Intrinsic value of MSG Networks Inc. - MSGN

Previous Close

$21.86

  Intrinsic Value

$7.35

stock screener

  Rating & Target

str. sell

-66%

Previous close

$21.86

 
Intrinsic value

$7.35

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of MSGN 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 1.6

 

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, %
  6.50
  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
  742
  789
  839
  890
  943
  998
  1,056
  1,117
  1,180
  1,245
  1,314
  1,386
  1,461
  1,540
  1,622
  1,708
  1,799
  1,893
  1,992
  2,096
  2,204
  2,318
  2,437
  2,562
  2,694
  2,831
  2,975
  3,127
  3,286
  3,452
Variable operating expenses, $m
  393
  415
  438
  462
  487
  513
  540
  568
  598
  629
  615
  648
  683
  720
  759
  799
  841
  885
  932
  980
  1,031
  1,084
  1,140
  1,198
  1,260
  1,324
  1,392
  1,462
  1,537
  1,615
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
  393
  415
  438
  462
  487
  513
  540
  568
  598
  629
  615
  648
  683
  720
  759
  799
  841
  885
  932
  980
  1,031
  1,084
  1,140
  1,198
  1,260
  1,324
  1,392
  1,462
  1,537
  1,615
Operating income, $m
  349
  374
  400
  427
  456
  485
  516
  548
  582
  617
  700
  738
  778
  820
  863
  909
  957
  1,008
  1,060
  1,115
  1,173
  1,234
  1,297
  1,364
  1,434
  1,507
  1,584
  1,664
  1,749
  1,838
EBITDA, $m
  404
  429
  456
  484
  513
  543
  574
  607
  642
  677
  715
  754
  795
  838
  882
  929
  978
  1,030
  1,083
  1,140
  1,199
  1,261
  1,326
  1,394
  1,465
  1,540
  1,618
  1,701
  1,787
  1,878
Interest expense (income), $m
  37
  64
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  122
  129
  136
  143
Earnings before tax, $m
  285
  352
  376
  401
  426
  453
  482
  511
  542
  574
  653
  688
  725
  763
  803
  845
  889
  935
  983
  1,034
  1,087
  1,142
  1,200
  1,261
  1,325
  1,392
  1,462
  1,536
  1,613
  1,694
Tax expense, $m
  77
  95
  101
  108
  115
  122
  130
  138
  146
  155
  176
  186
  196
  206
  217
  228
  240
  252
  265
  279
  293
  308
  324
  340
  358
  376
  395
  415
  436
  457
Net income, $m
  208
  257
  274
  292
  311
  331
  352
  373
  395
  419
  477
  503
  529
  557
  586
  617
  649
  683
  718
  755
  793
  834
  876
  921
  967
  1,016
  1,067
  1,121
  1,178
  1,237

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
  728
  774
  822
  872
  924
  979
  1,035
  1,095
  1,156
  1,221
  1,288
  1,359
  1,433
  1,510
  1,590
  1,675
  1,763
  1,856
  1,953
  2,054
  2,161
  2,272
  2,389
  2,512
  2,641
  2,776
  2,917
  3,065
  3,221
  3,384
Adjusted assets (=assets-cash), $m
  728
  774
  822
  872
  924
  979
  1,035
  1,095
  1,156
  1,221
  1,288
  1,359
  1,433
  1,510
  1,590
  1,675
  1,763
  1,856
  1,953
  2,054
  2,161
  2,272
  2,389
  2,512
  2,641
  2,776
  2,917
  3,065
  3,221
  3,384
Revenue / Adjusted assets
  1.019
  1.019
  1.021
  1.021
  1.021
  1.019
  1.020
  1.020
  1.021
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
Average production assets, $m
  258
  275
  292
  310
  328
  347
  368
  389
  411
  433
  457
  482
  509
  536
  565
  595
  626
  659
  693
  729
  767
  807
  848
  892
  937
  985
  1,035
  1,088
  1,143
  1,201
Working capital, $m
  100
  107
  113
  120
  127
  135
  143
  151
  159
  168
  177
  187
  197
  208
  219
  231
  243
  256
  269
  283
  298
  313
  329
  346
  364
  382
  402
  422
  444
  466
Total debt, $m
  410
  452
  495
  540
  587
  636
  687
  741
  796
  854
  915
  979
  1,045
  1,114
  1,187
  1,263
  1,342
  1,426
  1,513
  1,604
  1,700
  1,801
  1,906
  2,016
  2,132
  2,254
  2,381
  2,514
  2,655
  2,802
Total liabilities, $m
  655
  697
  740
  785
  832
  881
  932
  985
  1,041
  1,099
  1,160
  1,223
  1,289
  1,359
  1,431
  1,507
  1,587
  1,670
  1,758
  1,849
  1,945
  2,045
  2,151
  2,261
  2,377
  2,498
  2,625
  2,759
  2,899
  3,046
Total equity, $m
  73
  77
  82
  87
  92
  98
  104
  109
  116
  122
  129
  136
  143
  151
  159
  167
  176
  186
  195
  205
  216
  227
  239
  251
  264
  278
  292
  307
  322
  338
Total liabilities and equity, $m
  728
  774
  822
  872
  924
  979
  1,036
  1,094
  1,157
  1,221
  1,289
  1,359
  1,432
  1,510
  1,590
  1,674
  1,763
  1,856
  1,953
  2,054
  2,161
  2,272
  2,390
  2,512
  2,641
  2,776
  2,917
  3,066
  3,221
  3,384
Debt-to-equity ratio
  5.640
  5.840
  6.030
  6.200
  6.350
  6.500
  6.640
  6.770
  6.890
  7.000
  7.100
  7.200
  7.290
  7.380
  7.460
  7.540
  7.610
  7.680
  7.750
  7.810
  7.870
  7.920
  7.980
  8.030
  8.070
  8.120
  8.160
  8.200
  8.240
  8.280
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
  208
  257
  274
  292
  311
  331
  352
  373
  395
  419
  477
  503
  529
  557
  586
  617
  649
  683
  718
  755
  793
  834
  876
  921
  967
  1,016
  1,067
  1,121
  1,178
  1,237
Depreciation, amort., depletion, $m
  55
  55
  56
  57
  57
  58
  58
  59
  60
  61
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
Funds from operations, $m
  263
  312
  330
  349
  368
  389
  410
  432
  455
  479
  492
  519
  546
  575
  605
  637
  670
  705
  741
  779
  819
  861
  904
  950
  998
  1,049
  1,102
  1,157
  1,216
  1,277
Change in working capital, $m
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
Cash from operations, $m
  256
  306
  324
  342
  361
  381
  402
  424
  447
  471
  483
  509
  536
  564
  594
  625
  658
  692
  728
  765
  804
  845
  888
  933
  981
  1,030
  1,082
  1,137
  1,194
  1,254
Maintenance CAPEX, $m
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
New CAPEX, $m
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
Cash from investing activities, $m
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -72
  -76
  -79
  -83
  -88
  -91
  -96
Free cash flow, $m
  233
  281
  297
  315
  332
  351
  371
  391
  412
  434
  445
  469
  494
  520
  548
  576
  607
  638
  671
  706
  742
  780
  820
  862
  905
  951
  999
  1,050
  1,103
  1,158
Issuance/(repayment) of debt, $m
  -780
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  116
  121
  127
  134
  140
  147
Issuance/(repurchase) of shares, $m
  617
  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  
  -163
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  116
  121
  127
  134
  140
  147
Total cash flow (excl. dividends), $m
  70
  322
  341
  360
  379
  400
  422
  444
  468
  492
  505
  532
  560
  590
  620
  652
  686
  721
  758
  797
  838
  880
  925
  972
  1,021
  1,073
  1,127
  1,183
  1,243
  1,305
Retained Cash Flow (-), $m
  -825
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
Prev. year cash balance distribution, $m
  94
  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
  -661
  318
  336
  355
  374
  395
  416
  438
  461
  486
  499
  525
  553
  582
  612
  644
  677
  712
  749
  787
  827
  869
  913
  960
  1,008
  1,059
  1,112
  1,168
  1,227
  1,289
Discount rate, %
  12.80
  13.44
  14.11
  14.82
  15.56
  16.34
  17.15
  18.01
  18.91
  19.86
  20.85
  21.89
  22.99
  24.14
  25.34
  26.61
  27.94
  29.34
  30.80
  32.34
  33.96
  35.66
  37.44
  39.32
  41.28
  43.35
  45.51
  47.79
  50.18
  52.69
PV of cash for distribution, $m
  -586
  247
  226
  204
  182
  159
  137
  116
  97
  79
  62
  49
  38
  28
  21
  15
  10
  7
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

MSG Networks Inc., formerly The Madison Square Garden Company, is engaged in sports production, and content development and distribution. The Company owns and operates two regional sports and entertainment networks, MSG Network (MSGN) and MSG+, collectively MSG Networks. Its networks are distributed throughout its territory, which includes all of New York State and significant portions of New Jersey and Connecticut, as well as parts of Pennsylvania. The Company delivers live games of the New York Knicks (the Knicks) of the National Basketball Association (NBA); the New York Rangers (the Rangers), New York Islanders (the Islanders), New Jersey Devils (the Devils) and Buffalo Sabres (the Sabres) of the National Hockey League (NHL); the New York Liberty (the Liberty) of the Women's National Basketball Association; the New York Red Bulls (the Red Bulls) of Major League Soccer (MLS), and the Westchester Knicks of the National Basketball Association Developmental League.

FINANCIAL RATIOS  of  MSG Networks Inc. (MSGN)

Valuation Ratios
P/E Ratio 9.8
Price to Sales 2.4
Price to Book -1.7
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 8.6
Growth Rates
Sales Growth Rate 2.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 66.7%
Cap. Spend. - 3 Yr. Gr. Rate 38%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity -131.5%
Total Debt to Equity -139.1%
Interest Coverage 8
Management Effectiveness
Return On Assets 23.5%
Ret/ On Assets - 3 Yr. Avg. 11.2%
Return On Total Capital 45.9%
Ret/ On T. Cap. - 3 Yr. Avg. 20.7%
Return On Equity -16.2%
Return On Equity - 3 Yr. Avg. 0.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 61.6%
EBITDA Margin 47.9%
EBITDA Margin - 3 Yr. Avg. 53.9%
Operating Margin 46.4%
Oper. Margin - 3 Yr. Avg. 51.8%
Pre-Tax Margin 40.9%
Pre-Tax Margin - 3 Yr. Avg. 48.4%
Net Profit Margin 24.7%
Net Profit Margin - 3 Yr. Avg. 22.1%
Effective Tax Rate 39.5%
Eff/ Tax Rate - 3 Yr. Avg. 38.1%
Payout Ratio 0%

MSGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MSGN stock intrinsic value calculation we used $697 million for the last fiscal year's total revenue generated by MSG Networks Inc.. The default revenue input number comes from 0001 income statement of MSG 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 MSGN 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 12.8%, whose default value for MSGN is calculated based on our internal credit rating of MSG 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 MSG 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 MSGN stock the variable cost ratio is equal to 53.4%.

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 MSGN 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 MSG Networks Inc..

Corporate tax rate of 27% is the nominal tax rate for MSG 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 MSGN 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 MSGN are equal to 34.8%.

Life of production assets of 50.8 years is the average useful life of capital assets used in MSG 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 MSGN is equal to 13.5%. 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 - $-657.742 million for MSG 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 75.000 million for MSG 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 MSG Networks Inc. at the current share price and the inputted number of shares is $1.6 billion.

RELATED COMPANIES Price Int.Val. Rating
AMCX AMC Networks I 56.32 136.58  str.buy
HMTV Hemisphere Med 13.56 602.42  str.buy
EVLV EVINE Live Inc 0.332 0.31  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.