Intrinsic value of Hemisphere Media Group Cl A - HMTV

Previous Close

$13.92

  Intrinsic Value

$30.64

stock screener

  Rating & Target

str. buy

+120%

Previous close

$13.92

 
Intrinsic value

$30.64

 
Up/down potential

+120%

 
Rating

str. buy

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 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, %
  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
  127
  130
  133
  137
  141
  146
  151
  156
  162
  168
  175
  182
  189
  197
  206
  215
  224
  234
  245
  256
  268
  281
  294
  308
  323
  338
  354
  371
  389
  408
Variable operating expenses, $m
  90
  91
  93
  94
  96
  99
  101
  104
  107
  110
  85
  89
  92
  96
  100
  105
  109
  114
  119
  125
  131
  137
  143
  150
  157
  165
  173
  181
  190
  199
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
  90
  91
  93
  94
  96
  99
  101
  104
  107
  110
  85
  89
  92
  96
  100
  105
  109
  114
  119
  125
  131
  137
  143
  150
  157
  165
  173
  181
  190
  199
Operating income, $m
  37
  39
  41
  42
  45
  47
  50
  52
  55
  58
  90
  93
  97
  101
  106
  110
  115
  120
  126
  131
  138
  144
  151
  158
  165
  173
  182
  190
  200
  209
EBITDA, $m
  74
  76
  78
  80
  82
  85
  88
  91
  94
  98
  102
  106
  110
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
Interest expense (income), $m
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
Earnings before tax, $m
  26
  27
  29
  30
  32
  34
  36
  38
  40
  43
  73
  76
  79
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  153
  161
  168
Tax expense, $m
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  40
  41
  43
  45
Net income, $m
  19
  20
  21
  22
  23
  25
  26
  28
  30
  31
  54
  56
  58
  60
  63
  66
  68
  71
  75
  78
  81
  85
  89
  93
  98
  102
  107
  112
  117
  123

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
  412
  422
  433
  445
  458
  473
  489
  506
  525
  545
  567
  590
  615
  641
  668
  697
  728
  761
  796
  832
  871
  912
  955
  1,000
  1,047
  1,098
  1,150
  1,206
  1,264
  1,326
Adjusted assets (=assets-cash), $m
  412
  422
  433
  445
  458
  473
  489
  506
  525
  545
  567
  590
  615
  641
  668
  697
  728
  761
  796
  832
  871
  912
  955
  1,000
  1,047
  1,098
  1,150
  1,206
  1,264
  1,326
Revenue / Adjusted assets
  0.308
  0.308
  0.307
  0.308
  0.308
  0.309
  0.309
  0.308
  0.309
  0.308
  0.309
  0.308
  0.307
  0.307
  0.308
  0.308
  0.308
  0.307
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.309
  0.308
  0.308
  0.308
  0.308
  0.308
Average production assets, $m
  170
  174
  178
  183
  189
  195
  202
  209
  217
  225
  234
  243
  253
  264
  276
  288
  300
  314
  328
  343
  359
  376
  394
  412
  432
  453
  474
  497
  521
  547
Working capital, $m
  13
  14
  14
  14
  15
  15
  16
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
Total debt, $m
  213
  219
  226
  234
  243
  252
  262
  273
  285
  298
  312
  327
  342
  359
  376
  395
  415
  436
  458
  481
  506
  532
  559
  588
  618
  650
  684
  719
  756
  795
Total liabilities, $m
  263
  269
  276
  283
  292
  301
  312
  323
  335
  347
  361
  376
  391
  408
  426
  444
  464
  485
  507
  530
  555
  581
  608
  637
  667
  699
  733
  768
  805
  844
Total equity, $m
  150
  153
  157
  161
  166
  172
  178
  184
  191
  198
  206
  214
  223
  233
  243
  253
  264
  276
  289
  302
  316
  331
  347
  363
  380
  398
  418
  438
  459
  481
Total liabilities and equity, $m
  413
  422
  433
  444
  458
  473
  490
  507
  526
  545
  567
  590
  614
  641
  669
  697
  728
  761
  796
  832
  871
  912
  955
  1,000
  1,047
  1,097
  1,151
  1,206
  1,264
  1,325
Debt-to-equity ratio
  1.430
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.530
  1.530
  1.540
  1.550
  1.560
  1.570
  1.580
  1.580
  1.590
  1.600
  1.610
  1.610
  1.620
  1.630
  1.630
  1.640
  1.640
  1.650
  1.650
Adjusted equity ratio
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  20
  21
  22
  23
  25
  26
  28
  30
  31
  54
  56
  58
  60
  63
  66
  68
  71
  75
  78
  81
  85
  89
  93
  98
  102
  107
  112
  117
  123
Depreciation, amort., depletion, $m
  37
  37
  37
  37
  38
  38
  38
  39
  39
  40
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
Funds from operations, $m
  56
  57
  58
  60
  61
  63
  65
  67
  69
  71
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  56
  57
  58
  59
  61
  62
  64
  66
  68
  70
  65
  68
  71
  73
  77
  80
  83
  87
  91
  95
  99
  104
  109
  114
  119
  124
  130
  137
  143
  150
Maintenance CAPEX, $m
  -9
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
New CAPEX, $m
  -4
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
Cash from investing activities, $m
  -13
  -13
  -13
  -14
  -16
  -16
  -17
  -18
  -19
  -19
  -21
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
Free cash flow, $m
  43
  44
  44
  45
  45
  46
  47
  48
  49
  51
  44
  46
  48
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
Issuance/(repayment) of debt, $m
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  35
  37
  39
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  
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  35
  37
  39
Total cash flow (excl. dividends), $m
  48
  50
  51
  52
  54
  56
  57
  59
  61
  63
  58
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
  136
Retained Cash Flow (-), $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Prev. year cash balance distribution, $m
  93
  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
  138
  46
  47
  48
  49
  50
  52
  53
  54
  56
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
  90
  95
  99
  104
  109
  114
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  131
  42
  40
  38
  37
  35
  33
  31
  29
  27
  21
  20
  18
  16
  14
  13
  11
  9
  8
  7
  6
  4
  4
  3
  2
  2
  1
  1
  1
  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

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 32.6
Price to Sales 4.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 21.7
Price to Free Cash Flow 24.4
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 $124.464 million for the last fiscal year's total revenue generated by Hemisphere Media Group Cl A. The default revenue input number comes from 0001 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 5%, 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%.

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 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 133.9%.

Life of production assets of 18.9 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 10.4%. 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 - $238.904 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 19.643 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 $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
AMCX AMC Networks C 59.97 136.56  str.buy
MSGN MSG Networks C 25.84 4.50  str.sell
DIS Walt Disney 117.11 221.57  str.buy

COMPANY NEWS

▶ Hemisphere Media: 3Q Earnings Snapshot   [Nov-07-18 12:49PM  Associated Press]
▶ 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]

CONTACT US       ASSET ALLOCATION

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

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