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BY JONATHAN BLUM, KAGAN
It's good news that an analyst of Richard Bilotti's stature is promoting MSO stocks. Bilotti uses an interesting valuation called ?discretionary cash flow (DCF)? to show that operators have control over capex beyond must-be-spent maintenance investing. Operators would be wise to husband that investor perception. If MSOs are valued on a full free cash basis, their worth falls dramatically.
FREE CASH FLOW (FCF) VS. DISCRETIONARY CASH FLOW (DCF) VALUATION
| Company |
FCF |
DCF |
FCF/Share |
DCF/Share |
| Cox |
$47 |
$1,072 |
$0.07 |
$1.68 |
| Comcast |
$(44) |
$2,853 |
$(0.02) |
$1.23 |
| Cablevision |
$(458) |
$221 |
$(1.37) |
$0.66 |
| Charter |
$(990) |
$(504) |
$(1.49) |
$(0.76) |
| SHARE PRICES AS OF DEC. 31, 2002 |
| SOURCE: KAGAN WORLD MEDIA ESTIMATES OF MORGAN STANLEY DATA. |
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