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,我們將通過預測麥迪遜廣場花園娛樂公司(紐約證券交易所代碼:MSGE)的未來現金流,然後將其折現爲今天的價值來估算其內在價值。我們的分析將採用貼現現金流(DCF)模型。在你認爲自己無法理解之前,請繼續閱讀吧!實際上,它比你想象的要複雜得多。
我們普遍認爲,公司的價值是其未來將產生的所有現金的現值。但是,差價合約只是衆多估值指標中的一個,而且並非沒有缺陷。如果您想了解有關折扣現金流的更多信息,可以在Simply Wall St分析模型中詳細瞭解此計算背後的理由。
查看我們對麥迪遜廣場花園娛樂的最新分析
該模型
我們使用所謂的兩階段模型,這僅意味着公司的現金流有兩個不同的增長期。通常,第一階段是較高的增長階段,第二階段是較低的增長階段。在第一階段,我們需要估算未來十年的業務現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
通常,我們假設今天的一美元比未來一美元更有價值,因此我們需要對這些未來現金流的總和進行折價才能得出現值估計:
10 年自由現金流 (FCF) 估計
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 |
Levered FCF(美元,百萬) | -2.880 億美元 | 2.070 億美元 | 1.910 億美元 | 1.822 億美元 | 1.774 億美元 | 1.752 億美元 | 1.746 億美元 | 1.753 億美元 | 1.768 億美元 | 1.788 億美元 |
增長率估算來源 | 分析師 x1 | 分析師 x1 | 分析師 x1 | Est @ -4.6% | Est @ -2.64% | Est @ -1.26% | Est @ -0.3% | Est @ 0.37% | 美國東部標準時間 @ 0.84% | 美國東部標準時間 @ 1.17% |
現值(美元,百萬)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估計的FCF增長率)
10年期現金流(PVCF)的現值 = 7.62 億美元
在計算了最初10年期間未來現金流的現值之後,我們需要計算終端價值,該終端價值考慮了第一階段之後的所有未來現金流。出於多種原因,使用的增長率非常保守,不能超過一個國家的GDP增長率。在這種情況下,我們使用了10年期國債收益率的5年平均值(1.9%)來估計未來的增長。與10年的 “增長” 期相同,我們將未來的現金流折現爲今天的價值,使用8.7%的股權成本。
終端價值 (TV)= FCF2032 × (1 + g) ÷ (r — g) = 1.79 億美元× (1 + 1.9%) ÷ (8.7% — 1.9%) = 27億美元
終端價值的現值 (PVTV)= 電視/ (1 + r)10= 27b美元÷ (1 + 8.7%)10= 12 億美元
因此,總價值或權益價值是未來現金流現值的總和,在本例中爲19億美元。爲了獲得每股的內在價值,我們將其除以已發行股票總數。與目前的50.3美元股價相比,該公司的公允價值似乎比目前的股價折扣了11%。但是請記住,這只是一個近似的估值,就像任何複雜的公式一樣——垃圾進來,垃圾出去。
紐約證券交易所:MSGE 2022 年 9 月 22 日貼現現金流
假設
上面的計算在很大程度上取決於兩個假設。第一個是貼現率,另一個是現金流量。如果你不同意這些結果,那就自己去計算一下,試試假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面描述公司的潛在表現。鑑於我們將麥迪遜廣場花園娛樂公司視爲潛在股東,因此使用股權成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了 8.7%,這是基於 1.588 的槓桿測試值。與整個市場相比,Beta是衡量股票波動率的指標。我們的測試值來自全球可比公司的行業平均測試值,施加的限制在0.8到2.0之間,對於穩定的業務而言,這是一個合理的範圍。
展望未來:
儘管公司的估值很重要,但它不應該是你在研究公司時要考慮的唯一指標。使用DCF模型不可能獲得萬無一失的估值。最好你應用不同的案例和假設,看看它們將如何影響公司的估值。如果一家公司以不同的速度增長,或者其股本成本或無風險利率發生急劇變化,則產出可能會大不相同。對於麥迪遜廣場花園娛樂公司,我們彙總了你應該考慮的三個相關方面:
- 財務健康: MSGE 的資產負債表健康嗎?看看我們的免費資產負債表分析,其中包含對槓桿率和風險等關鍵因素的六項簡單檢查。
- 未來收益: 與同行和整個市場相比,MSGE的增長率如何?通過與我們的免費分析師增長預期圖表互動,更深入地瞭解未來幾年的分析師共識數字。
- 其他高質量的替代品: 你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,瞭解您可能還缺少甚麼!
PS。Simply Wall St應用程序每天對紐約證券交易所的每隻股票進行折扣現金流估值。如果您想找到其他股票的計算方法,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂? 取得聯繫 直接和我們聯繫。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St 的這篇文章本質上是一般性的。 我們僅使用不偏不倚的方法根據歷史數據和分析師預測提供評論,我們的文章並非旨在提供財務建議。 它不構成買入或賣出任何股票的建議,也沒有考慮您的目標或財務狀況。我們的目標是爲您提供由基本面數據驅動的長期重點分析。請注意,我們的分析可能未將最新的價格敏感型公司公告或定性材料考慮在內。簡而言之,華爾街對上述任何股票都沒有頭寸。