Apartment Investment and Management Co Valuation – January 2019 $AIV

Company Profile (excerpt from Reuters): Apartment Investment and Management Company (Aimco), incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (REIT). Aimco, through its subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds the ownership interests in the Aimco Operating Partnership. The Company operates through two segments: conventional real estate and affordable real estate. As of July 25, 2018, its real estate portfolio consisted of 134 apartment communities with 37,228 apartment homes. Aimco Operating Partnership conducts the Company’s business, which is focused on the ownership, management, redevelopment and limited development of apartment communities located in the coastal and job growth markets of the United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AIV – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,313,721,219 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.43 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -385.71% Fail
6. Moderate PEmg Ratio PEmg < 20 17.71 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.36 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -26.33 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.65
MG Growth Estimate 15.00%
MG Value $102.15
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $38.47
MG Value based on 0% Growth $22.55
Market Implied Growth Rate 4.60%
Current Price $46.99
% of Intrinsic Value 46.00%

Apartment Investment and Management Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1 in 2014 to an estimated $2.65 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.6% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Apartment Investment and Management Co revealed the company was trading above its Graham Number of $28.81. The company pays a dividend of $1.44 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.71, which was below the industry average of 70.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.77.

Apartment Investment and Management Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.77
Graham Number $28.81
PEmg 17.71
Current Ratio 0.43
PB Ratio 3.36
Current Dividend $1.44
Dividend Yield 3.06%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $104,299,000
Total Current Liabilities $242,782,000
Long-Term Debt $3,646,789,000
Total Assets $6,185,021,000
Intangible Assets $37,808,000
Total Liabilities $3,990,891,000
Shares Outstanding (Diluted Average) 156,938,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.77
Dec2017 $1.96
Dec2016 $2.67
Dec2015 $1.52
Dec2014 $2.06
Dec2013 $1.40
Dec2012 $0.61
Dec2011 -$0.86
Dec2010 -$1.08
Dec2009 -$1.00
Dec2008 $3.96
Dec2007 -$0.26
Dec2006 $0.95
Dec2005 -$0.12
Dec2004 $1.28
Dec2003 $0.67
Dec2002 $0.87
Dec2001 $0.23
Dec2000 $0.52
Dec1999 $0.38
Dec1998 $0.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.65
Dec2017 $2.04
Dec2016 $1.93
Dec2015 $1.36
Dec2014 $1.00
Dec2013 $0.25
Dec2012 -$0.11
Dec2011 -$0.26
Dec2010 $0.19
Dec2009 $0.79
Dec2008 $1.51
Dec2007 $0.36
Dec2006 $0.69
Dec2005 $0.57
Dec2004 $0.84
Dec2003 $0.60
Dec2002 $0.56

Recommended Reading:

Other ModernGraham posts about the company

Apartment Investment & Management Co Valuation – March 2018 $AIV
Apartment Investment & Management Co Valuation – July 2016 $AIV
Apartment Investment and Management Company Annual Valuation – 2015 $AIV
14 Companies in the Spotlight This Week – 1/4/14
ModernGraham Valuation: Apartment Investment & Management Co. (AIV)

Other ModernGraham posts about related companies

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Weyerhaeuser Co Valuation – December 2018 $WY
Alexandria Real Estate Equities Inc Valuation – November 2018 $ARE
LaSalle Hotel Properties Valuation – September 2018 $LHO
Cousins Properties Inc Valuation – September 2018 $CUZ
Cominar Real Estate Investment Trust Valuation – September 2018 $TSE:CUF.UN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Apartment Investment & Management Co Valuation – March 2018 $AIV

Company Profile (excerpt from Reuters): Apartment Investment and Management Company (Aimco), incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (REIT). Aimco, through its subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds the ownership interests in the Aimco Operating Partnership. The Company operates through two segments: conventional real estate and affordable real estate. As of December 31, 2016, its real estate portfolio consisted of 189 apartment communities with 46,311 apartment homes. Aimco Operating Partnership conducts the Company’s business, which is focused on the ownership, management, redevelopment and limited development of apartment communities located in the coastal and job growth markets of the United States.

AIV Chart

AIV data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AIV – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,310,517,506 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.66 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -257.31% Fail
6. Moderate PEmg Ratio PEmg < 20 28.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.78 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.66 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -51.84 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.39
MG Growth Estimate 6.02%
MG Value $28.66
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $20.23
MG Value based on 0% Growth $11.86
Market Implied Growth Rate 10.13%
Current Price $40.11
% of Intrinsic Value 139.96%

Apartment Investment and Management Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1 in 2014 to an estimated $1.39 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Apartment Investment and Management Co revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.44 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.75, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.17.

Apartment Investment and Management Co scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.17
Graham Number $0.00
PEmg 28.75
Current Ratio 0.66
PB Ratio 3.78
Current Dividend $1.44
Dividend Yield 3.59%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $153,958,000
Total Current Liabilities $232,839,000
Long-Term Debt $4,088,911,000
Total Assets $6,079,040,000
Intangible Assets $38,701,000
Total Liabilities $4,415,896,000
Shares Outstanding (Diluted Average) 156,880,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.01
Dec2017 $1.96
Dec2016 $2.67
Dec2015 $1.52
Dec2014 $2.06
Dec2013 $1.40
Dec2012 $0.61
Dec2011 -$0.86
Dec2010 -$1.08
Dec2009 -$1.00
Dec2008 $3.96
Dec2007 -$0.26
Dec2006 $0.95
Dec2005 -$0.12
Dec2004 $1.28
Dec2003 $0.67
Dec2002 $0.87
Dec2001 $0.23
Dec2000 $0.52
Dec1999 $0.38
Dec1998 $0.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.39
Dec2017 $2.04
Dec2016 $1.93
Dec2015 $1.36
Dec2014 $1.00
Dec2013 $0.25
Dec2012 -$0.11
Dec2011 -$0.26
Dec2010 $0.19
Dec2009 $0.79
Dec2008 $1.51
Dec2007 $0.36
Dec2006 $0.69
Dec2005 $0.57
Dec2004 $0.84
Dec2003 $0.60
Dec2002 $0.56

Recommended Reading:

Other ModernGraham posts about the company

Apartment Investment and Management Company Annual Valuation – 2015 $AIV
14 Companies in the Spotlight This Week – 1/4/14
ModernGraham Valuation: Apartment Investment & Management Co. (AIV)

Other ModernGraham posts about related companies

Crown Castle International Corp Valuation – March 2018 $CCI
GGP Inc Valuation – March 2018 $GGP
Starwood Property Trust Inc Valuation – March 2018 $STWD
Simon Property Group Inc Valuation – March 2018 $SPG
Welltower Inc Valuation – March 2018 $WELL
Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Apartment Investment & Management Co Valuation – July 2016 $AIV

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Apartment Investment & Management Co (AIV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Apartment Investment and Management Company (Aimco) is a self-administered and self-managed real estate investment trust. The Company, through its subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds the ownership interests in the Aimco Operating Partnership. Its segments include conventional real estate and affordable real estate. Its conventional real estate segment includes over 140 apartment communities with over 40,460 apartment homes. Its affordable real estate operations include approximately 60 apartment communities with over 8,680 apartment homes. The affordable segment consists of apartment communities, which it classifies as Affordable Same Store or Other Affordable. It owns and operates a portfolio of market-rate apartment communities. Aimco Operating Partnership conducts its business, which is focused on the ownership, management, redevelopment and limited development of apartment communities located in the coastal and job growth markets of the United States.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of AIV – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,090,925,666 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.38 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 261.73% Pass
6. Moderate PEmg Ratio PEmg < 20 24.66 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.33 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -15.75 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

AIV value chart July 2016

EPSmg $1.80
MG Growth Estimate 15.00%
MG Value $69.48
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $26.17
MG Value based on 0% Growth $15.34
Market Implied Growth Rate 8.08%
Current Price $44.51
% of Intrinsic Value 64.06%

Apartment Investment and Management Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $-0.18 in 2012 to an estimated $1.8 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Apartment Investment and Management Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

AIV charts July 2016

Net Current Asset Value (NCAV) -$28.08
Graham Number $21.75
PEmg 24.66
Current Ratio 0.38
PB Ratio 4.33
Current Dividend $1.23
Dividend Yield 2.76%
Number of Consecutive Years of Dividend Growth 6

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $154,612,000
Total Current Liabilities $403,357,000
Long-Term Debt $3,917,590,000
Total Assets $6,142,213,000
Intangible Assets $0
Total Liabilities $4,539,051,000
Shares Outstanding (Diluted Average) 156,117,000

Earnings Per Share History

Next Fiscal Year Estimate $2.28
Dec2015 $1.52
Dec2014 $2.06
Dec2013 $1.40
Dec2012 $0.61
Dec2011 -$0.86
Dec2010 -$1.08
Dec2009 -$1.00
Dec2008 $2.98
Dec2007 -$0.36
Dec2006 $1.00
Dec2005 -$0.18
Dec2004 $1.88
Dec2003 $0.70
Dec2002 $0.87
Dec2001 $0.23
Dec2000 $0.52
Dec1999 $0.38
Dec1998 $0.80
Dec1997 $1.08
Dec1996 $1.05

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.80
Dec2015 $1.36
Dec2014 $1.00
Dec2013 $0.25
Dec2012 -$0.18
Dec2011 -$0.40
Dec2010 -$0.01
Dec2009 $0.51
Dec2008 $1.20
Dec2007 $0.41
Dec2006 $0.81
Dec2005 $0.71
Dec2004 $1.05
Dec2003 $0.61
Dec2002 $0.56
Dec2001 $0.47
Dec2000 $0.65

Recommended Reading:

Other ModernGraham posts about the company

Apartment Investment and Management Company Annual Valuation – 2015 $AIV
14 Companies in the Spotlight This Week – 1/4/14
ModernGraham Valuation: Apartment Investment & Management Co. (AIV)

Other ModernGraham posts about related companies

Crown Castle International Corp Valuation – June 2016 $CCI
General Growth Properties Inc Valuation – June 2016 $GGP
Boston Properties Inc Valuation – June 2016 $BXP
Simon Property Group Inc Valuation – June 2016 $SPG
AvalonBay Communities Inc Valuation – May 2016 $AVB
Weyerhaeuser Company Valuation – May 2016 $WY
Realty Income Corporation Valuation – May 2016 $O
Welltower Inc. Valuation – May 2016 $HCN
Starwood Property Trust Inc Stock Valuation – February 2016 $STWD
Kimco Realty Corp Stock Valuation – February 2016 $KIM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Apartment Investment and Management Company Annual Valuation – 2015 $AIV

220px-Aimco_LogoREITs often attract a great deal of investors because of their strong cash flows and dividends, and those investors often overlook other parts of the business, choosing to analyze the company under a different set of criteria than companies in other sectors.  This can create a problem in that it becomes difficult to compare a REIT to an industrial, which is fine if you use the typical top-down approach to stock selection; however, a top-down approach invites speculation in the fact that you are theorizing which sector will perform well going forward.  Benjamin Graham taught that we should avoid speculation as much as possible, which is why it is critical to develop a system for analyzing companies that will allow them to be compared across industries.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another investment opportunity.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Apartment Investment and Management Company (AIV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Apartment Investment and Management Company (Aimco) is a self-administered and self-managed real estate investment trust (REIT). AIMCO Properties, L.P. (the Aimco Operating Partnership), is a partnership formed to conduct the Company’s business, which is focused on the ownership, management and redevelopment of apartment communities located in the United States. Aimco, through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, owns an ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. As of December 31, 2012 , the Company’s portfolio of owned properties consisted of 265 properties with 67,977 apartment units. The Company’s business is organized around two activities: Property Operations and Portfolio Management. During the year ended December 31, 2012, the Company acquired 84 properties in San Diego, 42 in Manhattan and 488 in Phoenix.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $40.55
MG Value $38.45
MG Opinion Fairly Valued
Value Based on 3% Growth $14.48
Value Based on 0% Growth $8.49
Market Implied Growth Rate 16.05%
Net Current Asset Value (NCAV) -$30.90
PEmg 40.60
Current Ratio 0.47
PB Ratio 4.82

Balance Sheet – September 2014

Current Assets $195,200,000
Current Liabilities $415,700,000
Total Debt $3,962,200,000
Total Assets $5,937,500,000
Intangible Assets $0
Total Liabilities $4,709,200,000
Outstanding Shares 146,100,000

Earnings Per Share

2014 (estimate) $2.07
2013 $1.40
2012 $0.61
2011 -$0.86
2010 -$1.08
2009 -$1.00
2008 $3.96
2007 -$0.26
2006 $0.95
2005 -$0.12
2004 $1.28

Earnings Per Share – ModernGraham

2014 (estimate) $1.00
2013 $0.25
2012 -$0.11
2011 -$0.26
2010 $0.19
2009 $0.79

Dividend History

Conclusion:

Apartment Investment and Management Company is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, lack of earnings stability, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the high level of debt relative to the current assets and the lack of earnings stability.  As a result, value investors following the ModernGraham approach should explore other opportunities at this time.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $0.19 in 2010 to an estimated $1.00 in 2014.  This demonstrated level of growth supports the market’s implied estimate of 16.05% earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model returns an estimate of intrinsic value that is within a margin of safety relative to the market price.

Be sure to check out previous ModernGraham valuations of Apartment Investment and Management Company (AIV) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Apartment Investment and Management Company (AIV)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Apartment Investment and Management Company (AIV) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia; this article is not affiliated with the company in any manner.

ModernGraham Valuation: Apartment Investment & Management Co. (AIV)

moneyCompany Profile (obtained from Google Finance): Apartment Investment and Management Company (Aimco) is a self-administered and self-managed real estate investment trust (REIT). AIMCO Properties, L.P. (the Aimco Operating Partnership), is a partnership formed to conduct the Company’s business, which is focused on the ownership, management and redevelopment of apartment communities located in the United States. Aimco, through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, owns an ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. As of December 31, 2012 , the Company’s portfolio of owned properties consisted of 265 properties with 67,977 apartment units. The Company’s business is organized around two activities: Property Operations and Portfolio Management. During the year ended December 31, 2012, the Company acquired 84 properties in San Diego, 42 in Manhattan and 488 in Phoenix.

Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?):

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary (Explanation of the ModernGraham Valuation Model)

Key Data:

MG Value $0.00 ** See conclusion.
MG Opinion Overvalued
Value Based on 3% Growth $0.00
Value Based on 0% Growth $0.00
Market Implied Growth Rate -28.04%
Net Current Asset Value (NCAV) -$36.84
PEmg -47.57
Current Ratio 0.48
PB Ratio 4.29

Balance Sheet – 9/30/2013 

Current Assets $231,100,000
Current Liabilities $484,900,000
Total Debt $4,829,500,000
Total Assets $6,489,500,000
Intangible Assets $0
Total Liabilities $5,607,400,000
Outstanding Shares 145,920,000

Earnings Per Share

2013 (estimate) $1.11
2012 -$0.95
2011 -$1.57
2010 -$1.73
2009 -$1.75
2008 -$1.51
2007 -$1.14
2006 -$1.29
2005 -$1.23
2004 -$0.36
2003 -$0.25

Earnings Per Share – ModernGraham 

2013 (estimate) -$0.54
2012 -$1.42
2011 -$1.61
2010 -$1.58
2009 -$1.47
2008 -$1.25

Conclusion:

Apartment Investment & Management Co. fares extremely poorly in the ModernGraham valuation model.  First, it does not pass the requirements of either the Defensive Investor or the Enterprising Investor.  This is a result of the high level of debt relative to its current assets, but more than that it is a result of the terrible earnings figures put out by the company.  Earnings drive everything for businesses, even REITs.  Free cash flow is nice, but everything still comes down to earnings.  If a company does not earn money, it will not have cash to eventually trickle back to investors.  Investors seeking to use a value investing approach as is used by ModernGraham would do better by looking at some companies that pass the requirements set forth by Benjamin Graham.  As for a valuation, the company’s consistently negative earnings lead to the valuation model returning a figure of $0.  If there is value here, it would be found through the balance sheet, but the high debt eliminates that as a possibility.

What do you think?  Do you agree that Apartment Investment & Management Co. is overvalued?  What would be your assessment?  Is the company not suitable for Defensive Investors or Enterprising Investors?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Apartment Investment & Management Co. (AIV) at the time of publication and had no intention of changing that position within the next 72 hours.

Photo Credit:  Andrew Magill

Duke Realty Corp Valuation – March 2019 $DRE

Company Profile (excerpt from Reuters): Duke Realty Corporation, incorporated on March 12, 1992, is a self-managed real estate investment trust (REIT). The Company and Duke Realty Limited Partnership (Partnership) collectively specialize in the ownership, management and development of bulk distribution (industrial) and medical office real estate. It operates through three segments, the first two of which consist of the ownership and rental of industrial and medical office real estate investments. The operations of its industrial and medical office properties, as well as its rental operations, are collectively referred to as Rental Operations. The third segment consists of various real estate services, such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as Service Operations. Its Service Operations segment also includes its taxable REIT subsidiary (TRS), through which certain of the segment’s operations are conducted. The Company maintains a Baa1 rating from Moody’s Investor Service, Inc. and a BBB+ rating from Standard & Poor’s Financial Services LLC.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DRE – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,579,736,074 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.51 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -1477.27% Fail
6. Moderate PEmg Ratio PEmg < 20 18.69 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.28 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.68 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.58
MG Growth Estimate 15.00%
MG Value $60.68
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $22.85
MG Value based on 0% Growth $13.40
Market Implied Growth Rate 5.09%
Current Price $29.45
% of Intrinsic Value 48.54%

Duke Realty Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.79 in 2015 to an estimated $1.58 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.09% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Duke Realty Corp revealed the company was trading above its Graham Number of $11.21. The company pays a dividend of $0.82 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.69, which was below the industry average of 61.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.22.

Duke Realty Corp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.22
Graham Number $11.21
PEmg 18.69
Current Ratio 2.51
PB Ratio 2.28
Current Dividend $0.82
Dividend Yield 2.77%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $456,336,000
Total Current Liabilities $181,799,000
Long-Term Debt $2,658,501,000
Total Assets $7,804,024,000
Intangible Assets $107,716,000
Total Liabilities $3,090,781,000
Shares Outstanding (Diluted Average) 364,953,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.43
Dec2018 $1.07
Dec2017 $4.56
Dec2016 $0.88
Dec2015 $1.77
Dec2014 $0.60
Dec2013 $0.47
Dec2012 -$0.48
Dec2011 $0.11
Dec2010 -$0.07
Dec2009 -$1.67
Dec2008 $0.33
Dec2007 $1.55
Dec2006 $1.07
Dec2005 $2.17
Dec2004 $1.06
Dec2003 $1.19
Dec2002 $1.14
Dec2001 $1.74
Dec2000 $1.66
Dec1999 $1.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.58
Dec2018 $2.02
Dec2017 $2.22
Dec2016 $0.92
Dec2015 $0.79
Dec2014 $0.24
Dec2013 -$0.07
Dec2012 -$0.35
Dec2011 -$0.17
Dec2010 -$0.12
Dec2009 $0.13
Dec2008 $1.10
Dec2007 $1.46
Dec2006 $1.38
Dec2005 $1.51
Dec2004 $1.24
Dec2003 $1.36

Recommended Reading:

Other ModernGraham posts about the company

10 Best Dividend Paying Stocks for the Enterprising Investor – May 2018
Duke Realty Corp Valuation – Initial Coverage $DRE

Other ModernGraham posts about related companies

Realty Income Corp Valuation – February 2019 $O
Ventas Inc Valuation – February 2019 $VTR
SL Green Realty Corp Valuation – February 2019 $SLG
Regency Centers Corp Valuation – February 2019 $REG
Host Hotels & Resorts Inc Valuation – February 2019 $HST
Vornado Realty Trust Valuation – January 2019 $VNO
Public Storage Valuation – January 2019 $PSA
Macerich Co Valuation – January 2019 $MAC
HCP Inc Valuation – January 2019 $HCP
Apartment Investment and Management Co Valuation – January 2019 $AIV

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Realty Income Corp Valuation – February 2019 $O

Company Profile (excerpt from Reuters): Realty Income Corporation, incorporated on March 25, 1997, is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

O Chart

O data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of O – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,684,700,386 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.21 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 12.23% Fail
6. Moderate PEmg Ratio PEmg < 20 61.13 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.65 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 172.66 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.15
MG Growth Estimate 2.50%
MG Value $15.49
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $16.63
MG Value based on 0% Growth $9.75
Market Implied Growth Rate 26.31%
Current Price $70.09
% of Intrinsic Value 452.55%

Realty Income Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.98 in 2014 to an estimated $1.15 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 26.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Realty Income Corp revealed the company was trading above its Graham Number of $26.88. The company pays a dividend of $2.54 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 61.13, which was below the industry average of 81.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.59.

Realty Income Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.59
Graham Number $26.88
PEmg 61.13
Current Ratio 1.21
PB Ratio 2.65
Current Dividend $2.54
Dividend Yield 3.62%
Number of Consecutive Years of Dividend Growth 19

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $224,158,000
Total Current Liabilities $184,893,000
Long-Term Debt $6,779,659,000
Total Assets $15,095,325,000
Intangible Assets $1,227,540,000
Total Liabilities $7,384,071,000
Shares Outstanding (Diluted Average) 291,207,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.24
Dec2017 $1.10
Dec2016 $1.13
Dec2015 $1.09
Dec2014 $1.04
Dec2013 $1.06
Dec2012 $0.73
Dec2011 $1.05
Dec2010 $1.01
Dec2009 $1.03
Dec2008 $1.06
Dec2007 $1.16
Dec2006 $1.11
Dec2005 $1.12
Dec2004 $1.15
Dec2003 $1.08
Dec2002 $1.01
Dec2001 $0.88
Dec2000 $0.85
Dec1999 $0.77
Dec1998 $0.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.15
Dec2017 $1.10
Dec2016 $1.07
Dec2015 $1.02
Dec2014 $0.98
Dec2013 $0.96
Dec2012 $0.93
Dec2011 $1.04
Dec2010 $1.05
Dec2009 $1.08
Dec2008 $1.11
Dec2007 $1.13
Dec2006 $1.11
Dec2005 $1.09
Dec2004 $1.05
Dec2003 $0.97
Dec2002 $0.90

Recommended Reading:

Other ModernGraham posts about the company

Realty Income Corp Valuation – April 2018 $O
Realty Income Corp Valuation – November 2016 $O
Realty Income Corporation Valuation – May 2016 $O
Realty Income Corporation Annual Valuation – 2014 $O
10 Companies in the Spotlight This Week – 12/28/13

Other ModernGraham posts about related companies

Ventas Inc Valuation – February 2019 $VTR
SL Green Realty Corp Valuation – February 2019 $SLG
Regency Centers Corp Valuation – February 2019 $REG
Host Hotels & Resorts Inc Valuation – February 2019 $HST
Vornado Realty Trust Valuation – January 2019 $VNO
Public Storage Valuation – January 2019 $PSA
Macerich Co Valuation – January 2019 $MAC
HCP Inc Valuation – January 2019 $HCP
Apartment Investment and Management Co Valuation – January 2019 $AIV
Simon Property Group Inc Valuation – January 2019 $SPG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ventas Inc Valuation – February 2019 $VTR

Company Profile (excerpt from Reuters): Ventas, Inc., incorporated on June 22, 1987, is a real estate investment trust (REIT) with its properties located throughout the United States, Canada and the United Kingdom. The Company operates through three segments: triple-net leased properties, senior living operations and office operations. Under its triple-net leased properties segment, the Company acquires and owns seniors housing and healthcare properties throughout the United States and the United Kingdom and leases those properties to healthcare operating companies under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses. In its senior living operations segment, the Company invests in seniors housing communities throughout the United States and Canada and engages independent operators to manage those communities. In its office operations segment, the Company primarily acquires, owns, develops, leases and manages medical office buildings (MOBs) and life science and innovation centers throughout the United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VTR – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,220,325,302 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.28 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 40.27% Pass
6. Moderate PEmg Ratio PEmg < 20 36.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.28 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.28 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -12.51 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.79
MG Growth Estimate 3.95%
MG Value $29.43
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $26.02
MG Value based on 0% Growth $15.25
Market Implied Growth Rate 13.90%
Current Price $65.14
% of Intrinsic Value 221.35%

Ventas, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.42 in 2015 to an estimated $1.79 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.9% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Ventas, Inc. revealed the company was trading above its Graham Number of $27.93. The company pays a dividend of $3.16 per share, for a yield of 4.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 36.3, which was below the industry average of 81.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-33.29.

Ventas, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$33.29
Graham Number $27.93
PEmg 36.30
Current Ratio 0.28
PB Ratio 2.28
Current Dividend $3.16
Dividend Yield 4.86%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $327,754,000
Total Current Liabilities $1,185,902,000
Long-Term Debt $10,733,699,000
Total Assets $22,584,555,000
Intangible Assets $2,559,126,000
Total Liabilities $12,312,961,000
Shares Outstanding (Diluted Average) 360,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.21
Dec2018 $1.14
Dec2017 $3.78
Dec2016 $1.86
Dec2015 $1.25
Dec2014 $1.60
Dec2013 $1.54
Dec2012 $1.23
Dec2011 $1.58
Dec2010 $1.56
Dec2009 $1.74
Dec2008 $1.59
Dec2007 $2.25
Dec2006 $1.25
Dec2005 $1.36
Dec2004 $1.43
Dec2003 $2.03
Dec2002 $0.93
Dec2001 $0.73
Dec2000 -$0.96
Dec1999 $0.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.79
Dec2018 $2.03
Dec2017 $2.32
Dec2016 $1.56
Dec2015 $1.42
Dec2014 $1.50
Dec2013 $1.48
Dec2012 $1.48
Dec2011 $1.65
Dec2010 $1.69
Dec2009 $1.71
Dec2008 $1.66
Dec2007 $1.68
Dec2006 $1.40
Dec2005 $1.41
Dec2004 $1.24
Dec2003 $0.98

Recommended Reading:

Other ModernGraham posts about the company

Ventas Inc Valuation – April 2018 $VTR
Ventas Inc Valuation – August 2016 $VTR
Ventas Inc. Analysis – 2015 Update $VTR
19 Companies in the Spotlight This Week – 7/26/14
Ventas Inc. Annual Valuation – 2014 $VTR

Other ModernGraham posts about related companies

SL Green Realty Corp Valuation – February 2019 $SLG
Regency Centers Corp Valuation – February 2019 $REG
Host Hotels & Resorts Inc Valuation – February 2019 $HST
Vornado Realty Trust Valuation – January 2019 $VNO
Public Storage Valuation – January 2019 $PSA
Macerich Co Valuation – January 2019 $MAC
HCP Inc Valuation – January 2019 $HCP
Apartment Investment and Management Co Valuation – January 2019 $AIV
Simon Property Group Inc Valuation – January 2019 $SPG
Crown Castle International Corp Valuation – January 2019 $CCI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

SL Green Realty Corp Valuation – February 2019 $SLG

Company Profile (excerpt from Reuters): SL Green Realty Corp., incorporated on June 10, 1997, is a self-managed real estate investment trust (REIT), with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. The Company operates through two segments: real estate, and debt and preferred equity investments. It acquires, owns, repositions, manages and leases commercial office, retail and multifamily properties in the New York Metropolitan area. Its subsidiaries include Reckson Associates Realty Corp. (Reckson) and Reckson Operating Partnership, L.P. (ROP).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SLG – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,801,417,990 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.69 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -61.98% Fail
6. Moderate PEmg Ratio PEmg < 20 51.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.36 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.99 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.78
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.88
MG Value based on 0% Growth $15.17
Market Implied Growth Rate 21.38%
Current Price $91.49
% of Intrinsic Value N/A

SL Green Realty Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.24 in 2015 to an estimated $1.78 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 21.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into SL Green Realty Corp revealed the company was trading above its Graham Number of $42.89. The company pays a dividend of $3.29 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 51.26, which was below the industry average of 81.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-69.24.

SL Green Realty Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$69.24
Graham Number $42.89
PEmg 51.26
Current Ratio 2.69
PB Ratio 1.36
Current Dividend $3.29
Dividend Yield 3.59%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $684,720,000
Total Current Liabilities $254,248,000
Long-Term Debt $5,591,918,000
Total Assets $12,751,358,000
Intangible Assets $0
Total Liabilities $6,803,503,000
Shares Outstanding (Diluted Average) 88,376,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.22
Dec2018 $2.67
Dec2017 $0.87
Dec2016 $2.34
Dec2015 $2.70
Dec2014 $5.23
Dec2013 $1.10
Dec2012 $1.74
Dec2011 $7.33
Dec2010 $3.45
Dec2009 $0.54
Dec2008 $6.20
Dec2007 $10.78
Dec2006 $4.38
Dec2005 $3.20
Dec2004 $4.75
Dec2003 $2.66
Dec2002 $2.09
Dec2001 $1.94
Dec2000 $2.93
Dec1999 $1.37

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.78
Dec2018 $2.30
Dec2017 $2.22
Dec2016 $2.81
Dec2015 $3.24
Dec2014 $3.59
Dec2013 $2.79
Dec2012 $3.71
Dec2011 $5.02
Dec2010 $4.26
Dec2009 $4.79
Dec2008 $6.56
Dec2007 $6.21
Dec2006 $3.76
Dec2005 $3.27
Dec2004 $3.16
Dec2003 $2.31

Recommended Reading:

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SL Green Realty Corp Valuation – April 2018 $SLG
SL Green Realty Corp Valuation – August 2016 $SLG
SL Green Realty Corp Analysis – Initial Coverage $SLG

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Regency Centers Corp Valuation – February 2019 $REG
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Regency Centers Corp Valuation – February 2019 $REG

Company Profile (excerpt from Reuters): Regency Centers Corporation, incorporated on July 8, 1993, is a real estate investment trust (REIT). The Company is the general partner of Regency Centers, L.P. (the Operating Partnership). The Company is engaged in the ownership, management, leasing, acquisition and development of retail shopping centers through the Operating Partnership. The Company’s properties include Palm Valley Marketplace, Shops at Arizona, Amerige Heights Town Center, Clayton Valley Shopping Center, Five Points Shopping Center, French Valley Village Center, Hasley Canyon Village, Pleasant Hill Shopping Center, Snell & Branham Plaza, Applewood Shopping Center, Kent Place, Black Rock, Spring Valley Shopping Center and Pebblebrook Plaza.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of REG – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,929,926,700 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.07 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -815.09% Fail
6. Moderate PEmg Ratio PEmg < 20 49.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.67 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.07 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 222.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.31
MG Growth Estimate 4.74%
MG Value $23.52
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $18.98
MG Value based on 0% Growth $11.12
Market Implied Growth Rate 20.40%
Current Price $64.51
% of Intrinsic Value 274.31%

Regency Centers Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.99 in 2014 to an estimated $1.31 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.4% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Regency Centers Corp revealed the company was trading above its Graham Number of $34.73. The company pays a dividend of $2.09 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 49.29, which was below the industry average of 81.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.03.

Regency Centers Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.03
Graham Number $34.73
PEmg 49.29
Current Ratio 1.07
PB Ratio 1.67
Current Dividend $2.09
Dividend Yield 3.24%
Number of Consecutive Years of Dividend Growth 4

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $252,966,000
Total Current Liabilities $236,250,000
Long-Term Debt $3,717,208,000
Total Assets $11,057,030,000
Intangible Assets $731,363,000
Total Liabilities $4,504,787,000
Shares Outstanding (Diluted Average) 169,839,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.37
Dec2017 $1.00
Dec2016 $1.42
Dec2015 $1.36
Dec2014 $1.80
Dec2013 $1.40
Dec2012 -$0.08
Dec2011 $0.35
Dec2010 -$0.14
Dec2009 -$0.74
Dec2008 $1.66
Dec2007 $2.65
Dec2006 $2.89
Dec2005 $2.23
Dec2004 $2.03
Dec2003 $2.11
Dec2002 $1.81
Dec2001 $1.69
Dec2000 $1.08
Dec1999 $1.61
Dec1998 $1.75

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.31
Dec2017 $1.32
Dec2016 $1.38
Dec2015 $1.23
Dec2014 $0.99
Dec2013 $0.45
Dec2012 $0.05
Dec2011 $0.33
Dec2010 $0.63
Dec2009 $1.26
Dec2008 $2.27
Dec2007 $2.51
Dec2006 $2.37
Dec2005 $2.06
Dec2004 $1.90
Dec2003 $1.78
Dec2002 $1.60

Recommended Reading:

Other ModernGraham posts about the company

Regency Centers Corp Valuation – Initial Coverage $REG

Other ModernGraham posts about related companies

Host Hotels & Resorts Inc Valuation – February 2019 $HST
Vornado Realty Trust Valuation – January 2019 $VNO
Public Storage Valuation – January 2019 $PSA
Macerich Co Valuation – January 2019 $MAC
HCP Inc Valuation – January 2019 $HCP
Apartment Investment and Management Co Valuation – January 2019 $AIV
Simon Property Group Inc Valuation – January 2019 $SPG
Crown Castle International Corp Valuation – January 2019 $CCI
Welltower Inc Valuation – January 2019 $WELL
Boston Properties Inc Valuation – January 2019 $BXP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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