Intrinsic value of Empire Resorts - NYNY

Previous Close

$26.35

  Intrinsic Value

$2.25

stock screener

  Rating & Target

str. sell

-91%

Previous close

$26.35

 
Intrinsic value

$2.25

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of NYNY 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 0.8

 

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, %
  -1.47
  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
  67
  68
  70
  72
  74
  76
  78
  81
  84
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  166
  174
  182
  191
  200
  210
  220
Variable operating expenses, $m
 
  103
  105
  108
  111
  114
  118
  122
  127
  131
  136
  142
  147
  154
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  274
  287
  301
  316
  331
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
  91
  103
  105
  108
  111
  114
  118
  122
  127
  131
  136
  142
  147
  154
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  274
  287
  301
  316
  331
Operating income, $m
  -24
  -35
  -35
  -36
  -37
  -39
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -101
  -106
  -111
EBITDA, $m
  -23
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
Earnings before tax, $m
  -24
  -35
  -35
  -36
  -38
  -39
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
Tax expense, $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
Net income, $m
  -24
  -35
  -35
  -36
  -38
  -39
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  11
  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
  340
  335
  343
  352
  361
  372
  384
  397
  412
  427
  443
  461
  480
  499
  521
  543
  567
  592
  619
  647
  677
  708
  741
  776
  813
  851
  892
  935
  980
  1,027
  1,077
Adjusted assets (=assets-cash), $m
  329
  335
  343
  352
  361
  372
  384
  397
  412
  427
  443
  461
  480
  499
  521
  543
  567
  592
  619
  647
  677
  708
  741
  776
  813
  851
  892
  935
  980
  1,027
  1,077
Revenue / Adjusted assets
  0.204
  0.203
  0.204
  0.205
  0.205
  0.204
  0.203
  0.204
  0.204
  0.204
  0.203
  0.204
  0.204
  0.204
  0.203
  0.204
  0.205
  0.204
  0.204
  0.204
  0.204
  0.203
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
  0.204
Average production assets, $m
  158
  161
  165
  169
  174
  179
  185
  191
  198
  205
  213
  222
  231
  240
  250
  261
  273
  285
  298
  311
  325
  341
  356
  373
  391
  409
  429
  450
  471
  494
  518
Working capital, $m
  -35
  -47
  -48
  -49
  -51
  -52
  -54
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -144
  -151
Total debt, $m
  0
  1
  2
  4
  6
  8
  10
  12
  15
  18
  21
  24
  27
  31
  35
  39
  43
  48
  53
  58
  63
  69
  75
  81
  88
  95
  102
  110
  118
  127
  136
Total liabilities, $m
  60
  61
  62
  64
  66
  68
  70
  72
  75
  78
  81
  84
  87
  91
  95
  99
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
  196
Total equity, $m
  280
  274
  280
  288
  296
  305
  314
  325
  337
  349
  363
  377
  392
  409
  426
  444
  464
  484
  506
  529
  553
  579
  606
  635
  665
  696
  730
  765
  802
  840
  881
Total liabilities and equity, $m
  340
  335
  342
  352
  362
  373
  384
  397
  412
  427
  444
  461
  479
  500
  521
  543
  567
  592
  619
  647
  676
  708
  741
  776
  813
  851
  892
  935
  980
  1,027
  1,077
Debt-to-equity ratio
  0.000
  0.000
  0.010
  0.010
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.140
  0.150
  0.150
  0.150
Adjusted equity ratio
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -24
  -35
  -35
  -36
  -38
  -39
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
Depreciation, amort., depletion, $m
  1
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
Funds from operations, $m
  -6
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -94
  -99
Change in working capital, $m
  7
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  -13
  -28
  -29
  -30
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
Maintenance CAPEX, $m
  0
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
New CAPEX, $m
  -2
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Cash from investing activities, $m
  -236
  -8
  -9
  -9
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -18
  -18
  -19
  -20
  -21
  -22
  -24
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -40
Free cash flow, $m
  -249
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -132
Issuance/(repayment) of debt, $m
  0
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
Issuance/(repurchase) of shares, $m
  255
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
  79
  83
  87
  92
  96
  101
  106
  111
  117
  123
  129
  135
  142
  149
  157
Cash from financing (excl. dividends), $m  
  254
  41
  43
  46
  48
  50
  52
  54
  58
  60
  63
  66
  69
  73
  76
  80
  83
  88
  92
  97
  101
  107
  112
  117
  124
  130
  136
  143
  150
  158
  166
Total cash flow (excl. dividends), $m
  5
  4
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  34
Retained Cash Flow (-), $m
  -281
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -123
  -129
  -135
  -142
  -149
  -157
Prev. year cash balance distribution, $m
 
  11
  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
 
  -25
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -61
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -101
  -106
  -112
  -117
  -123
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
 
  -24
  -33
  -33
  -32
  -31
  -30
  -29
  -28
  -27
  -26
  -24
  -23
  -21
  -19
  -18
  -16
  -14
  -13
  -11
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  95.2
  90.5
  85.9
  81.5
  77.3
  73.2
  69.3
  65.5
  62.0
  58.5
  55.3
  52.2
  49.2
  46.4
  43.8
  41.3
  38.9
  36.6
  34.5
  32.5
  30.6
  28.8
  27.1
  25.5
  24.0
  22.5
  21.2
  19.9
  18.8
  17.6

Empire Resorts, Inc. is a holding company for various subsidiaries engaged in the hospitality and gaming industries. As of December 31, 2016, the Company, through Monticello Raceway Management, Inc. (MRMI), owned and operated Monticello Casino and Raceway, a 45,000 square foot video gaming machine (VGM) and harness horseracing facility located in Monticello, New York, approximately 90 miles northwest of New York City. The Company's Monticello Casino and Raceway includes VGM Operations and Raceway Operations. As of December 31, 2016, Monticello Casino and Raceway operated 1,110 VGMs, which included 1,070 video lottery terminals (VLTs) and 40 electronic table game positions (ETGs). ETGs include the games of roulette, blackjack and three-card poker. The Company, through its subsidiary, Montreign Operating Company, LLC, has a license to operate a resort casino (the Casino Project).

FINANCIAL RATIOS  of  Empire Resorts (NYNY)

Valuation Ratios
P/E Ratio -34.2
Price to Sales 12.3
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow -63.2
Price to Free Cash Flow -54.7
Growth Rates
Sales Growth Rate -1.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate -22.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -11.9%
Ret/ On Assets - 3 Yr. Avg. -46.2%
Return On Total Capital -14.8%
Ret/ On T. Cap. - 3 Yr. Avg. -64.5%
Return On Equity -17.2%
Return On Equity - 3 Yr. Avg. 190.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 19.4%
Gross Margin - 3 Yr. Avg. 18.5%
EBITDA Margin -34.3%
EBITDA Margin - 3 Yr. Avg. -39.9%
Operating Margin -35.8%
Oper. Margin - 3 Yr. Avg. -36.3%
Pre-Tax Margin -35.8%
Pre-Tax Margin - 3 Yr. Avg. -42.4%
Net Profit Margin -35.8%
Net Profit Margin - 3 Yr. Avg. -42.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NYNY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NYNY stock intrinsic value calculation we used $67 million for the last fiscal year's total revenue generated by Empire Resorts. The default revenue input number comes from 2016 income statement of Empire Resorts. 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 NYNY 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 NYNY is calculated based on our internal credit rating of Empire Resorts, 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 Empire Resorts.
    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 NYNY stock the variable cost ratio is equal to 150.7%.

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 NYNY 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 3.5% for Empire Resorts.

Corporate tax rate of 27% is the nominal tax rate for Empire Resorts. 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 NYNY 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 NYNY are equal to 235.8%.

Life of production assets of 158 years is the average useful life of capital assets used in Empire Resorts 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 NYNY is equal to -68.7%. 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 - $280 million for Empire Resorts - 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 31.177 million for Empire Resorts 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 Empire Resorts at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ ETFs with exposure to Empire Resorts, Inc. : May 19, 2017   [May-19-17 02:03PM  Capital Cube]
▶ ETFs with exposure to Empire Resorts, Inc. : May 8, 2017   [May-08-17 05:01PM  Capital Cube]
▶ No Joke: Empire Resorts Building Catskills Casino   [Nov-15-16 09:55AM  at Investopedia]
Financial statements of NYNY
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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