Intrinsic value of Hemisphere Media Group Cl A - HMTV

Previous Close

$12.90

  Intrinsic Value

$21.67

stock screener

  Rating & Target

str. buy

+68%

  Value-price divergence*

+3%

Previous close

$12.90

 
Intrinsic value

$21.67

 
Up/down potential

+68%

 
Rating

str. buy

 
Value-price divergence*

+3%

*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
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
Revenue, $m
  139
  148
  157
  167
  177
  188
  199
  211
  223
  235
  248
  262
  276
  291
  307
  324
  341
  359
  378
  397
  418
  440
  462
  486
  511
  537
  565
  593
  624
  655
  688
Variable operating expenses, $m
 
  65
  68
  71
  75
  78
  82
  85
  89
  93
  98
  86
  90
  95
  101
  106
  112
  117
  124
  130
  137
  144
  151
  159
  167
  176
  185
  194
  204
  214
  225
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
  104
  108
  112
  117
  121
  126
  130
  135
  140
  147
  136
  141
  147
  155
  161
  168
  175
  183
  191
  199
  208
  216
  226
  236
  246
  257
  268
  280
  292
  305
Operating income, $m
  40
  44
  49
  55
  61
  67
  73
  80
  87
  94
  102
  126
  135
  144
  153
  163
  173
  183
  195
  206
  219
  232
  246
  260
  275
  291
  308
  325
  344
  363
  383
EBITDA, $m
  57
  69
  75
  81
  88
  94
  101
  109
  116
  124
  133
  142
  151
  161
  171
  181
  192
  204
  217
  229
  243
  257
  272
  288
  305
  322
  340
  359
  380
  401
  423
Interest expense (income), $m
  11
  11
  12
  12
  13
  14
  15
  16
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  35
  37
  39
  42
  44
  46
  49
  51
  54
  57
  60
Earnings before tax, $m
  28
  33
  38
  43
  48
  53
  58
  64
  69
  76
  82
  105
  112
  120
  128
  136
  144
  153
  163
  173
  183
  194
  206
  218
  231
  245
  259
  274
  289
  306
  323
Tax expense, $m
  10
  9
  10
  12
  13
  14
  16
  17
  19
  20
  22
  28
  30
  32
  34
  37
  39
  41
  44
  47
  50
  53
  56
  59
  62
  66
  70
  74
  78
  83
  87
Net income, $m
  18
  24
  28
  31
  35
  38
  42
  46
  51
  55
  60
  77
  82
  87
  93
  99
  105
  112
  119
  126
  134
  142
  150
  159
  169
  179
  189
  200
  211
  223
  236

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
  391
  415
  441
  468
  496
  525
  556
  588
  621
  655
  692
  729
  769
  810
  854
  899
  946
  996
  1,048
  1,103
  1,160
  1,220
  1,282
  1,348
  1,417
  1,490
  1,566
  1,645
  1,729
  1,816
Adjusted assets (=assets-cash), $m
  367
  391
  415
  441
  468
  496
  525
  556
  588
  621
  655
  692
  729
  769
  810
  854
  899
  946
  996
  1,048
  1,103
  1,160
  1,220
  1,282
  1,348
  1,417
  1,490
  1,566
  1,645
  1,729
  1,816
Revenue / Adjusted assets
  0.379
  0.379
  0.378
  0.379
  0.378
  0.379
  0.379
  0.379
  0.379
  0.378
  0.379
  0.379
  0.379
  0.378
  0.379
  0.379
  0.379
  0.379
  0.380
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
Average production assets, $m
  148
  158
  168
  178
  189
  200
  212
  224
  237
  251
  265
  279
  294
  310
  327
  345
  363
  382
  402
  423
  445
  468
  492
  518
  544
  572
  601
  632
  664
  698
  733
Working capital, $m
  174
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  37
  38
  40
  42
  45
  47
  49
  52
  54
Total debt, $m
  210
  227
  244
  263
  282
  302
  322
  344
  367
  390
  415
  441
  468
  496
  525
  556
  588
  622
  657
  694
  733
  774
  816
  861
  908
  957
  1,008
  1,062
  1,119
  1,178
  1,241
Total liabilities, $m
  261
  278
  295
  314
  333
  353
  373
  395
  418
  441
  466
  492
  519
  547
  576
  607
  639
  673
  708
  745
  784
  825
  867
  912
  959
  1,008
  1,059
  1,113
  1,170
  1,229
  1,292
Total equity, $m
  269
  113
  120
  128
  135
  143
  152
  161
  170
  179
  189
  200
  211
  222
  234
  247
  260
  274
  288
  303
  319
  335
  352
  371
  390
  410
  431
  452
  475
  500
  525
Total liabilities and equity, $m
  530
  391
  415
  442
  468
  496
  525
  556
  588
  620
  655
  692
  730
  769
  810
  854
  899
  947
  996
  1,048
  1,103
  1,160
  1,219
  1,283
  1,349
  1,418
  1,490
  1,565
  1,645
  1,729
  1,817
Debt-to-equity ratio
  0.781
  2.010
  2.040
  2.060
  2.080
  2.100
  2.120
  2.140
  2.160
  2.180
  2.190
  2.210
  2.220
  2.230
  2.240
  2.250
  2.260
  2.270
  2.280
  2.290
  2.300
  2.310
  2.320
  2.320
  2.330
  2.340
  2.340
  2.350
  2.350
  2.360
  2.360
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
  24
  28
  31
  35
  38
  42
  46
  51
  55
  60
  77
  82
  87
  93
  99
  105
  112
  119
  126
  134
  142
  150
  159
  169
  179
  189
  200
  211
  223
  236
Depreciation, amort., depletion, $m
  17
  25
  26
  26
  27
  27
  28
  29
  29
  30
  31
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
Funds from operations, $m
  19
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  92
  98
  104
  111
  118
  125
  133
  141
  149
  158
  167
  177
  187
  198
  210
  222
  234
  247
  261
  276
Change in working capital, $m
  -8
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
Cash from operations, $m
  27
  49
  53
  57
  61
  65
  69
  74
  79
  84
  90
  91
  97
  103
  110
  117
  124
  131
  139
  148
  156
  166
  175
  186
  196
  208
  219
  232
  245
  259
  273
Maintenance CAPEX, $m
  0
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
New CAPEX, $m
  -3
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
Cash from investing activities, $m
  -3
  -18
  -19
  -19
  -21
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -55
  -58
  -60
  -64
  -66
  -70
  -73
Free cash flow, $m
  24
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  62
  66
  71
  76
  81
  87
  93
  99
  105
  111
  118
  126
  134
  142
  150
  159
  169
  179
  189
  200
Issuance/(repayment) of debt, $m
  -8
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
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
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
Total cash flow (excl. dividends), $m
  -16
  48
  52
  55
  59
  63
  68
  72
  77
  82
  87
  88
  93
  99
  106
  112
  119
  126
  134
  142
  150
  159
  168
  178
  188
  199
  211
  223
  235
  248
  262
Retained Cash Flow (-), $m
  10
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
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
 
  204
  44
  48
  51
  55
  59
  63
  68
  72
  77
  77
  82
  88
  94
  100
  106
  113
  119
  127
  134
  143
  151
  160
  169
  179
  190
  201
  212
  224
  237
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
 
  195
  41
  42
  42
  43
  43
  43
  42
  41
  40
  37
  35
  33
  31
  29
  27
  24
  22
  20
  17
  15
  13
  10
  9
  7
  6
  4
  3
  2
  2
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. owns and operates Spanish-language cable and television broadcasting networks and a content platform in the United States. It operates Cinelatino, a cable movie network with approximately 16 million subscribers in the United States, Latin America, and Canada; and WAPA, a broadcast television network, as well as that produces television content. The company also distributes WAPA2 Deportes, a sports television network in Puerto Rico; and operates WAPA.TV, a broadband news and entertainment Website. In addition, the company operates WAPA America, a cable television network that serves 5 million subscribers in the United States; and Pasiones, a cable television network that offers telenovelas and serialized dramas to 4.4 million subscribers in the United States, and 10.2 million subscribers in Latin America. Further, it operates Centroamerica TV, a cable television network that offers news and entertainment, and soccer programming to 4 million subscribers in Central America; and Television Dominicana, a cable television network that provides news and entertainment, and professional winter baseball leagues to approximately 3 million subscribers in the Dominican Republic. The company was founded in 2013 and is headquartered in Coral Gables, Florida.

FINANCIAL RATIOS  of  Hemisphere Media Group Cl A (HMTV)

Valuation Ratios
P/E Ratio 30.2
Price to Sales 3.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 20.1
Price to Free Cash Flow 22.7
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 6.5% 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 42.592 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 101.92 163.69  str.buy
AMCX AMC Networks C 60.72 32.00  sell
QVCA Liberty Intera 21.80 8.47  str.sell
SNI Scripps Networ 85.85 70.41  hold
FOXA 21st Century F 27.99 51.02  str.buy
MSGN MSG Networks C 20.25 3.88  str.sell
DIS Walt Disney 102.20 105.74  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]
Stock chart of HMTV 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.