Intrinsic value of AMC Networks Inc. - AMCX

Previous Close

$50.16

  Intrinsic Value

$82.64

stock screener

  Rating & Target

str. buy

+65%

Previous close

$50.16

 
Intrinsic value

$82.64

 
Up/down potential

+65%

 
Rating

str. buy

We calculate the intrinsic value of AMCX 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 0001), $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 2.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  3,159
  3,354
  3,557
  3,769
  3,989
  4,219
  4,460
  4,710
  4,972
  5,246
  5,532
  5,831
  6,144
  6,471
  6,814
  7,173
  7,549
  7,943
  8,356
  8,788
  9,241
  9,717
  10,215
  10,737
  11,285
  11,860
  12,463
  13,096
  13,759
  14,456
Variable operating expenses, $m
  2,346
  2,489
  2,638
  2,794
  2,956
  3,125
  3,301
  3,485
  3,678
  3,879
  4,064
  4,284
  4,514
  4,755
  5,007
  5,270
  5,547
  5,836
  6,139
  6,457
  6,790
  7,139
  7,505
  7,889
  8,292
  8,714
  9,157
  9,622
  10,109
  10,621
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
  2,346
  2,489
  2,638
  2,794
  2,956
  3,125
  3,301
  3,485
  3,678
  3,879
  4,064
  4,284
  4,514
  4,755
  5,007
  5,270
  5,547
  5,836
  6,139
  6,457
  6,790
  7,139
  7,505
  7,889
  8,292
  8,714
  9,157
  9,622
  10,109
  10,621
Operating income, $m
  813
  865
  919
  975
  1,034
  1,095
  1,158
  1,225
  1,294
  1,367
  1,467
  1,547
  1,630
  1,717
  1,808
  1,903
  2,003
  2,107
  2,217
  2,331
  2,452
  2,578
  2,710
  2,848
  2,994
  3,146
  3,306
  3,474
  3,650
  3,835
EBITDA, $m
  898
  954
  1,012
  1,072
  1,134
  1,200
  1,268
  1,339
  1,414
  1,492
  1,573
  1,658
  1,747
  1,840
  1,938
  2,040
  2,147
  2,259
  2,376
  2,499
  2,628
  2,763
  2,905
  3,053
  3,209
  3,373
  3,544
  3,724
  3,913
  4,111
Interest expense (income), $m
  128
  169
  174
  191
  208
  227
  246
  266
  286
  308
  331
  354
  379
  405
  432
  460
  490
  521
  553
  587
  623
  660
  699
  740
  783
  828
  876
  925
  977
  1,032
  1,089
Earnings before tax, $m
  644
  691
  728
  767
  807
  849
  893
  939
  986
  1,036
  1,113
  1,168
  1,225
  1,285
  1,348
  1,413
  1,482
  1,554
  1,629
  1,709
  1,792
  1,878
  1,970
  2,065
  2,165
  2,271
  2,381
  2,497
  2,618
  2,746
Tax expense, $m
  174
  187
  197
  207
  218
  229
  241
  253
  266
  280
  301
  315
  331
  347
  364
  382
  400
  420
  440
  461
  484
  507
  532
  558
  585
  613
  643
  674
  707
  741
Net income, $m
  470
  504
  532
  560
  589
  620
  652
  685
  720
  757
  813
  853
  894
  938
  984
  1,032
  1,082
  1,134
  1,190
  1,247
  1,308
  1,371
  1,438
  1,508
  1,581
  1,658
  1,738
  1,823
  1,911
  2,004

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  5,611
  5,958
  6,318
  6,694
  7,086
  7,495
  7,921
  8,366
  8,831
  9,318
  9,826
  10,357
  10,913
  11,495
  12,104
  12,741
  13,409
  14,108
  14,841
  15,609
  16,415
  17,259
  18,144
  19,072
  20,045
  21,066
  22,137
  23,261
  24,440
  25,677
Adjusted assets (=assets-cash), $m
  5,611
  5,958
  6,318
  6,694
  7,086
  7,495
  7,921
  8,366
  8,831
  9,318
  9,826
  10,357
  10,913
  11,495
  12,104
  12,741
  13,409
  14,108
  14,841
  15,609
  16,415
  17,259
  18,144
  19,072
  20,045
  21,066
  22,137
  23,261
  24,440
  25,677
Revenue / Adjusted assets
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
Average production assets, $m
  1,810
  1,922
  2,038
  2,159
  2,286
  2,418
  2,555
  2,699
  2,849
  3,006
  3,170
  3,341
  3,520
  3,708
  3,905
  4,110
  4,326
  4,551
  4,788
  5,036
  5,295
  5,568
  5,853
  6,153
  6,467
  6,796
  7,141
  7,504
  7,884
  8,283
Working capital, $m
  679
  721
  765
  810
  858
  907
  959
  1,013
  1,069
  1,128
  1,189
  1,254
  1,321
  1,391
  1,465
  1,542
  1,623
  1,708
  1,796
  1,889
  1,987
  2,089
  2,196
  2,309
  2,426
  2,550
  2,680
  2,816
  2,958
  3,108
Total debt, $m
  3,224
  3,536
  3,861
  4,199
  4,551
  4,919
  5,303
  5,704
  6,123
  6,560
  7,017
  7,496
  7,996
  8,519
  9,067
  9,641
  10,242
  10,872
  11,531
  12,223
  12,947
  13,707
  14,504
  15,339
  16,215
  17,134
  18,098
  19,109
  20,170
  21,283
Total liabilities, $m
  5,050
  5,362
  5,686
  6,025
  6,377
  6,745
  7,129
  7,530
  7,948
  8,386
  8,843
  9,321
  9,822
  10,345
  10,893
  11,467
  12,068
  12,698
  13,357
  14,048
  14,773
  15,533
  16,329
  17,165
  18,041
  18,960
  19,923
  20,935
  21,996
  23,109
Total equity, $m
  561
  596
  632
  669
  709
  749
  792
  837
  883
  932
  983
  1,036
  1,091
  1,149
  1,210
  1,274
  1,341
  1,411
  1,484
  1,561
  1,641
  1,726
  1,814
  1,907
  2,005
  2,107
  2,214
  2,326
  2,444
  2,568
Total liabilities and equity, $m
  5,611
  5,958
  6,318
  6,694
  7,086
  7,494
  7,921
  8,367
  8,831
  9,318
  9,826
  10,357
  10,913
  11,494
  12,103
  12,741
  13,409
  14,109
  14,841
  15,609
  16,414
  17,259
  18,143
  19,072
  20,046
  21,067
  22,137
  23,261
  24,440
  25,677
Debt-to-equity ratio
  5.750
  5.940
  6.110
  6.270
  6.420
  6.560
  6.690
  6.820
  6.930
  7.040
  7.140
  7.240
  7.330
  7.410
  7.490
  7.570
  7.640
  7.710
  7.770
  7.830
  7.890
  7.940
  7.990
  8.040
  8.090
  8.130
  8.180
  8.220
  8.250
  8.290
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  470
  504
  532
  560
  589
  620
  652
  685
  720
  757
  813
  853
  894
  938
  984
  1,032
  1,082
  1,134
  1,190
  1,247
  1,308
  1,371
  1,438
  1,508
  1,581
  1,658
  1,738
  1,823
  1,911
  2,004
Depreciation, amort., depletion, $m
  85
  89
  93
  97
  101
  105
  110
  115
  120
  125
  106
  111
  117
  124
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  216
  227
  238
  250
  263
  276
Funds from operations, $m
  555
  593
  624
  656
  690
  725
  762
  800
  840
  881
  918
  964
  1,012
  1,062
  1,114
  1,169
  1,226
  1,286
  1,349
  1,415
  1,484
  1,557
  1,633
  1,713
  1,796
  1,884
  1,976
  2,073
  2,174
  2,280
Change in working capital, $m
  40
  42
  44
  45
  47
  49
  52
  54
  56
  59
  62
  64
  67
  70
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
Cash from operations, $m
  515
  551
  580
  611
  642
  675
  710
  746
  783
  823
  857
  900
  944
  991
  1,040
  1,092
  1,145
  1,201
  1,260
  1,322
  1,387
  1,455
  1,526
  1,600
  1,679
  1,761
  1,847
  1,937
  2,031
  2,131
Maintenance CAPEX, $m
  -57
  -60
  -64
  -68
  -72
  -76
  -81
  -85
  -90
  -95
  -100
  -106
  -111
  -117
  -124
  -130
  -137
  -144
  -152
  -160
  -168
  -177
  -186
  -195
  -205
  -216
  -227
  -238
  -250
  -263
New CAPEX, $m
  -106
  -112
  -116
  -121
  -126
  -132
  -138
  -144
  -150
  -157
  -164
  -171
  -179
  -188
  -196
  -206
  -215
  -226
  -236
  -248
  -260
  -272
  -286
  -299
  -314
  -329
  -346
  -362
  -380
  -399
Cash from investing activities, $m
  -163
  -172
  -180
  -189
  -198
  -208
  -219
  -229
  -240
  -252
  -264
  -277
  -290
  -305
  -320
  -336
  -352
  -370
  -388
  -408
  -428
  -449
  -472
  -494
  -519
  -545
  -573
  -600
  -630
  -662
Free cash flow, $m
  352
  379
  400
  422
  444
  467
  492
  517
  543
  571
  593
  623
  654
  686
  720
  756
  793
  832
  872
  915
  959
  1,006
  1,055
  1,106
  1,159
  1,216
  1,274
  1,336
  1,401
  1,469
Issuance/(repayment) of debt, $m
  88
  312
  325
  338
  353
  368
  384
  401
  419
  437
  457
  478
  500
  524
  548
  574
  601
  630
  660
  691
  725
  760
  797
  835
  876
  919
  964
  1,011
  1,061
  1,113
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
Cash from financing (excl. dividends), $m  
  88
  312
  325
  338
  353
  368
  384
  401
  419
  437
  457
  478
  500
  524
  548
  574
  601
  630
  660
  691
  725
  760
  797
  835
  876
  919
  964
  1,011
  1,061
  1,113
Total cash flow (excl. dividends), $m
  440
  691
  725
  760
  797
  835
  876
  918
  962
  1,008
  1,050
  1,101
  1,154
  1,210
  1,268
  1,329
  1,394
  1,461
  1,532
  1,606
  1,684
  1,766
  1,851
  1,941
  2,035
  2,134
  2,238
  2,347
  2,462
  2,582
Retained Cash Flow (-), $m
  -244
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -84
  -89
  -93
  -97
  -102
  -107
  -112
  -118
  -124
Prev. year cash balance distribution, $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 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
  196
  656
  688
  722
  758
  794
  833
  873
  915
  960
  999
  1,048
  1,098
  1,152
  1,207
  1,266
  1,327
  1,391
  1,459
  1,529
  1,603
  1,681
  1,763
  1,848
  1,938
  2,032
  2,131
  2,235
  2,344
  2,458
Discount rate, %
  9.70
  10.19
  10.69
  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
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
  179
  540
  508
  472
  434
  394
  354
  314
  274
  236
  199
  166
  136
  110
  87
  67
  51
  38
  27
  19
  13
  9
  6
  4
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  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

AMC Networks Inc. is a holding company, which conducts all of its operations through its subsidiaries. The Company owns and operates entertainment businesses and assets. It operates through two segments: National Networks, and International and Other. National Networks includes activities of its programming businesses, which include its programming networks distributed in the United States and Canada. The International and Other segment includes AMC Networks International (AMCNI), the Company's international programming businesses consisting of a portfolio of channels in Europe, Latin America, the Middle East and parts of Asia and Africa; IFC Films, the Company's independent film distribution business; AMCNI- DMC, the broadcast solutions unit of certain networks of AMCNI and third-party networks, and various developing online content distribution initiatives. National Networks' programming networks include AMC, WE tv, BBC AMERICA and SundanceTV.

FINANCIAL RATIOS  of  AMC Networks Inc. (AMCX)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 1.2
Price to Book -114.6
Price to Tangible Book
Price to Cash Flow 6.7
Price to Free Cash Flow 7.9
Growth Rates
Sales Growth Rate 6.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.2%
Cap. Spend. - 3 Yr. Gr. Rate 26.9%
Financial Strength
Quick Ratio 2
Current Ratio 0.5
LT Debt to Equity -8773.3%
Total Debt to Equity -9530%
Interest Coverage 5
Management Effectiveness
Return On Assets 8.1%
Ret/ On Assets - 3 Yr. Avg. 9.8%
Return On Total Capital 9.9%
Ret/ On T. Cap. - 3 Yr. Avg. 12.4%
Return On Equity -785.5%
Return On Equity - 3 Yr. Avg. -339.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 54.5%
Gross Margin - 3 Yr. Avg. 56.3%
EBITDA Margin 55.5%
EBITDA Margin - 3 Yr. Avg. 57%
Operating Margin 22%
Oper. Margin - 3 Yr. Avg. 24.9%
Pre-Tax Margin 16.5%
Pre-Tax Margin - 3 Yr. Avg. 19.1%
Net Profit Margin 9.8%
Net Profit Margin - 3 Yr. Avg. 12%
Effective Tax Rate 36.3%
Eff/ Tax Rate - 3 Yr. Avg. 34.4%
Payout Ratio 0%

AMCX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMCX stock intrinsic value calculation we used $2972 million for the last fiscal year's total revenue generated by AMC Networks Inc.. The default revenue input number comes from 0001 income statement of AMC Networks Inc.. 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 AMCX stock valuation model: a) initial revenue growth rate of 6.3% 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 9.7%, whose default value for AMCX is calculated based on our internal credit rating of AMC Networks Inc., 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 AMC Networks Inc..
    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 AMCX stock the variable cost ratio is equal to 74.3%.

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 AMCX 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 AMC Networks Inc..

Corporate tax rate of 27% is the nominal tax rate for AMC Networks Inc.. 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 AMCX 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 AMCX are equal to 57.3%.

Life of production assets of 35 years is the average useful life of capital assets used in AMC Networks Inc. 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 AMCX is equal to 21.5%. 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 - $316.68 million for AMC Networks Inc. - 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 56.144 million for AMC Networks Inc. 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 AMC Networks Inc. at the current share price and the inputted number of shares is $2.8 billion.

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