4,249
  5,809
  7,765
  10,138
  12,934
  16,140
  19,725
  23,644
  27,841
  31,861
  36,426
  42,083
  48,126
  54,480
  61,117
  68,016
  75,158
  82,532
  90,131
  97,955
  106,006
  114,292
  122,825
  131,619
  140,692
  150,064
  159,755
  169,791
  180,195
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
 
  2,913
  3,460
  4,207
  4,948
  5,621
  6,165
  6,529
  6,680
  6,608
  6,323
  5,785
  5,197
  4,633
  4,010
  3,367
  2,741
  2,164
  1,656
  1,228
  882
  613
  412
  267
  168
  101
  59
  33
  18
  9
  4
Current shareholders' claim on cash, %
  100
  67.2
  48.5
  37.1
  29.8
  24.8
  21.5
  19.1
  17.5
  16.4
  15.7
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4
  15.4

AMC Entertainment Holdings, Inc., through its subsidiaries, operates as a theatrical exhibition company in the United States and internationally. It owns, operates, or has interests in theatres. As of June 30, 2016, the company owned, operated, or had interests in 386 theatres with 5,334 screens primarily in the United States. The company was founded in 1920 and is headquartered in Leawood, Kansas. AMC Entertainment Holdings, Inc. operates as a subsidiary of Wanda America Investment Holding Co. Ltd.

FINANCIAL RATIOS  of  AMC Entertainment Holding (AMC)

Valuation Ratios
P/E Ratio 12.8
Price to Sales 0.4
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 3.3
Price to Free Cash Flow 143.1
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 60% 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 -10%. 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 129.276 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 $1.7 billion.

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COMPANY NEWS

▶ Why Theater Chains Are Tanking   [Aug-18-17 08:59PM  Motley Fool]
▶ [$$] MoviePass Says Success Will Convince Theater Industry to Cooperate   [Aug-16-17 10:06PM  The Wall Street Journal]
▶ Trading the content wars: 4 plays   [05:00PM  CNBC Videos]
▶ [$$] MoviePass Says Success Will Bring Cooperation   [02:59PM  The Wall Street Journal]
▶ AMC seeks to block MoviePass   [10:50AM  Yahoo Finance Video]
▶ Yahoo Finance Live: Market Movers - Aug 16th, 2017   [07:20AM  Yahoo Finance Video]
▶ [$$] AMC Objects to $10/Month MoviePass Plan   [Aug-15-17 08:50PM  The Wall Street Journal]
▶ Walking Dead producers file lawsuit against AMC over profits   [03:22PM  American City Business Journals]
▶ AMC Entertainment's Fire Sale Has Begun   [Aug-12-17 02:48PM  Motley Fool]
▶ [$$] Movie Theaters Have a Bigger Problem Than This Summer of Duds   [Aug-11-17 11:25PM  The Wall Street Journal]
▶ Spoiler alert: AMC doesn't plan layoffs as part of cuts   [09:45AM  American City Business Journals]
▶ AMC CEO: 'The quarter was simply a bust'   [12:18AM  American City Business Journals]
▶ AMC Entertainment Previewed a Horror Film of a Quarter   [Aug-06-17 05:35PM  Motley Fool]
▶ AMC Entertainment reports 2Q loss   [Aug-04-17 11:12PM  Associated Press]
▶ AMC Theatres rolling out big concessions upgrade in Chicago market   [02:05PM  American City Business Journals]
▶ [$$] Chinese-Backed Company to Buy the Studio Behind 'Spotlight'   [Aug-02-17 07:53PM  The Wall Street Journal]
▶ AMC shares plunge following earnings warning   [05:49PM  Investing.com]
▶ What Happened in the Stock Market Today   [05:10PM  Motley Fool]
▶ 3 ways to play media stocks   [05:00PM  CNBC Videos]
▶ Stocks Open Higher: Apple Breaks Out, Dow Clears 22,000   [09:50AM  Investor's Business Daily]
▶ 6 Most Important Things in Business Today   [05:13AM  24/7 Wall St.]
▶ [$$] AMC Entertainment Shares Plunge   [Aug-01-17 07:59PM  The Wall Street Journal]
▶ AMC shares bounce following tough week of losses   [Jul-20-17 03:36PM  MarketWatch]
▶ Barclays Bearish on AMC Entertainment   [11:27AM  TheStreet.com]
▶ [$$] AMC Says Dalian Wanda Didnt Fund Acquisitions   [09:03PM  The Wall Street Journal]
▶ [$$] AMC Says Dalian Wanda Didn't Fund Recent Acquisitions   [12:36PM  The Wall Street Journal]
▶ [$$] China Blocks Big Banks From Lending to Dalian Wanda   [02:06AM  The Wall Street Journal]
Stock chart of AMC 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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