Intrinsic value of Hemisphere Media Group Cl A - HMTV

Previous Close

$12.00

  Intrinsic Value

$13.98

stock screener

  Rating & Target

hold

+16%

Previous close

$12.00

 
Intrinsic value

$13.98

 
Up/down potential

+16%

 
Rating

hold

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

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, %
  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
  126
  129
  133
  136
  141
  145
  150
  155
  161
  167
  174
  181
  189
  197
  205
  214
  224
  234
  244
  255
  267
  280
  293
  307
  321
  337
  353
  370
  388
  407
Variable operating expenses, $m
 
  90
  91
  93
  95
  97
  99
  101
  104
  107
  110
  86
  89
  93
  97
  101
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  166
  174
  182
  191
  200
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
  99
  90
  91
  93
  95
  97
  99
  101
  104
  107
  110
  86
  89
  93
  97
  101
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  166
  174
  182
  191
  200
Operating income, $m
  40
  37
  38
  40
  42
  44
  46
  49
  51
  54
  57
  88
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  207
EBITDA, $m
  57
  96
  98
  100
  103
  106
  110
  113
  117
  122
  126
  131
  137
  142
  148
  155
  162
  169
  176
  184
  193
  202
  211
  221
  232
  243
  254
  267
  279
  293
  307
Interest expense (income), $m
  11
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  37
  38
  40
Earnings before tax, $m
  28
  26
  27
  28
  30
  31
  33
  35
  37
  40
  42
  73
  75
  78
  82
  85
  89
  93
  97
  101
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  166
Tax expense, $m
  10
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
Net income, $m
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  31
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  121

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
  412
  421
  432
  444
  458
  473
  489
  506
  525
  545
  567
  590
  614
  640
  668
  697
  728
  761
  795
  832
  871
  911
  954
  999
  1,047
  1,097
  1,150
  1,205
  1,264
  1,325
Adjusted assets (=assets-cash), $m
  367
  412
  421
  432
  444
  458
  473
  489
  506
  525
  545
  567
  590
  614
  640
  668
  697
  728
  761
  795
  832
  871
  911
  954
  999
  1,047
  1,097
  1,150
  1,205
  1,264
  1,325
Revenue / Adjusted assets
  0.379
  0.306
  0.306
  0.308
  0.306
  0.308
  0.307
  0.307
  0.306
  0.307
  0.306
  0.307
  0.307
  0.308
  0.308
  0.307
  0.307
  0.308
  0.307
  0.307
  0.306
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
Average production assets, $m
  148
  312
  319
  327
  337
  347
  358
  370
  383
  398
  413
  429
  447
  465
  485
  506
  528
  551
  576
  602
  630
  659
  690
  723
  757
  793
  831
  871
  913
  957
  1,003
Working capital, $m
  174
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
Total debt, $m
  210
  210
  216
  223
  231
  239
  248
  259
  270
  282
  294
  308
  323
  338
  355
  372
  391
  410
  431
  453
  476
  501
  527
  554
  582
  612
  644
  678
  713
  750
  789
Total liabilities, $m
  261
  261
  267
  274
  282
  290
  300
  310
  321
  333
  346
  359
  374
  389
  406
  423
  442
  462
  482
  504
  528
  552
  578
  605
  634
  664
  695
  729
  764
  801
  840
Total equity, $m
  269
  151
  154
  158
  163
  168
  173
  179
  185
  192
  200
  207
  216
  225
  234
  244
  255
  266
  278
  291
  305
  319
  334
  349
  366
  383
  401
  421
  441
  462
  485
Total liabilities and equity, $m
  530
  412
  421
  432
  445
  458
  473
  489
  506
  525
  546
  566
  590
  614
  640
  667
  697
  728
  760
  795
  833
  871
  912
  954
  1,000
  1,047
  1,096
  1,150
  1,205
  1,263
  1,325
Debt-to-equity ratio
  0.781
  1.390
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.490
  1.500
  1.510
  1.520
  1.530
  1.540
  1.550
  1.560
  1.560
  1.570
  1.580
  1.590
  1.590
  1.600
  1.600
  1.610
  1.620
  1.620
  1.630
Adjusted equity ratio
  0.289
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  31
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  121
Depreciation, amort., depletion, $m
  17
  59
  60
  60
  61
  62
  64
  65
  66
  67
  69
  43
  45
  47
  48
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
  100
Funds from operations, $m
  19
  78
  79
  81
  83
  85
  88
  90
  93
  96
  100
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  168
  176
  184
  193
  202
  212
  222
Change in working capital, $m
  -8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  27
  78
  79
  81
  83
  85
  88
  91
  94
  97
  100
  96
  100
  104
  108
  113
  118
  123
  129
  134
  140
  147
  154
  161
  168
  176
  185
  193
  203
  212
  223
Maintenance CAPEX, $m
  0
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -48
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
New CAPEX, $m
  -3
  -5
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
Cash from investing activities, $m
  -3
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -64
  -67
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -101
  -106
  -112
  -117
  -123
  -129
  -135
  -142
Free cash flow, $m
  24
  42
  41
  41
  41
  42
  42
  43
  43
  44
  45
  39
  40
  41
  42
  44
  45
  47
  49
  50
  53
  55
  57
  59
  62
  65
  67
  70
  74
  77
  80
Issuance/(repayment) of debt, $m
  -8
  4
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
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
  4
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
Total cash flow (excl. dividends), $m
  -16
  46
  47
  48
  49
  50
  51
  53
  54
  56
  58
  52
  54
  56
  59
  61
  64
  66
  69
  72
  76
  79
  83
  86
  90
  95
  99
  104
  109
  114
  119
Retained Cash Flow (-), $m
  10
  -2
  -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
  -22
Prev. year cash balance distribution, $m
 
  91
  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
 
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
Cash available for distribution, $m
 
  135
  43
  44
  44
  45
  46
  47
  48
  49
  50
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  128
  39
  37
  36
  34
  32
  30
  28
  26
  24
  19
  17
  16
  14
  13
  11
  10
  8
  7
  6
  5
  4
  3
  3
  2
  1
  1
  1
  1
  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

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 28.1
Price to Sales 3.6
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 18.7
Price to Free Cash Flow 21.1
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 $124 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 4.9%, 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 71.5%.

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 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 5.4% 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 3.3%.

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 246.7%.

Life of production assets of 10 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 -4.3%. 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 - $239 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 40 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 98.77 106.74  hold
AMCX AMC Networks C 61.55 62.27  buy
MSGN MSG Networks C 23.45 2.29  str.sell
DIS Walt Disney 111.48 112.76  hold

COMPANY NEWS

▶ Hemisphere Media Group Announces Expiration of Warrants   [Apr-05-18 04:05PM  Business Wire]
▶ Hemisphere Media posts 3Q profit   [Nov-10-17 05:01AM  Associated Press]
▶ 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

ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2018. All rigths reserved.