Discounted Cash Flow Calculation for DB:65P using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method. We use
analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:65P DCF 1st Stage: Next 5 year cash flow forecast
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Pinnacle Entertainment's earnings available for a low price, and how does
this compare to other companies in the same industry?
Pinnacle Entertainment's earnings are expected to grow by 0.8% yearly, however this is not considered high growth (20% yearly).
Pinnacle Entertainment's revenue is expected to grow by 1.1% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Pinnacle Entertainment's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Pinnacle Entertainment's finances.
The net worth of a company is the difference between its assets and liabilities.
Pinnacle Entertainment's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Pinnacle Entertainment's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Pinnacle Entertainment's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Pinnacle Entertainment has negative shareholder equity (liabilities exceed assets) therefore debt is not covered by short term assets.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Anthony M. Sanfilippo has been Chairman of the Board of Pinnacle Entertainment, Inc. (“Company”) since May 2017 and its Chief Executive Officer since April 2016. He has more than 30 years of gaming entertainment experience and since joining the Company in 2010 has led the company through significant growth. He served as President, Chief Executive Officer and a Board Member of Multimedia Games Inc. He served in leadership roles at Harrah's Entertainment, Inc. He served as President of Harrah's central and western divisions, overseeing the operations of more than two dozen casinos and gaming resorts. In addition, he was President and Chief Operating Officer for Harrah's New Orleans and a Board member of Jazz Casino Corp. He has directed tribal gaming operations in Arizona, California and Kansas and has held gaming licenses in most states that offer legalized gambling.
Anthony's compensation has increased by more than 20% in the past year.
Anthony's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Pinnacle Entertainment management team is about average.
Chairman & CEO
Executive Vice President of Operations
Executive VP & Chief Administrative Officer
Executive Vice President of Government Relations & Public Affairs
Senior VP & Chief Accounting Officer
Senior Vice President of Human Resources
Senior VP of Operations & GM of L'Auberge Lake Charles
Senior VP of Operations & GM of L'Auberge Baton Rouge
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Pinnacle Entertainment board of directors is less than 3 years, this suggests a new board.
Pinnacle Entertainment, Inc. owns, develops, and operates casinos and related hospitality and entertainment facilities in the United States. It operates through Midwest, South, and West segments. As of February 28, 2018, the company owned and operated 16 gaming entertainment businesses located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, and Pennsylvania. It also holds interest in the racing license owner, as well as a management contract, for Retama Park Racetrack outside of San Antonio, Texas. In addition, the company owns and operates a live and televised poker tournament series under the Heartland Poker Tour name. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1938 and is headquartered in Las Vegas, Nevada.
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