Intrinsic value of Century Casinos, Inc. - CNTY

Previous Close

$9.86

  Intrinsic Value

$4.11

stock screener

  Rating & Target

str. sell

-58%

Previous close

$9.86

 
Intrinsic value

$4.11

 
Up/down potential

-58%

 
Rating

str. sell

We calculate the intrinsic value of CNTY 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 0.3

 

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, %
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  194
  221
  249
  280
  312
  345
  381
  417
  456
  496
  538
  581
  626
  673
  722
  773
  825
  880
  937
  996
  1,058
  1,122
  1,189
  1,259
  1,332
  1,408
  1,487
  1,570
  1,656
  1,747
Variable operating expenses, $m
  173
  194
  217
  241
  266
  293
  321
  350
  381
  413
  427
  462
  497
  535
  573
  614
  656
  699
  744
  791
  840
  891
  945
  1,000
  1,058
  1,118
  1,181
  1,247
  1,316
  1,387
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
  173
  194
  217
  241
  266
  293
  321
  350
  381
  413
  427
  462
  497
  535
  573
  614
  656
  699
  744
  791
  840
  891
  945
  1,000
  1,058
  1,118
  1,181
  1,247
  1,316
  1,387
Operating income, $m
  21
  27
  33
  39
  45
  52
  60
  67
  75
  83
  111
  120
  129
  138
  148
  159
  170
  181
  193
  205
  218
  231
  245
  259
  274
  289
  306
  323
  341
  359
EBITDA, $m
  50
  57
  64
  72
  80
  89
  98
  107
  117
  127
  138
  149
  161
  173
  186
  199
  212
  226
  241
  256
  272
  288
  306
  323
  342
  362
  382
  403
  426
  449
Interest expense (income), $m
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
Earnings before tax, $m
  17
  21
  26
  31
  37
  42
  48
  55
  61
  68
  94
  101
  108
  116
  125
  133
  142
  151
  161
  171
  181
  192
  203
  215
  227
  240
  254
  267
  282
  297
Tax expense, $m
  5
  6
  7
  8
  10
  11
  13
  15
  16
  18
  25
  27
  29
  31
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
Net income, $m
  12
  16
  19
  23
  27
  31
  35
  40
  45
  50
  68
  74
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  148
  157
  166
  175
  185
  195
  206
  217

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
  305
  347
  392
  440
  490
  543
  598
  656
  717
  780
  845
  914
  985
  1,058
  1,135
  1,215
  1,298
  1,384
  1,473
  1,566
  1,663
  1,764
  1,870
  1,979
  2,094
  2,213
  2,338
  2,468
  2,604
  2,746
Adjusted assets (=assets-cash), $m
  305
  347
  392
  440
  490
  543
  598
  656
  717
  780
  845
  914
  985
  1,058
  1,135
  1,215
  1,298
  1,384
  1,473
  1,566
  1,663
  1,764
  1,870
  1,979
  2,094
  2,213
  2,338
  2,468
  2,604
  2,746
Revenue / Adjusted assets
  0.636
  0.637
  0.635
  0.636
  0.637
  0.635
  0.637
  0.636
  0.636
  0.636
  0.637
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
Average production assets, $m
  213
  242
  274
  307
  342
  379
  418
  458
  501
  545
  590
  638
  688
  739
  793
  848
  906
  966
  1,029
  1,094
  1,162
  1,232
  1,306
  1,382
  1,462
  1,545
  1,633
  1,723
  1,818
  1,918
Working capital, $m
  -27
  -30
  -34
  -38
  -43
  -47
  -52
  -57
  -62
  -68
  -74
  -80
  -86
  -92
  -99
  -106
  -113
  -121
  -128
  -136
  -145
  -154
  -163
  -172
  -182
  -193
  -204
  -215
  -227
  -239
Total debt, $m
  73
  87
  102
  118
  135
  153
  172
  191
  212
  233
  255
  278
  302
  327
  353
  379
  407
  436
  467
  498
  531
  565
  600
  637
  676
  716
  758
  802
  848
  896
Total liabilities, $m
  103
  117
  132
  148
  165
  183
  202
  221
  242
  263
  285
  308
  332
  357
  383
  409
  437
  466
  496
  528
  561
  595
  630
  667
  706
  746
  788
  832
  878
  925
Total equity, $m
  202
  230
  260
  292
  325
  360
  397
  435
  475
  517
  561
  606
  653
  702
  753
  805
  860
  917
  977
  1,038
  1,103
  1,170
  1,240
  1,312
  1,388
  1,467
  1,550
  1,636
  1,726
  1,821
Total liabilities and equity, $m
  305
  347
  392
  440
  490
  543
  599
  656
  717
  780
  846
  914
  985
  1,059
  1,136
  1,214
  1,297
  1,383
  1,473
  1,566
  1,664
  1,765
  1,870
  1,979
  2,094
  2,213
  2,338
  2,468
  2,604
  2,746
Debt-to-equity ratio
  0.360
  0.380
  0.390
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
Adjusted equity ratio
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  16
  19
  23
  27
  31
  35
  40
  45
  50
  68
  74
  79
  85
  91
  97
  104
  110
  117
  125
  132
  140
  148
  157
  166
  175
  185
  195
  206
  217
Depreciation, amort., depletion, $m
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  58
  61
  65
  68
  72
  76
  81
  85
  90
Funds from operations, $m
  41
  46
  51
  56
  62
  67
  74
  80
  87
  94
  96
  103
  111
  120
  128
  137
  146
  156
  165
  176
  187
  198
  209
  222
  234
  248
  261
  276
  291
  307
Change in working capital, $m
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
Cash from operations, $m
  44
  49
  55
  60
  66
  72
  78
  85
  92
  99
  102
  109
  118
  126
  135
  144
  153
  163
  173
  184
  195
  207
  219
  231
  244
  258
  272
  287
  303
  319
Maintenance CAPEX, $m
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -51
  -54
  -58
  -61
  -65
  -68
  -72
  -76
  -81
  -85
New CAPEX, $m
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -73
  -77
  -80
  -83
  -87
  -91
  -95
  -99
Cash from investing activities, $m
  -37
  -39
  -42
  -46
  -49
  -53
  -57
  -60
  -63
  -67
  -71
  -76
  -80
  -84
  -89
  -93
  -98
  -102
  -108
  -113
  -119
  -125
  -131
  -138
  -145
  -151
  -159
  -167
  -176
  -184
Free cash flow, $m
  8
  10
  12
  14
  16
  19
  22
  25
  28
  32
  30
  34
  38
  42
  47
  51
  56
  61
  66
  71
  76
  82
  88
  94
  100
  106
  113
  120
  127
  135
Issuance/(repayment) of debt, $m
  13
  14
  15
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
Issuance/(repurchase) of shares, $m
  14
  12
  11
  9
  6
  4
  1
  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  
  27
  26
  26
  25
  23
  22
  20
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
Total cash flow (excl. dividends), $m
  35
  36
  38
  39
  40
  41
  42
  45
  49
  53
  52
  57
  62
  67
  72
  78
  84
  90
  96
  102
  109
  116
  123
  130
  138
  146
  155
  164
  173
  183
Retained Cash Flow (-), $m
  -26
  -28
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
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
  9
  9
  8
  7
  7
  6
  5
  6
  9
  11
  9
  12
  15
  18
  22
  25
  29
  33
  36
  40
  45
  49
  53
  58
  62
  67
  72
  77
  83
  88
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
  9
  8
  7
  6
  5
  4
  4
  4
  5
  6
  4
  5
  6
  6
  6
  6
  6
  6
  6
  5
  5
  4
  3
  3
  2
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  95.5
  92.1
  89.6
  87.8
  86.6
  86.0
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8

Century Casinos, Inc. is an international casino entertainment company. The Company develops and operates gaming establishments, as well as related lodging, restaurant and entertainment facilities around the world. Its segments include Canada, the United States, Poland, and Corporate and Other. The Canada segment consists of Century Casino & Hotel-Edmonton; Century Casino Calgary; Century Downs Racetrack and Casino, and Century Bets! Inc. (Century Bets). The United States segment comprises Century Casino & Hotel-Central City, and Century Casino & Hotel-Cripple Creek. The Poland segment consists of Casinos Poland. The Corporate and Other segment comprises Cruise Ships and other. The Company owns casino operations in North America; holds interest in casinos throughout Poland; holds a racetrack and entertainment center (REC) in Canada and the pari-mutuel off-track betting network in southern Alberta; manages a casino in Aruba, and provides gaming services in Argentina.

FINANCIAL RATIOS  of  Century Casinos, Inc. (CNTY)

Valuation Ratios
P/E Ratio 26.8
Price to Sales 1.7
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate 3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -63.2%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 37.9%
Total Debt to Equity 42.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 49.6%
Gross Margin - 3 Yr. Avg. 46.8%
EBITDA Margin 19.4%
EBITDA Margin - 3 Yr. Avg. 15.2%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 11.5%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 6.5%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate 12.5%
Eff/ Tax Rate - 3 Yr. Avg. 8.6%
Payout Ratio 0%

CNTY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNTY stock intrinsic value calculation we used $169 million for the last fiscal year's total revenue generated by Century Casinos, Inc.. The default revenue input number comes from 0001 income statement of Century Casinos, 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 CNTY stock valuation model: a) initial revenue growth rate of 14.8% 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 CNTY is calculated based on our internal credit rating of Century Casinos, 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 Century Casinos, 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 CNTY stock the variable cost ratio is equal to 90.5%.

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 CNTY 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 7.3% for Century Casinos, Inc..

Corporate tax rate of 27% is the nominal tax rate for Century Casinos, 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 CNTY 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 CNTY are equal to 109.8%.

Life of production assets of 21.4 years is the average useful life of capital assets used in Century Casinos, 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 CNTY is equal to -13.7%. 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 - $176.321 million for Century Casinos, 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 29.439 million for Century Casinos, 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 Century Casinos, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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