Intrinsic value of Century Casinos - CNTY

Previous Close

$6.79

  Intrinsic Value

$2.68

stock screener

  Rating & Target

str. sell

-61%

  Value-price divergence*

+432%

Previous close

$6.79

 
Intrinsic value

$2.68

 
Up/down potential

-61%

 
Rating

str. sell

 
Value-price divergence*

+432%

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

We calculate the intrinsic value of CNTY 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 0.2

 

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, %
  3.73
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  139
  152
  165
  179
  193
  208
  223
  239
  256
  273
  291
  310
  329
  349
  371
  393
  415
  439
  464
  490
  518
  546
  576
  607
  640
  674
  709
  747
  786
  827
  870
Variable operating expenses, $m
 
  133
  144
  156
  169
  182
  195
  209
  223
  238
  254
  269
  286
  304
  322
  341
  361
  382
  403
  426
  450
  474
  500
  527
  556
  585
  616
  649
  683
  718
  755
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
  123
  133
  144
  156
  169
  182
  195
  209
  223
  238
  254
  269
  286
  304
  322
  341
  361
  382
  403
  426
  450
  474
  500
  527
  556
  585
  616
  649
  683
  718
  755
Operating income, $m
  16
  19
  20
  22
  24
  26
  28
  30
  32
  35
  37
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  109
  114
EBITDA, $m
  24
  28
  30
  33
  36
  38
  41
  44
  47
  50
  54
  57
  61
  64
  68
  72
  77
  81
  86
  91
  96
  101
  106
  112
  118
  124
  131
  138
  145
  153
  161
Interest expense (income), $m
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  27
  29
Earnings before tax, $m
  16
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  67
  70
  74
  77
  81
  85
Tax expense, $m
  2
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
Net income, $m
  9
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  39
  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
  218
  195
  212
  230
  248
  267
  287
  308
  329
  351
  374
  399
  424
  450
  477
  505
  535
  566
  598
  631
  666
  703
  741
  781
  823
  867
  913
  961
  1,011
  1,064
  1,119
Adjusted assets (=assets-cash), $m
  179
  195
  212
  230
  248
  267
  287
  308
  329
  351
  374
  399
  424
  450
  477
  505
  535
  566
  598
  631
  666
  703
  741
  781
  823
  867
  913
  961
  1,011
  1,064
  1,119
Revenue / Adjusted assets
  0.777
  0.779
  0.778
  0.778
  0.778
  0.779
  0.777
  0.776
  0.778
  0.778
  0.778
  0.777
  0.776
  0.776
  0.778
  0.778
  0.776
  0.776
  0.776
  0.777
  0.778
  0.777
  0.777
  0.777
  0.778
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
Average production assets, $m
  145
  158
  172
  186
  201
  217
  233
  249
  267
  285
  303
  323
  343
  364
  386
  409
  433
  458
  484
  512
  540
  570
  601
  633
  667
  703
  740
  779
  820
  862
  907
Working capital, $m
  17
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -75
  -79
  -83
  -87
Total debt, $m
  56
  57
  65
  73
  81
  89
  98
  108
  117
  127
  137
  148
  159
  171
  183
  196
  209
  223
  237
  252
  268
  284
  301
  319
  338
  358
  378
  400
  422
  446
  470
Total liabilities, $m
  86
  87
  95
  103
  111
  119
  128
  138
  147
  157
  167
  178
  189
  201
  213
  226
  239
  253
  267
  282
  298
  314
  331
  349
  368
  388
  408
  430
  452
  476
  500
Total equity, $m
  132
  108
  117
  127
  137
  148
  159
  170
  182
  194
  207
  220
  234
  249
  264
  279
  296
  313
  331
  349
  368
  389
  410
  432
  455
  479
  505
  531
  559
  588
  619
Total liabilities and equity, $m
  218
  195
  212
  230
  248
  267
  287
  308
  329
  351
  374
  398
  423
  450
  477
  505
  535
  566
  598
  631
  666
  703
  741
  781
  823
  867
  913
  961
  1,011
  1,064
  1,119
Debt-to-equity ratio
  0.424
  0.530
  0.550
  0.570
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.690
  0.690
  0.700
  0.710
  0.710
  0.720
  0.720
  0.730
  0.730
  0.740
  0.740
  0.740
  0.750
  0.750
  0.750
  0.750
  0.760
  0.760
Adjusted equity ratio
  0.520
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553
  0.553

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
Depreciation, amort., depletion, $m
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  16
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
Funds from operations, $m
  21
  21
  22
  24
  26
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
Cash from operations, $m
  22
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  68
  72
  75
  79
  83
  88
  92
  97
  102
  107
  113
Maintenance CAPEX, $m
  0
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -7
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
Cash from investing activities, $m
  -27
  -20
  -22
  -23
  -25
  -25
  -27
  -29
  -30
  -32
  -34
  -35
  -36
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -58
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
Free cash flow, $m
  -5
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
Issuance/(repayment) of debt, $m
  18
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  21
  23
  24
  25
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  16
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  21
  23
  24
  25
Total cash flow (excl. dividends), $m
  9
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
Retained Cash Flow (-), $m
  -10
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
Prev. year cash balance distribution, $m
 
  33
  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
 
  33
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  31
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  0
  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
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Century Casinos, Inc., a casino entertainment company, develops and operates gaming establishments worldwide. It also provides lodging, restaurant, and entertainment facilities related to gaming establishments. The company owns and operates casinos in North America and Poland; a racetrack and entertainment center in Canada; and pari-mutuel off-track betting network in southern Alberta, Canada. It also operates and manages cruise ship-based casinos; manages a casino in Aruba; and provides gaming services in Argentina. The company was founded in 1992 and is based in Colorado Springs, Colorado.

FINANCIAL RATIOS  of  Century Casinos (CNTY)

Valuation Ratios
P/E Ratio 18.4
Price to Sales 1.2
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow 11.1
Growth Rates
Sales Growth Rate 3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -63.2%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 37.9%
Total Debt to Equity 42.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 49.6%
Gross Margin - 3 Yr. Avg. 46.8%
EBITDA Margin 19.4%
EBITDA Margin - 3 Yr. Avg. 15.2%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 11.5%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 6.5%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate 12.5%
Eff/ Tax Rate - 3 Yr. Avg. 8.6%
Payout Ratio 0%

CNTY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNTY stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by Century Casinos. The default revenue input number comes from 2016 income statement of Century Casinos. 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 CNTY stock valuation model: a) initial revenue growth rate of 9.1% 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 4.3%, whose default value for CNTY is calculated based on our internal credit rating of Century Casinos, 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 Century Casinos.
    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 CNTY stock the variable cost ratio is equal to 87.8%.

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 CNTY 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 6.5% for Century Casinos.

Corporate tax rate of 27% is the nominal tax rate for Century Casinos. 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 CNTY 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 CNTY are equal to 104.3%.

Life of production assets of 19.6 years is the average useful life of capital assets used in Century Casinos 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 CNTY 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 - $132 million for Century Casinos - 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 23.886 million for Century Casinos 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 Century Casinos at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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MGM MGM Resorts In 31.11 1.93  str.sell
MCRI Monarch Casino 34.37 25.38  hold
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COMPANY NEWS

▶ Century Casinos posts 2Q profit   [Aug-07-17 11:55PM  Associated Press]
▶ Century Casinos posts 1Q profit   [06:19AM  Associated Press]
▶ 4 Reasons Century Casinos Shares Are A Buy   [Mar-10-17 02:25PM  Benzinga]
Stock chart of CNTY Financial statements of CNTY
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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