Discounted Cash Flow Calculation for DB:M59 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 try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:M59 DCF 1st Stage: Next 10 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
Merlin Entertainments's earnings available for a low price, and how does
this compare to other companies in the same industry?
Merlin Entertainments's earnings are expected to grow by 5.3% yearly, however this is not considered high growth (20% yearly).
Merlin Entertainments's revenue is expected to grow by 5.7% 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.
Merlin Entertainments'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
4/6, 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
Merlin Entertainments's finances.
The net worth of a company is the difference between its assets and liabilities.
Merlin Entertainments's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Merlin Entertainments's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Merlin Entertainments'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.
Debt is not covered by short term assets, assets are 0.2x debt.
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. Nicholas John Varney, also known as Nick, has been the Group Chief Executive Officer of Merlin Entertainments plc since 1999. Mr. Varney has been the Chief Executive Officer of Merlin Entertainments Group Limited since October 21, 2013. He started his career in consumer goods marketing, working for Nestle Rowntree and Reckitt & Colman PLC. In 1991, he joined Alton Towers as Marketing Director and served as Head of Group Marketing for the Tussauds Group, overseeing the launch of Port Aventura in Spain. He oversaw the launch of Port Aventura in Spain and set new strategies for the Madame Tussauds business in London and Amsterdam. During his 3 years at the park he transformed its marketing and contributed to three record seasons in succession. Mr. Varney joined Vardon Attractions in 1995 as Managing Director and has since overseen the exciting development of the Dungeon brand and its move into the German market. He served as the Chairman of Merlin Entertainments Group Ltd. and Merlin Entertainments plc. He serves as a Director of Merlin Entertainments Group Limited. He serves as a Director of Charcoal Newco 1 Limited. He served as a Director at Merlin Entertainments Plc., since October 20. 2013. He served as Director at Charcoal Newco 1A Ltd. until October 3, 2014. He served as a Director of Vardon PLC Board in 1997. His Skills and experience With over 25 years in the visitor attractions industry. He is Chairman of the British Hospitality Association. Mr. Varney is a graduate of the London School of Economics.
Nick's compensation has increased by more than 20% in the past year whilst earnings grew less than 20%.
Nick's remuneration is lower 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 Merlin Entertainments management team is about average.
Anne-Francoise Michele Rankine
CFO & Executive Director
Chief Development Officer & Member of Executive Board
Chief New Openings Officer and Member of Executive Board
Managing Director of Midway Attractions and Member of Executive Board
Chief Digital Marketing & Information Officer and Member of Executive Board
Managing Director of LEGOLAND Parks and Member of Executive Board
Chief Strategy Officer & Member of Executive Board
Group HR Director & Member of Executive Board
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Merlin Entertainments board of directors is about average.
Merlin Entertainments plc operates visitor attraction places worldwide. The company operates midway attractions under the Madame Tussauds, The Eye Brand, SEA LIFE, The Dungeons, LEGOLAND Discovery Centres, Seal Sanctuaries, Shreks Adventure, Blackpool Tower, WILD LIFE, Australian Treetop Adventures, Hotham Alpine Resort, Falls Creek, and Little BIG City brands. It also operates resort theme parks under the Alton Towers, Chessington World of Adventures, Gardaland, Heide Park, THORPE PARK Resort, and Warwick Castle brands; and LEGOLAND parks under the LEGOLAND Billund, LEGOLAND Windsor, LEGOLAND California, LEGOLAND Deutschland, LEGOLAND Florida, LEGOLAND Malaysia, LEGOLAND Dubai, and LEGOLAND Japan brands. The company operates approximately 120 attractions, 18 hotels, and 6 holiday villages in 25 countries and across 4 continents. Merlin Entertainments plc was founded in 1999 and is headquartered in Poole, the United Kingdom.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.