Intrinsic value of Hemisphere Media Group Cl A - HMTV

Previous Close

$12.35

  Intrinsic Value

$16.07

stock screener

  Rating & Target

buy

+30%

  Value-price divergence*

-28%

Previous close

$12.35

 
Intrinsic value

$16.07

 
Up/down potential

+30%

 
Rating

buy

 
Value-price divergence*

-28%

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

We calculate the intrinsic value of HMTV 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 0.5

 

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, %
  6.92
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  139
  142
  145
  149
  153
  158
  163
  168
  174
  181
  188
  195
  203
  211
  220
  230
  240
  251
  262
  274
  286
  300
  314
  328
  344
  360
  378
  396
  415
  435
  456
Variable operating expenses, $m
 
  63
  64
  65
  67
  68
  70
  72
  74
  76
  78
  64
  66
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  113
  118
  124
  129
  136
  142
  149
Fixed operating expenses, $m
 
  39
  40
  41
  42
  43
  44
  45
  46
  47
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
  69
  70
  72
  74
  76
  78
  80
Total operating expenses, $m
  99
  102
  104
  106
  109
  111
  114
  117
  120
  123
  127
  114
  117
  121
  126
  130
  135
  140
  145
  151
  156
  162
  168
  174
  182
  188
  196
  203
  212
  220
  229
Operating income, $m
  40
  40
  41
  43
  44
  47
  49
  51
  54
  58
  61
  81
  85
  90
  95
  100
  105
  111
  117
  123
  130
  138
  146
  154
  163
  172
  182
  192
  203
  215
  227
EBITDA, $m
  57
  65
  66
  68
  70
  72
  75
  78
  81
  85
  88
  93
  97
  102
  107
  113
  119
  125
  132
  139
  147
  155
  164
  173
  183
  193
  204
  215
  227
  240
  253
Interest expense (income), $m
  11
  11
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  34
  35
  37
  39
Earnings before tax, $m
  28
  29
  30
  31
  33
  34
  36
  39
  41
  44
  46
  66
  69
  73
  77
  81
  86
  90
  96
  101
  107
  113
  119
  126
  134
  142
  150
  159
  168
  178
  188
Tax expense, $m
  10
  8
  8
  8
  9
  9
  10
  10
  11
  12
  13
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
Net income, $m
  18
  21
  22
  23
  24
  25
  27
  28
  30
  32
  34
  48
  51
  53
  56
  59
  62
  66
  70
  74
  78
  82
  87
  92
  98
  103
  109
  116
  123
  130
  137

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  163
  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
  530
  374
  383
  393
  404
  416
  429
  444
  460
  477
  495
  515
  535
  558
  581
  606
  633
  661
  691
  722
  755
  791
  827
  866
  907
  951
  996
  1,044
  1,094
  1,147
  1,203
Adjusted assets (=assets-cash), $m
  367
  374
  383
  393
  404
  416
  429
  444
  460
  477
  495
  515
  535
  558
  581
  606
  633
  661
  691
  722
  755
  791
  827
  866
  907
  951
  996
  1,044
  1,094
  1,147
  1,203
Revenue / Adjusted assets
  0.379
  0.380
  0.379
  0.379
  0.379
  0.380
  0.380
  0.378
  0.378
  0.379
  0.380
  0.379
  0.379
  0.378
  0.379
  0.380
  0.379
  0.380
  0.379
  0.380
  0.379
  0.379
  0.380
  0.379
  0.379
  0.379
  0.380
  0.379
  0.379
  0.379
  0.379
Average production assets, $m
  148
  151
  154
  158
  163
  168
  173
  179
  186
  192
  200
  208
  216
  225
  235
  245
  255
  267
  279
  292
  305
  319
  334
  350
  366
  384
  402
  421
  442
  463
  486
Working capital, $m
  174
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
Total debt, $m
  210
  215
  221
  228
  236
  245
  254
  265
  276
  288
  301
  315
  330
  346
  362
  380
  399
  419
  440
  463
  486
  511
  537
  565
  594
  625
  657
  691
  727
  765
  804
Total liabilities, $m
  261
  266
  272
  279
  287
  296
  305
  316
  327
  339
  352
  366
  381
  397
  413
  431
  450
  470
  491
  514
  537
  562
  588
  616
  645
  676
  708
  742
  778
  816
  855
Total equity, $m
  269
  108
  111
  113
  117
  120
  124
  128
  133
  138
  143
  149
  155
  161
  168
  175
  183
  191
  200
  209
  218
  228
  239
  250
  262
  275
  288
  302
  316
  332
  348
Total liabilities and equity, $m
  530
  374
  383
  392
  404
  416
  429
  444
  460
  477
  495
  515
  536
  558
  581
  606
  633
  661
  691
  723
  755
  790
  827
  866
  907
  951
  996
  1,044
  1,094
  1,148
  1,203
Debt-to-equity ratio
  0.781
  1.990
  2.000
  2.010
  2.020
  2.040
  2.050
  2.060
  2.080
  2.090
  2.100
  2.120
  2.130
  2.140
  2.160
  2.170
  2.180
  2.190
  2.200
  2.220
  2.230
  2.240
  2.250
  2.260
  2.270
  2.270
  2.280
  2.290
  2.300
  2.310
  2.310
Adjusted equity ratio
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289
  0.289

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  21
  22
  23
  24
  25
  27
  28
  30
  32
  34
  48
  51
  53
  56
  59
  62
  66
  70
  74
  78
  82
  87
  92
  98
  103
  109
  116
  123
  130
  137
Depreciation, amort., depletion, $m
  17
  25
  25
  25
  25
  26
  26
  26
  27
  27
  27
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Funds from operations, $m
  19
  46
  47
  48
  49
  51
  52
  54
  56
  59
  61
  59
  62
  66
  69
  73
  76
  80
  85
  90
  95
  100
  105
  111
  118
  124
  131
  139
  147
  155
  164
Change in working capital, $m
  -8
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
Cash from operations, $m
  27
  46
  47
  48
  49
  50
  52
  54
  56
  58
  61
  59
  62
  65
  68
  72
  76
  80
  84
  89
  94
  99
  104
  110
  116
  123
  130
  137
  145
  153
  162
Maintenance CAPEX, $m
  0
  -8
  -8
  -8
  -9
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -23
Cash from investing activities, $m
  -3
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -48
Free cash flow, $m
  24
  35
  35
  35
  36
  37
  38
  39
  40
  41
  43
  40
  42
  44
  46
  49
  52
  54
  57
  61
  64
  68
  72
  76
  81
  86
  91
  96
  102
  108
  114
Issuance/(repayment) of debt, $m
  -8
  5
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
Issuance/(repurchase) of shares, $m
  -31
  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  
  -40
  5
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
Total cash flow (excl. dividends), $m
  -16
  40
  41
  42
  44
  45
  47
  49
  51
  53
  56
  54
  57
  60
  63
  67
  70
  74
  79
  83
  88
  93
  98
  104
  110
  116
  123
  130
  138
  146
  154
Retained Cash Flow (-), $m
  10
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
Prev. year cash balance distribution, $m
 
  163
  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
 
  201
  39
  40
  41
  42
  43
  45
  47
  48
  51
  48
  51
  54
  56
  59
  63
  66
  70
  74
  78
  83
  88
  93
  98
  104
  110
  116
  123
  130
  138
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
 
  192
  35
  34
  33
  32
  31
  30
  29
  28
  26
  23
  22
  20
  19
  17
  16
  14
  13
  11
  10
  9
  7
  6
  5
  4
  3
  2
  2
  1
  1
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

Hemisphere Media Group, Inc. is a Spanish-language media company. As of December 31, 2016, the Company served the United States Hispanic and Latin American markets with five Spanish-language cable television networks distributed in the United States, two Spanish-language cable television networks distributed in Latin America, and a broadcast television network in Puerto Rico. As of December 31, 2016, the Company owned and operated the Spanish language networks and content production platform, including movie and telenovela channels, two Hispanic entertainment genres, and the cable television networks. The Company's United States Hispanic groups include Cinelatino, WAPA, WAPA America, Pasiones, Centroamerica TV and Television Dominicana. WAPA is an independent broadcast television network. WAPA is distributed by various cable, satellite and telecommunication service providers in Puerto Rico.

FINANCIAL RATIOS  of  Hemisphere Media Group Cl A (HMTV)

Valuation Ratios
P/E Ratio 28.9
Price to Sales 3.7
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow 21.7
Growth Rates
Sales Growth Rate 6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 78.1%
Total Debt to Equity 78.1%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.6%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 5.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 69.8%
Gross Margin - 3 Yr. Avg. 68.7%
EBITDA Margin 40.3%
EBITDA Margin - 3 Yr. Avg. 38.7%
Operating Margin 28.8%
Oper. Margin - 3 Yr. Avg. 26%
Pre-Tax Margin 20.1%
Pre-Tax Margin - 3 Yr. Avg. 16.5%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 11.2%
Effective Tax Rate 35.7%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 0%

HMTV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HMTV stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by Hemisphere Media Group Cl A. The default revenue input number comes from 2016 income statement of Hemisphere Media Group 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 HMTV stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for HMTV is calculated based on our internal credit rating of Hemisphere Media Group 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 Hemisphere Media Group 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 HMTV stock the variable cost ratio is equal to 44.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $38 million in the base year in the intrinsic value calculation for HMTV 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 5.1% for Hemisphere Media Group Cl A.

Corporate tax rate of 27% is the nominal tax rate for Hemisphere Media Group 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 HMTV 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 HMTV are equal to 106.5%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Hemisphere Media Group 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 HMTV is equal to 7.9%. 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 - $269 million for Hemisphere Media Group 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 42.442 million for Hemisphere Media Group 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 Hemisphere Media Group Cl A at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
TWX Time Warner 101.12 143.32  buy
AMCX AMC Networks C 55.90 48.12  sell
QVCA Liberty Intera 22.52 8.07  str.sell
SNI Scripps Networ 83.37 67.01  sell
FOXA 21st Century F 26.69 29.87  hold
MSGN MSG Networks C 20.75 2.21  str.sell
DIS Walt Disney 98.13 103.16  hold

COMPANY NEWS

▶ REMEZCLA Announces $11 Million Series A Round   [Aug-02-17 12:34PM  PR Newswire]
▶ Gabelli & Companys Broadcasting Symposium   [Jul-20-17 07:00AM  Business Wire]
▶ Hemisphere Media posts 1Q profit   [May-09-17 03:13PM  Associated Press]
▶ ShoreTel Inc (SHOR): Are Hedge Funds Right About This Stock?   [Dec-07-16 03:24AM  Insider Monkey]
Financial statements of HMTV
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

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.