The earnings season is over, so it is a good time to look at the streaming/royalty sector and current valuation measures. To remind my readers, I am using two methods to find the value of these plays:
- Discounted cash flow model where I calculate the so-called market cap/equity value ratio
- Price to Book Value ratio
Market cap/equity value ratio
Here is my methodology:
- Firstly, for each streaming company, I calculate the annual (the last four quarters) cash flow from operations excluding working capital issues
- Then, I divide the annual cash flow by a discount rate