Cinema chains have traditionally been valued at a multiple of EDITDA (earnings before interest, tax, depreciation and amortisation). Thus a cinema company with EBITDA of $50 million might be valued at an EV (enterprise value) of eight times EBITDA or $400 million. EV is the market capitalisation plus net debt so if in this example net debt amounted to $100 million, the company’s equity would be valued at $300 million.
This handy valuation tool consists of an Excel spreadsheet with the latest full year financial data keyed in. Just update the share prices (most can be found on Google Finance) to see current EV/EBITDA valuation multiples. Click here to open it.