Intrinsic value of Central European Media Enterprises Cl A - CETV

Previous Close

$4.70

  Intrinsic Value

$10.05

stock screener

  Rating & Target

str. buy

+114%

Previous close

$4.70

 
Intrinsic value

$10.05

 
Up/down potential

+114%

 
Rating

str. buy

We calculate the intrinsic value of CETV 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

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, %
  5.28
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
Revenue, $m
  638
  703
  771
  842
  916
  993
  1,073
  1,157
  1,243
  1,333
  1,427
  1,524
  1,625
  1,730
  1,840
  1,954
  2,072
  2,196
  2,325
  2,459
  2,599
  2,746
  2,898
  3,058
  3,225
  3,400
  3,583
  3,774
  3,974
  4,183
  4,403
Variable operating expenses, $m
 
  587
  638
  691
  746
  804
  864
  926
  991
  1,058
  1,128
  1,141
  1,217
  1,295
  1,377
  1,463
  1,551
  1,644
  1,740
  1,841
  1,946
  2,055
  2,170
  2,290
  2,415
  2,545
  2,682
  2,825
  2,975
  3,132
  3,296
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
  677
  587
  638
  691
  746
  804
  864
  926
  991
  1,058
  1,128
  1,141
  1,217
  1,295
  1,377
  1,463
  1,551
  1,644
  1,740
  1,841
  1,946
  2,055
  2,170
  2,290
  2,415
  2,545
  2,682
  2,825
  2,975
  3,132
  3,296
Operating income, $m
  -39
  117
  134
  151
  170
  189
  210
  231
  252
  275
  298
  383
  409
  435
  462
  491
  521
  552
  584
  618
  653
  690
  729
  769
  811
  855
  901
  949
  999
  1,052
  1,107
EBITDA, $m
  328
  265
  290
  317
  345
  374
  404
  435
  468
  502
  537
  574
  612
  651
  692
  735
  780
  826
  875
  925
  978
  1,033
  1,091
  1,151
  1,214
  1,280
  1,348
  1,420
  1,496
  1,574
  1,657
Interest expense (income), $m
  54
  56
  61
  69
  76
  84
  92
  101
  110
  119
  129
  139
  149
  160
  171
  183
  195
  207
  220
  234
  249
  263
  279
  295
  312
  330
  349
  368
  389
  410
  432
Earnings before tax, $m
  -173
  60
  72
  83
  94
  105
  117
  130
  143
  156
  170
  245
  260
  275
  292
  309
  326
  345
  364
  384
  405
  427
  449
  473
  498
  524
  552
  580
  610
  642
  674
Tax expense, $m
  8
  16
  19
  22
  25
  28
  32
  35
  38
  42
  46
  66
  70
  74
  79
  83
  88
  93
  98
  104
  109
  115
  121
  128
  135
  142
  149
  157
  165
  173
  182
Net income, $m
  -180
  44
  53
  60
  69
  77
  86
  95
  104
  114
  124
  179
  190
  201
  213
  225
  238
  252
  266
  280
  296
  311
  328
  346
  364
  383
  403
  424
  445
  468
  492

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  41
  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
  1,391
  1,486
  1,630
  1,780
  1,937
  2,100
  2,269
  2,446
  2,629
  2,819
  3,017
  3,222
  3,436
  3,658
  3,889
  4,130
  4,381
  4,642
  4,915
  5,199
  5,495
  5,805
  6,128
  6,466
  6,819
  7,188
  7,574
  7,978
  8,401
  8,844
  9,308
Adjusted assets (=assets-cash), $m
  1,350
  1,486
  1,630
  1,780
  1,937
  2,100
  2,269
  2,446
  2,629
  2,819
  3,017
  3,222
  3,436
  3,658
  3,889
  4,130
  4,381
  4,642
  4,915
  5,199
  5,495
  5,805
  6,128
  6,466
  6,819
  7,188
  7,574
  7,978
  8,401
  8,844
  9,308
Revenue / Adjusted assets
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
Average production assets, $m
  399
  439
  482
  526
  573
  621
  671
  723
  777
  833
  892
  953
  1,016
  1,081
  1,150
  1,221
  1,295
  1,372
  1,453
  1,537
  1,624
  1,716
  1,812
  1,911
  2,016
  2,125
  2,239
  2,359
  2,484
  2,615
  2,752
Working capital, $m
  168
  141
  155
  169
  184
  200
  216
  233
  250
  268
  287
  306
  327
  348
  370
  393
  417
  441
  467
  494
  522
  552
  583
  615
  648
  683
  720
  759
  799
  841
  885
Total debt, $m
  1,003
  1,097
  1,226
  1,361
  1,502
  1,649
  1,801
  1,960
  2,125
  2,296
  2,474
  2,659
  2,851
  3,051
  3,260
  3,476
  3,702
  3,937
  4,182
  4,438
  4,705
  4,983
  5,274
  5,578
  5,896
  6,228
  6,576
  6,940
  7,320
  7,719
  8,136
Total liabilities, $m
  1,244
  1,338
  1,467
  1,602
  1,743
  1,890
  2,042
  2,201
  2,366
  2,537
  2,715
  2,900
  3,092
  3,292
  3,501
  3,717
  3,943
  4,178
  4,423
  4,679
  4,946
  5,224
  5,515
  5,819
  6,137
  6,469
  6,817
  7,181
  7,561
  7,960
  8,377
Total equity, $m
  147
  149
  163
  178
  194
  210
  227
  245
  263
  282
  302
  322
  344
  366
  389
  413
  438
  464
  491
  520
  550
  580
  613
  647
  682
  719
  757
  798
  840
  884
  931
Total liabilities and equity, $m
  1,391
  1,487
  1,630
  1,780
  1,937
  2,100
  2,269
  2,446
  2,629
  2,819
  3,017
  3,222
  3,436
  3,658
  3,890
  4,130
  4,381
  4,642
  4,914
  5,199
  5,496
  5,804
  6,128
  6,466
  6,819
  7,188
  7,574
  7,979
  8,401
  8,844
  9,308
Debt-to-equity ratio
  6.823
  7.380
  7.520
  7.650
  7.760
  7.850
  7.940
  8.010
  8.080
  8.150
  8.200
  8.250
  8.300
  8.340
  8.380
  8.420
  8.450
  8.480
  8.510
  8.540
  8.560
  8.580
  8.610
  8.630
  8.650
  8.660
  8.680
  8.700
  8.710
  8.730
  8.740
Adjusted equity ratio
  0.079
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -180
  44
  53
  60
  69
  77
  86
  95
  104
  114
  124
  179
  190
  201
  213
  225
  238
  252
  266
  280
  296
  311
  328
  346
  364
  383
  403
  424
  445
  468
  492
Depreciation, amort., depletion, $m
  367
  148
  157
  165
  175
  184
  194
  205
  216
  227
  239
  191
  203
  216
  230
  244
  259
  274
  291
  307
  325
  343
  362
  382
  403
  425
  448
  472
  497
  523
  550
Funds from operations, $m
  -321
  192
  209
  226
  243
  261
  280
  299
  320
  341
  363
  369
  393
  417
  443
  469
  497
  526
  556
  588
  620
  655
  690
  728
  767
  808
  851
  895
  942
  991
  1,043
Change in working capital, $m
  -355
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
Cash from operations, $m
  34
  179
  196
  212
  228
  246
  264
  283
  302
  323
  344
  350
  372
  396
  421
  447
  473
  501
  530
  561
  592
  625
  660
  696
  733
  773
  814
  857
  902
  949
  999
Maintenance CAPEX, $m
  0
  -80
  -88
  -96
  -105
  -115
  -124
  -134
  -145
  -155
  -167
  -178
  -191
  -203
  -216
  -230
  -244
  -259
  -274
  -291
  -307
  -325
  -343
  -362
  -382
  -403
  -425
  -448
  -472
  -497
  -523
New CAPEX, $m
  -30
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -91
  -96
  -100
  -104
  -109
  -114
  -119
  -125
  -131
  -137
Cash from investing activities, $m
  -28
  -121
  -131
  -140
  -151
  -163
  -174
  -186
  -199
  -211
  -225
  -239
  -254
  -269
  -284
  -301
  -318
  -336
  -355
  -375
  -395
  -416
  -439
  -462
  -486
  -512
  -539
  -567
  -597
  -628
  -660
Free cash flow, $m
  6
  58
  65
  71
  77
  83
  90
  96
  104
  111
  119
  110
  119
  127
  136
  145
  155
  165
  175
  186
  197
  209
  221
  234
  247
  260
  275
  290
  305
  321
  339
Issuance/(repayment) of debt, $m
  -8
  95
  129
  135
  141
  147
  153
  159
  165
  171
  178
  185
  192
  200
  208
  217
  226
  235
  245
  256
  267
  279
  291
  304
  318
  332
  348
  364
  381
  399
  417
Issuance/(repurchase) of shares, $m
  7
  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  
  -23
  95
  129
  135
  141
  147
  153
  159
  165
  171
  178
  185
  192
  200
  208
  217
  226
  235
  245
  256
  267
  279
  291
  304
  318
  332
  348
  364
  381
  399
  417
Total cash flow (excl. dividends), $m
  -18
  153
  195
  206
  218
  230
  242
  255
  268
  282
  297
  295
  311
  327
  344
  362
  381
  400
  420
  442
  464
  487
  512
  538
  564
  593
  622
  653
  686
  720
  756
Retained Cash Flow (-), $m
  171
  -42
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
Prev. year cash balance distribution, $m
 
  40
  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
 
  152
  180
  191
  202
  213
  225
  237
  250
  263
  277
  275
  290
  305
  321
  338
  356
  374
  393
  413
  434
  456
  480
  504
  529
  556
  584
  613
  644
  676
  710
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  139
  150
  143
  135
  126
  116
  105
  94
  84
  73
  59
  50
  42
  34
  27
  22
  17
  13
  9
  7
  5
  3
  2
  1
  1
  1
  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

Central European Media Enterprises Ltd. (CME Ltd.) is a media and entertainment company operating in Central and Eastern Europe. The Company's assets are held through a series of Dutch and Curacao holding companies. The Company manages its business on a geographical basis, with six segments: Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia. The Bulgaria segment operated one general entertainment channel, BTV, and five other channels, including BTV CINEMA, BTV COMEDY, RING.BG, BTV ACTION and BTV LADY, as of December 31, 2016. The Croatia segment operated one general entertainment channel, NOVA TV (Croatia), as of December 31, 2016. The Czech Republic segment operated one general entertainment channel, TV NOVA (Czech Republic), as of December 31, 2016. The Romania segment operated one general entertainment channel, PRO TV, as of December 31, 2016. The Slovak Republic segment operated one general entertainment channel, TV MARKIZA, as of December 31, 2016.

FINANCIAL RATIOS  of  Central European Media Enterprises Cl A (CETV)

Valuation Ratios
P/E Ratio -3.7
Price to Sales 1.1
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 19.8
Price to Free Cash Flow 168.6
Growth Rates
Sales Growth Rate 5.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.8%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 41
Current Ratio 0.8
LT Debt to Equity 681.6%
Total Debt to Equity 682.3%
Interest Coverage -2
Management Effectiveness
Return On Assets -8.7%
Ret/ On Assets - 3 Yr. Avg. -7.9%
Return On Total Capital -15.1%
Ret/ On T. Cap. - 3 Yr. Avg. -13%
Return On Equity -77.4%
Return On Equity - 3 Yr. Avg. -48.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 35.1%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 38.9%
EBITDA Margin - 3 Yr. Avg. 47.2%
Operating Margin -6.1%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin -27.1%
Pre-Tax Margin - 3 Yr. Avg. -22.2%
Net Profit Margin -28.2%
Net Profit Margin - 3 Yr. Avg. -26.8%
Effective Tax Rate -4.6%
Eff/ Tax Rate - 3 Yr. Avg. -0.8%
Payout Ratio 0%

CETV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CETV stock intrinsic value calculation we used $638 million for the last fiscal year's total revenue generated by Central European Media Enterprises Cl A. The default revenue input number comes from 2016 income statement of Central European Media Enterprises Cl A. 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 CETV stock valuation model: a) initial revenue growth rate of 10.2% 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 9.2%, whose default value for CETV is calculated based on our internal credit rating of Central European Media Enterprises Cl A, 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 Central European Media Enterprises Cl A.
    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 CETV stock the variable cost ratio is equal to 84.3%.

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 CETV 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 5.6% for Central European Media Enterprises Cl A.

Corporate tax rate of 27% is the nominal tax rate for Central European Media Enterprises Cl A. 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 CETV 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 CETV are equal to 62.5%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Central European Media Enterprises Cl A 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 CETV is equal to 20.1%. 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 - $147 million for Central European Media Enterprises Cl A - 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 144.963 million for Central European Media Enterprises Cl A 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 Central European Media Enterprises Cl A at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
DIS Walt Disney 110.59 106.44  hold
VIAB Viacom Cl B 33.36 96.87  str.buy
TWX Time Warner 93.36 165.28  str.buy

COMPANY NEWS

▶ Central European Media reports 3Q loss   [05:55AM  Associated Press]
▶ Central European Media posts 2Q profit   [Jul-26-17 12:39AM  Associated Press]
▶ Company News for July 11, 2017   [10:19AM  Zacks]
▶ [$$] KKR-Backed Media Group Makes 230 Million Add-On Deal   [Jul-10-17 11:24AM  The Wall Street Journal]
▶ Central European Media reports 1Q loss   [05:01AM  Associated Press]
▶ Central European Media posts 4Q profit   [06:05AM  Associated Press]
Financial statements of CETV
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.

FREE DOWNLOAD
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.