In this article we are going to estimate the intrinsic value of Madison Square Garden Entertainment Corp. (NYSE:MSGE) by projecting its future cash flows and then discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.
View our latest analysis for Madison Square Garden Entertainment
The Model
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
10-year free cash flow (FCF) estimate
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 |
Levered FCF ($, Millions) | -US$288.0m | US$207.0m | US$191.0m | US$182.2m | US$177.4m | US$175.2m | US$174.6m | US$175.3m | US$176.8m | US$178.8m |
Growth Rate Estimate Source | Analyst x1 | Analyst x1 | Analyst x1 | Est @ -4.6% | Est @ -2.64% | Est @ -1.26% | Est @ -0.3% | Est @ 0.37% | Est @ 0.84% | Est @ 1.17% |
Present Value ($, Millions) Discounted @ 8.7% | -US$265 | US$175 | US$149 | US$131 | US$117 | US$106 | US$97.6 | US$90.1 | US$83.6 | US$77.8 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$762m
After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (1.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.7%.
Terminal Value (TV)= FCF2032 × (1 + g) ÷ (r – g) = US$179m× (1 + 1.9%) ÷ (8.7%– 1.9%) = US$2.7b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$2.7b÷ ( 1 + 8.7%)10= US$1.2b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.9b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of US$50.3, the company appears about fair value at a 11% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
NYSE:MSGE Discounted Cash Flow September 22nd 2022
The Assumptions
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Madison Square Garden Entertainment as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.7%, which is based on a levered beta of 1.588. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Looking Ahead:
Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Madison Square Garden Entertainment, we've put together three relevant aspects you should consider:
- Financial Health: Does MSGE have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Future Earnings: How does MSGE's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
在本文中,我们将通过预测麦迪逊广场花园娱乐公司(纽约证券交易所代码:MSGE)的未来现金流,然后将其折现为今天的价值来估算其内在价值。我们的分析将采用贴现现金流(DCF)模型。在你认为自己无法理解之前,请继续阅读吧!实际上,它比你想象的要复杂得多。
我们普遍认为,公司的价值是其未来将产生的所有现金的现值。但是,差价合约只是众多估值指标中的一个,而且并非没有缺陷。如果您想了解有关折扣现金流的更多信息,可以在Simply Wall St分析模型中详细了解此计算背后的理由。
查看我们对麦迪逊广场花园娱乐的最新分析
该模型
我们使用所谓的两阶段模型,这仅意味着公司的现金流有两个不同的增长期。通常,第一阶段是较高的增长阶段,第二阶段是较低的增长阶段。在第一阶段,我们需要估算未来十年的业务现金流。在可能的情况下,我们会使用分析师的估计值,但是当这些估计值不可用时,我们会从最新的估计值或报告的价值中推断出之前的自由现金流(FCF)。我们假设自由现金流萎缩的公司将减缓其萎缩速度,而自由现金流不断增长的公司在此期间的增长率将放缓。我们这样做是为了反映早期增长的放缓幅度往往比后来的几年更大。
通常,我们假设今天的一美元比未来一美元更有价值,因此我们需要对这些未来现金流的总和进行折价才能得出现值估计:
10 年自由现金流 (FCF) 估计
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 |
Levered FCF(美元,百万) | -2.880 亿美元 | 2.070 亿美元 | 1.910 亿美元 | 1.822 亿美元 | 1.774 亿美元 | 1.752 亿美元 | 1.746 亿美元 | 1.753 亿美元 | 1.768 亿美元 | 1.788 亿美元 |
增长率估算来源 | 分析师 x1 | 分析师 x1 | 分析师 x1 | Est @ -4.6% | Est @ -2.64% | Est @ -1.26% | Est @ -0.3% | Est @ 0.37% | 美国东部标准时间 @ 0.84% | 美国东部标准时间 @ 1.17% |
现值(美元,百万)折扣 @ 8.7% | -265 美元 | 175 美元 | 149 美元 | 131 美元 | 117 美元 | 106 美元 | 97.6 美元 | 90.1 美元 | 83.6 美元 | 77.8 美元 |
(“Est” = Simply Wall St估计的FCF增长率)
10年期现金流(PVCF)的现值 = 7.62 亿美元
在计算了最初10年期间未来现金流的现值之后,我们需要计算终端价值,该终端价值考虑了第一阶段之后的所有未来现金流。出于多种原因,使用的增长率非常保守,不能超过一个国家的GDP增长率。在这种情况下,我们使用了10年期国债收益率的5年平均值(1.9%)来估计未来的增长。与10年的 “增长” 期相同,我们将未来的现金流折现为今天的价值,使用8.7%的股权成本。
终端价值 (TV)= FCF2032 × (1 + g) ÷ (r — g) = 1.79 亿美元× (1 + 1.9%) ÷ (8.7% — 1.9%) = 27亿美元
终端价值的现值 (PVTV)= 电视/ (1 + r)10= 27b美元÷ (1 + 8.7%)10= 12 亿美元
因此,总价值或权益价值是未来现金流现值的总和,在本例中为19亿美元。为了获得每股的内在价值,我们将其除以已发行股票总数。与目前的50.3美元股价相比,该公司的公允价值似乎比目前的股价折扣了11%。但是请记住,这只是一个近似的估值,就像任何复杂的公式一样——垃圾进来,垃圾出去。
纽约证券交易所:MSGE 2022 年 9 月 22 日贴现现金流
假设
上面的计算在很大程度上取决于两个假设。第一个是贴现率,另一个是现金流量。如果你不同意这些结果,那就自己去计算一下,试试假设。DCF也没有考虑一个行业可能的周期性,也没有考虑公司未来的资本需求,因此它没有全面描述公司的潜在表现。鉴于我们将麦迪逊广场花园娱乐公司视为潜在股东,因此使用股权成本作为贴现率,而不是构成债务的资本成本(或加权平均资本成本,WACC)。在此计算中,我们使用了 8.7%,这是基于 1.588 的杠杆测试值。与整个市场相比,Beta是衡量股票波动率的指标。我们的测试值来自全球可比公司的行业平均测试值,施加的限制在0.8到2.0之间,对于稳定的业务而言,这是一个合理的范围。
展望未来:
尽管公司的估值很重要,但它不应该是你在研究公司时要考虑的唯一指标。使用DCF模型不可能获得万无一失的估值。最好你应用不同的案例和假设,看看它们将如何影响公司的估值。如果一家公司以不同的速度增长,或者其股本成本或无风险利率发生急剧变化,则产出可能会大不相同。对于麦迪逊广场花园娱乐公司,我们汇总了你应该考虑的三个相关方面:
- 财务健康: MSGE 的资产负债表健康吗?看看我们的免费资产负债表分析,其中包含对杠杆率和风险等关键因素的六项简单检查。
- 未来收益: 与同行和整个市场相比,MSGE的增长率如何?通过与我们的免费分析师增长预期图表互动,更深入地了解未来几年的分析师共识数字。
- 其他高质量的替代品: 你喜欢一个优秀的全能选手吗?浏览我们的高品质股票互动清单,了解您可能还缺少什么!
PS。Simply Wall St应用程序每天对纽约证券交易所的每只股票进行折扣现金流估值。如果您想找到其他股票的计算方法,请在此处搜索。
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Simply Wall St 的这篇文章本质上是一般性的。 我们仅使用不偏不倚的方法根据历史数据和分析师预测提供评论,我们的文章并非旨在提供财务建议。 它不构成买入或卖出任何股票的建议,也没有考虑您的目标或财务状况。我们的目标是为您提供由基本面数据驱动的长期重点分析。请注意,我们的分析可能未将最新的价格敏感型公司公告或定性材料考虑在内。简而言之,华尔街对上述任何股票都没有头寸。