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Boston Properties Inc Valuation – January 2019 $BXP

Company Profile (excerpt from Reuters): Boston Properties, Inc., incorporated on March 24, 1997, is a real estate investment trust. The Company is an owner and developer of office properties in the United States. The Company’s segments by geographic area are Boston, New York, San Francisco and Washington, DC. Its segments by property type include Office, Residential and Hotel. As of July 23, 2018, the Company owned or had interests in over 175 commercial real estate properties, aggregating approximately 50.3million net rentable square feet of primarily Class A office properties, including eight properties under construction/redevelopment totaling approximately 4.0 million net rentable square feet. As of July 23, 2018, its properties consisted of 167 Office properties (including nine properties under construction/redevelopment); one hotel; five retail properties, and six residential properties (including four under construction).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BXP – 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 $17,048,675,661 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.90 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 102.10% Pass
6. Moderate PEmg Ratio PEmg < 20 33.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.08 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 2.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 10.00 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 $3.26
MG Growth Estimate 1.60%
MG Value $38.14
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $47.29
MG Value based on 0% Growth $27.72
Market Implied Growth Rate 12.67%
Current Price $110.39
% of Intrinsic Value 289.40%

Boston Properties, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PEmg ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.95 in 2014 to an estimated $3.26 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.67% 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 Boston Properties, Inc. revealed the company was trading above its Graham Number of $52.98. The company pays a dividend of $3.05 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 33.85, 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 $-66.39.

Boston Properties, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$66.39
Graham Number $52.98
PEmg 33.94
Current Ratio 2.90
PB Ratio 2.09
Current Dividend $3.05
Dividend Yield 2.76%
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 9/1/2018
Total Current Assets $1,662,003,000
Total Current Liabilities $573,389,000
Long-Term Debt $10,889,702,000
Total Assets $20,137,498,000
Intangible Assets $0
Total Liabilities $11,931,524,000
Shares Outstanding (Diluted Average) 154,678,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.43
Dec2017 $2.93
Dec2016 $3.26
Dec2015 $3.72
Dec2014 $2.83
Dec2013 $4.86
Dec2012 $1.92
Dec2011 $1.86
Dec2010 $1.14
Dec2009 $1.76
Dec2008 $0.87
Dec2007 $10.94
Dec2006 $7.46
Dec2005 $3.86
Dec2004 $2.61
Dec2003 $3.65
Dec2002 $4.50
Dec2001 $2.19
Dec2000 $2.05
Dec1999 $1.71
Dec1998 $1.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.26
Dec2017 $3.29
Dec2016 $3.42
Dec2015 $3.35
Dec2014 $2.95
Dec2013 $2.77
Dec2012 $1.66
Dec2011 $2.12
Dec2010 $2.98
Dec2009 $4.26
Dec2008 $5.39
Dec2007 $7.00
Dec2006 $4.82
Dec2005 $3.46
Dec2004 $3.17
Dec2003 $3.24
Dec2002 $2.82

Recommended Reading:

Other ModernGraham posts about the company

Boston Properties Inc Valuation – March 2018 $BXP
9 Best Stocks For Value Investors This Week – 6/24/16
Boston Properties Inc Valuation – June 2016 $BXP
Boston Properties Inc. Valuation – November 2015 Update $BXP
Boston Properties Inc. Analysis – August 2015 Update $BXP

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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.

Boston Properties Inc Valuation – March 2018 $BXP

Company Profile (obtained from Marketwatch): Boston Properties, Inc. operates as a real estate investment trust. It engages in the acquisition, development, financing, capital markets, construction management, property management, marketing, leasing, accounting, and tax and legal services. It operates through the following segments: Boston, New York, San Francisco, and Washington, DC. The company was founded by Mortimer Benjamin Zuckerman and Edward H. Linde in 1970 and is headquartered in Boston, MA.

BXP Chart

BXP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BXP – 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 $18,344,290,442 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 83.99% Pass
6. Moderate PEmg Ratio PEmg < 20 39.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.17 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 2.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 11.00 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 $2.97
MG Growth Estimate 0.14%
MG Value $26.09
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $43.12
MG Value based on 0% Growth $25.28
Market Implied Growth Rate 15.73%
Current Price $118.87
% of Intrinsic Value 455.59%

Boston Properties, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. 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 Overvalued after growing its EPSmg (normalized earnings) from $2.95 in 2014 to an estimated $2.97 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.73% 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 Boston Properties, Inc. revealed the company was trading above its Graham Number of $45.86. The company pays a dividend of $3.05 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 39.97, which was below the industry average of 51.63, 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 $-77.89.

Boston Properties, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$77.89
Graham Number $45.86
PEmg 39.97
Current Ratio 2.69
PB Ratio 3.17
Current Dividend $3.05
Dividend Yield 2.57%
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 12/1/2017
Total Current Assets $1,488,291,000
Total Current Liabilities $554,186,000
Long-Term Debt $10,271,611,000
Total Assets $19,372,233,000
Intangible Assets $0
Total Liabilities $13,558,276,000
Shares Outstanding (Diluted Average) 154,969,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.57
Dec2017 $2.93
Dec2016 $3.26
Dec2015 $3.72
Dec2014 $2.83
Dec2013 $4.86
Dec2012 $1.92
Dec2011 $1.86
Dec2010 $1.14
Dec2009 $1.76
Dec2008 $0.87
Dec2007 $10.94
Dec2006 $7.46
Dec2005 $3.86
Dec2004 $2.61
Dec2003 $3.65
Dec2002 $4.50
Dec2001 $2.19
Dec2000 $2.05
Dec1999 $1.71
Dec1998 $1.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.97
Dec2017 $3.29
Dec2016 $3.42
Dec2015 $3.35
Dec2014 $2.95
Dec2013 $2.77
Dec2012 $1.66
Dec2011 $2.12
Dec2010 $2.98
Dec2009 $4.26
Dec2008 $5.39
Dec2007 $7.00
Dec2006 $4.82
Dec2005 $3.46
Dec2004 $3.17
Dec2003 $3.24
Dec2002 $2.82

Recommended Reading:

Other ModernGraham posts about the company

9 Best Stocks For Value Investors This Week – 6/24/16
Boston Properties Inc Valuation – June 2016 $BXP
Boston Properties Inc. Valuation – November 2015 Update $BXP
Boston Properties Inc. Analysis – August 2015 Update $BXP
47 Companies in the Spotlight This Week – 5/16/15

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REIT Industry Review – April 2017

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.

Boston Properties Inc Valuation – June 2016 $BXP

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 Boston Properties Inc (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is a real estate investment trust. The Company is an owner and developer of office properties in the United States. The Company’s segments by geographic area are Boston, New York, San Francisco and Washington, DC. The Company conducts its operations through Boston Properties Limited Partnership. The Company holds interests in approximately 170 commercial real estate properties, aggregating over 46.5 million net rentable square feet. The Company’s properties include approximately 160 office properties, a hotel, over five retail properties and approximately four residential properties. The Company’s properties include 399 Park Avenue in New York; 599 Lexington Avenue in New York; Bay Colony Corporate Center in Waltham; Embarcadero Center Four in San Francisco; Capital Gallery in Washington, DC; 680 Folsom Street in San Francisco; One Freedom Square in Reston; One Tower Center in East Brunswick, and 140 Kendrick Street in Needham.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

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 BXP – June 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 $20,021,668,654 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.32 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 -9.69% Fail
6. Moderate PEmg Ratio PEmg < 20 30.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.47 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 4.32 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.20 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

BXP value Chart June 2016

EPSmg $4.28
MG Growth Estimate 15.00%
MG Value $164.93
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $62.12
MG Value based on 0% Growth $36.41
Market Implied Growth Rate 10.89%
Current Price $129.75
% of Intrinsic Value 78.67%

Boston Properties, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.67 in 2012 to an estimated $4.28 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 10.89% 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 within a margin of safety relative to the price.

Boston Properties, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

BXP Charts June 2016

Net Current Asset Value (NCAV) -$70.73
Graham Number $68.96
PEmg 30.29
Current Ratio 4.32
PB Ratio 3.47
Current Dividend $2.60
Dividend Yield 2.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

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 $2,539,727,000
Total Current Liabilities $587,384,000
Long-Term Debt $10,160,366,000
Total Assets $19,175,830,000
Intangible Assets $0
Total Liabilities $13,426,047,000
Shares Outstanding (Diluted Average) 153,917,000

Earnings Per Share History

Next Fiscal Year Estimate $5.85
Dec2015 $3.72
Dec2014 $2.83
Dec2013 $4.86
Dec2012 $1.92
Dec2011 $1.86
Dec2010 $1.14
Dec2009 $1.76
Dec2008 $1.03
Dec2007 $10.94
Dec2006 $7.46
Dec2005 $3.86
Dec2004 $2.61
Dec2003 $3.71
Dec2002 $4.66
Dec2001 $2.19
Dec2000 $2.01
Dec1999 $1.71
Dec1998 $1.52
Dec1997 $1.03

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.28
Dec2015 $3.35
Dec2014 $2.95
Dec2013 $2.77
Dec2012 $1.67
Dec2011 $2.14
Dec2010 $3.01
Dec2009 $4.30
Dec2008 $5.44
Dec2007 $7.00
Dec2006 $4.84
Dec2005 $3.49
Dec2004 $3.22
Dec2003 $3.30
Dec2002 $2.87
Dec2001 $1.88
Dec2000 $1.57

Recommended Reading:

Other ModernGraham posts about the company

Boston Properties Inc. Valuation – November 2015 Update $BXP
Boston Properties Inc. Analysis – August 2015 Update $BXP
47 Companies in the Spotlight This Week – 5/16/15
Boston Properties Inc. Quarterly Valuation – May 2015 $BXP
34 Companies in the Spotlight This Week – 2/7/15

Other ModernGraham posts about related companies

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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.

Boston Properties Inc. Valuation – November 2015 Update $BXP

REITs 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 Boston Properties Inc. (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT). The Company is engaged in owning and developing office properties in the United States. The Company’s properties are concentrated in four markets: Boston, New York, San Francisco and Washington, DC. The Company conducts all of its business through its subsidiary, Boston Properties Limited Partnership. The Company considers office/technical properties to be properties that support office, research and development, laboratory and other technical uses. The Company is also engaged in providing resources in acquisitions, development, financing, capital markets, construction management, property management, marketing, leasing, accounting, risk management, tax and legal services.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

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.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of BXP – November 2015

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 $18,952,845,945 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.12 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 -38.35% Fail
6. Moderate PEmg Ratio PEmg < 20 35.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.24 Fail
Score
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 4.12 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.59 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

BXP value Chart November 2015

EPSmg $3.50
MG Growth Estimate 9.77%
MG Value $98.25
Opinion Overvalued
MG Value based on 3% Growth $50.80
MG Value based on 0% Growth $29.78
Market Implied Growth Rate 13.36%
Current Price $123.41
% of Intrinsic Value 125.61%

Boston Properties Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.12 in 2011 to an estimated $3.50 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 13.36% 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 below the price.

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 Boston Properties Inc. (BXP)?  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.

Stage 3: Information for Further Research

BXP Charts November 2015

Net Current Asset Value (NCAV) -$70.41
Graham Number $58.90
PEmg 35.23
Current Ratio 4.12
PB Ratio 3.24
Dividend Yield 2.11%
Number of Consecutive Years of Dividend Growth 0

 

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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

Total Current Assets $2,300,622,000
Total Current Liabilities $559,028,000
Long-Term Debt $9,729,796,000
Total Assets $18,980,260,000
Intangible Assets $0
Total Liabilities $13,128,350,000
Shares Outstanding (Diluted Average) 153,786,000

Earnings Per Share History

Next Fiscal Year Estimate $4.19
Dec14 $2.83
Dec13 $4.86
Dec12 $1.92
Dec11 $1.86
Dec10 $1.14
Dec09 $1.76
Dec08 $0.87
Dec07 $10.94
Dec06 $7.46
Dec05 $3.86
Dec04 $2.61
Dec03 $3.65
Dec02 $4.50
Dec01 $2.19
Dec00 $2.05
Dec99 $1.71
Dec98 $1.52
Dec97 $0.90

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.50
Dec14 $2.95
Dec13 $2.77
Dec12 $1.66
Dec11 $2.12
Dec10 $2.98
Dec09 $4.26
Dec08 $5.39
Dec07 $7.00
Dec06 $4.82
Dec05 $3.46
Dec04 $3.17
Dec03 $3.24
Dec02 $2.82
Dec01 $1.88
Dec00 $1.56
Dec99 $1.16

Recommended Reading:

Other ModernGraham posts about the company

Boston Properties Inc. Analysis – August 2015 Update $BXP
47 Companies in the Spotlight This Week – 5/16/15
Boston Properties Inc. Quarterly Valuation – May 2015 $BXP
34 Companies in the Spotlight This Week – 2/7/15
Boston Properties Inc. Quarterly Valuation – January 2015 $BXP

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Essex Property Trust Inc. Analysis – October 2015 Update $ESS
Macerich Company Analysis – September 2015 Update $MAC
Alexandria Real Estate Equities Inc. Analysis – Initial Coverage $ARE
Weyerhaeuser Company Analysis – August 2015 Update $WY
Boston Properties Inc. Analysis – August 2015 Update $BXP
Health Care REIT Inc. Analysis – August 2015 Update $HCN

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.

Boston Properties Inc. Analysis – August 2015 Update $BXP

REITs 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 Boston Properties Inc. (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT). The Company is engaged in owning and developing office properties in the United States. The Company’s properties are concentrated in four markets: Boston, New York, San Francisco and Washington, DC. The Company conducts all of its business through its subsidiary, Boston Properties Limited Partnership. The Company considers office/technical properties to be properties that support office, research and development, laboratory and other technical uses. The Company is also engaged in providing resources in acquisitions, development, financing, capital markets, construction management, property management, marketing, leasing, accounting, risk management, tax and legal services.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of BXP – August 2015

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 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 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 Fail
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
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 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 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 3.55
MG Growth Estimate 10.13%
MG Value $102.16
Opinion Overvalued
MG Value based on 3% Growth $51.52
MG Value based on 0% Growth $30.20
Market Implied Growth Rate 12.76%
Current Price $120.86
% of Intrinsic Value 118.30%

Boston Properties Inc. qualifies for the Enterprising Investor but is not suitable for the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.12 in 2011 to an estimated $3.55 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 12.76% 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 below the price.

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 Boston Properties Inc. (BXP)?  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.

Stage 3: Information for Further Research

BXP charts August 2015

 

Net Current Asset Value (NCAV) -$71.05
PEmg 34.01
Current Ratio 4.59
PB Ratio 3.21
Dividend Yield 2.15%
Number of Consecutive Years of Dividend Growth 0

 

 

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $2,402,242,000
Total Current Liabilities $523,340,000
Long-Term Debt $9,867,459,000
Total Assets $19,113,960,000
Intangible Assets $0
Total Liabilities $13,330,980,000
Outstanding Shares 153,815,000

Earnings Per Share History

Next Fiscal Year Estimate $4.34
Dec14 $2.83
Dec13 $4.86
Dec12 $1.92
Dec11 $1.86
Dec10 $1.14
Dec09 $1.76
Dec08 $0.87
Dec07 $10.94
Dec06 $7.46
Dec05 $3.86
Dec04 $2.61
Dec03 $3.65
Dec02 $4.50
Dec01 $2.19
Dec00 $2.05
Dec99 $1.71
Dec98 $1.52
Dec97 $0.90

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.55
Dec14 $2.95
Dec13 $2.77
Dec12 $1.66
Dec11 $2.12
Dec10 $2.98
Dec09 $4.26
Dec08 $5.39
Dec07 $7.00
Dec06 $4.82
Dec05 $3.46
Dec04 $3.17
Dec03 $3.24
Dec02 $2.82
Dec01 $1.88
Dec00 $1.56
Dec99 $1.16

Recommended Reading:

Other ModernGraham posts about the company

47 Companies in the Spotlight This Week – 5/16/15
Boston Properties Inc. Quarterly Valuation – May 2015 $BXP
34 Companies in the Spotlight This Week – 2/7/15
Boston Properties Inc. Quarterly Valuation – January 2015 $BXP
18 Companies in the Spotlight This Week – 10/25/14

Other ModernGraham posts about related companies

Health Care REIT Inc. Analysis – August 2015 Update $HCN
Kimco Realty Corporation Analysis – August 2015 Update $KIM
American Campus Communities Inc. Analysis – Initial Coverage $ACC
Ventas Inc. Analysis – 2015 Update $VTR
National Retail Properties Inc. Analysis – Initial Coverage $NNN
SL Green Realty Corp Analysis – Initial Coverage $SLG
Essex Property Trust Inc. Analysis – Initial Coverage $ESS
Equity Residential Analysis – 2015 Update $EQR
Macerich Stock Analysis – May 2015 Quarterly Update $MAC
Iron Mountain Inc. Annual Valuation – 2015 $IRM

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.  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.

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Boston Properties Inc. Quarterly Valuation – May 2015 $BXP

220px-Boston-prpts-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 Boston Properties Inc. (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is an integrated, self-administered and self-managed real estate investment trust (REIT) and owner and developer of office properties in the United States. The Company’s properties are concentrated in five markets: Boston, New York, Princeton, San Francisco and Washington, DC. The Company conducts all of its business through its subsidiary, Boston Properties Limited Partnership (BPLP). The Company owns or controls undeveloped land parcels of approximately 503.6 acres. The Company owns around 175 properties, including nine properties under construction, which constituted approximately 2.9 million rentable square feet. Its properties consist of approximately 167 office properties, including approximately 128 Class A office and approximately 39 office/technical properties; one hotel; four retail properties, and three residential properties.

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 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  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 – 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 = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  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 – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $132.38
MG Value $130.07
MG Opinion Fairly Valued
Value Based on 3% Growth $56.36
Value Based on 0% Growth $33.04
Market Implied Growth Rate 12.78%
Net Current Asset Value (NCAV) -$71.23
PEmg 34.06
Current Ratio 4.65
PB Ratio 3.52

Balance Sheet – March 2015

Current Assets $2,435,000,000
Current Liabilities $524,000,000
Total Debt $10,067,000,000
Total Assets $19,179,000,000
Intangible Assets $0
Total Liabilities $13,397,000,000
Outstanding Shares 153,900,000

Earnings Per Share

2015 (estimate) $5.34
2014 $2.83
2013 $4.86
2012 $1.92
2011 $1.86
2010 $1.14
2009 $1.76
2008 $0.87
2007 $10.94
2006 $7.46
2005 $3.86

Earnings Per Share – ModernGraham

2015 (estimate) $3.89
2014 $2.95
2013 $2.77
2012 $1.66
2011 $2.12
2010 $2.98

Dividend History

Conclusion:

Boston Properties Inc. is suitable for the Enterprising Investor but not for the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only concerned with the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with further research into the company.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.12 in 2011 to an estimated $3.89 for 2015.  This level of growth supports the market’s implied estimate of 12.78% annual earnings growth over the next 7-10 years, leading the ModernGraham valuation model to return an estimate of intrinsic value falling within a margin of safety relative to the current price.

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 Boston Properties Inc. (BXP)?  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 any 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.

Boston Properties Inc. Quarterly Valuation – January 2015 $BXP

220px-Boston-prpts-logoBenjamin 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 5 Most Undervalued Companies for the Defensive Investor – January 2015.  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 Boston Properties Inc. (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is an integrated, self-administered and self-managed real estate investment trust (REIT) and owner and developer of office properties in the United States. The Company’s properties are concentrated in five markets: Boston, New York, Princeton, San Francisco and Washington, DC. The Company conducts all of its business through its subsidiary, Boston Properties Limited Partnership (BPLP). The Company owns or controls undeveloped land parcels of approximately 503.6 acres. The Company owns around 175 properties, including nine properties under construction, which constituted approximately 2.9 million rentable square feet. Its properties consist of approximately 167 office properties, including approximately 128 Class A office and approximately 39 office/technical properties; one hotel; four retail properties, and three residential properties.

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 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  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 – 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 = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  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 – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $138.80
MG Value $61.55
MG Opinion Overvalued
Value Based on 3% Growth $54.53
Value Based on 0% Growth $31.97
Market Implied Growth Rate 14.20%
Net Current Asset Value (NCAV) -$74.35
PEmg 36.91
Current Ratio 3.20
PB Ratio 3.72

Balance Sheet – September 2014

Current Assets $1,752,000,000
Current Liabilities $548,000,000
Total Debt $10,656,000,000
Total Assets $18,875,000,000
Intangible Assets $0
Total Liabilities $13,150,000,000
Outstanding Shares 153,300,000

Earnings Per Share

2014 (estimate) $5.27
2013 $4.86
2012 $1.92
2011 $1.86
2010 $1.14
2009 $1.76
2008 $0.87
2007 $10.94
2006 $7.46
2005 $3.86
2004 $2.61

Earnings Per Share – ModernGraham

2014 (estimate) $3.76
2013 $2.77
2012 $1.66
2011 $2.12
2010 $2.98
2009 $4.26

Dividend History

Conclusion:

Boston Properties Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings growth over the last ten years as well as the high PEmg and PB ratios.  The Enterprising Investor is only concerned by the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.98 in 2010 to an estimated $3.76 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 14.2% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Boston Properties Inc. (BXP) 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 Boston Properties Inc. (BXP)?  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 Boston Properties Inc. (BXP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Boston Properties Inc. Quarterly Stock Valuation – October 2014 $BXP

220px-Boston-prpts-logoBenjamin 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 5 Undervalued Companies for the Defensive Investor.  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 Boston Properties Inc. (BXP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Boston Properties, Inc. is an integrated, self-administered and self-managed real estate investment trust (REIT). The Company is an owner and developer of office properties in the United States. The Company’s properties are concentrated in five markets: Boston, New York, Princeton, San Francisco and Washington, DC. As of December 31, 2012, the Company owned or had interests in 157 properties, totaling approximately 44.4 million net rentable square feet, including seven properties under construction totaling approximately 2.8 million net rentable square feet. In March 2012, the Company acquired 100 Federal Street in Boston, Massachusetts from an affiliate of Bank of America, N.A. On March 1, 2012, the Company acquired 453 Ravendale Drive. On October 4, 2012, the Company acquired Fountain Square. In June 2013, Sungate Fifth Avenue LLC and 767 LLC, acquired a 40% interest in the General Motors Building located in New York, from joint venture partners of Boston Properties Inc.
BXP Chart

BXP data by YCharts

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 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  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 – 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 = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  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 – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $119.56
MG Value $60.29
MG Opinion Overvalued
Value Based on 3% Growth $54.19
Value Based on 0% Growth $31.77
Market Implied Growth Rate 11.75%
Net Current Asset Value (NCAV) -$74.20
PEmg 31.99
Current Ratio 3.79
PB Ratio 3.22

Balance Sheet – 6/30/2014

Current Assets $1,840,000,000
Current Liabilities $485,000,000
Total Debt $10,739,000,000
Total Assets $18,899,000,000
Intangible Assets $0
Total Liabilities $13,208,000,000
Outstanding Shares 153,200,000

Earnings Per Share

2014 (estimate) $5.20
2013 $4.86
2012 $1.92
2011 $1.86
2010 $1.14
2009 $1.76
2008 $0.87
2007 $10.94
2006 $7.46
2005 $3.86
2004 $2.61

Earnings Per Share – ModernGraham

2014 (estimate) $3.74
2013 $2.77
2012 $1.66
2011 $2.12
2010 $2.98
2009 $4.26

Dividend History
BXP Dividend Chart

BXP Dividend data by YCharts

Conclusion:

Boston Properties is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned with the company’s low level of growth over the last ten years and the high PEmg and PB ratios.  The Enterprising Investor’s only concern is the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.98 in 2010 to an estimated $3.74 in 2014.  This level of demonstrated growth does not support the market’s implied estimate of 11.75% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

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 Boston Properties Inc. (BXP)?  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 Boston Properties Inc. (BXP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia or the company website for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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

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 $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

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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.

Host Hotels & Resorts Inc Valuation – February 2019 $HST

Company Profile (excerpt from Reuters): Host Hotels & Resorts, Inc. (Host Inc.), incorporated on September 28, 1998, operates as a self-managed and self-administered real estate investment trust (REIT). The Company operates through hotel ownership segment. The Company owned properties and conducted operations through Host Hotels & Resorts, L.P. (Host L.P.), of which Host Inc. was the general partner and of which it held approximately 99% of the partnership interests (OP units), as of December 31, 2016. As of February 20, 2017, its lodging portfolio consisted of 96 primarily luxury and upper-upscale hotels containing approximately 53,500 rooms, with the majority located in the United States, and with seven of the properties located outside of the United States in Australia, Brazil, Canada and Mexico. In addition, it owns non-controlling interests in two international joint ventures: approximately a 33% interest in a joint venture in Europe, which owns 10 luxury and upper-upscale hotels with approximately 3,900 rooms in Belgium, France, Germany, Spain, Sweden, the Netherlands and the United Kingdom, and a 9% indirect interest, through joint ventures, in five operating hotels and two hotels in the final stages of completion in India.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HST – 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 $13,386,799,159 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.13 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -494.12% Fail
6. Moderate PEmg Ratio PEmg < 20 20.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.81 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 7.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.51 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 $0.87
MG Growth Estimate 15.00%
MG Value $33.47
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $12.61
MG Value based on 0% Growth $7.39
Market Implied Growth Rate 6.13%
Current Price $18.04
% of Intrinsic Value 53.90%

Host Hotels and Resorts Inc 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, and the poor dividend history, and the high PEmg ratio. 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 $0.43 in 2014 to an estimated $0.87 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.13% 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 above the price.

At the time of valuation, further research into Host Hotels and Resorts Inc revealed the company was trading above its Graham Number of $13.82. The company pays a dividend of $0.8 per share, for a yield of 4.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.75, 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 $-3.88.

Host Hotels and Resorts Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.88
Graham Number $13.82
PEmg 20.75
Current Ratio 7.13
PB Ratio 1.81
Current Dividend $0.80
Dividend Yield 4.43%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,889,000,000
Total Current Liabilities $265,000,000
Long-Term Debt $4,079,000,000
Total Assets $12,155,000,000
Intangible Assets $0
Total Liabilities $4,760,000,000
Shares Outstanding (Diluted Average) 740,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.90
Dec2017 $0.76
Dec2016 $1.02
Dec2015 $0.74
Dec2014 $0.96
Dec2013 $0.42
Dec2012 $0.08
Dec2011 -$0.02
Dec2010 -$0.21
Dec2009 -$0.45
Dec2008 $0.72
Dec2007 $1.30
Dec2006 $1.45
Dec2005 $0.37
Dec2004 -$0.12
Dec2003 -$0.07
Dec2002 -$0.19
Dec2001 $0.08
Dec2000 $0.62
Dec1999 $0.90
Dec1998 $0.22

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.87
Dec2017 $0.83
Dec2016 $0.79
Dec2015 $0.60
Dec2014 $0.43
Dec2013 $0.10
Dec2012 -$0.03
Dec2011 $0.03
Dec2010 $0.22
Dec2009 $0.52
Dec2008 $0.92
Dec2007 $0.87
Dec2006 $0.54
Dec2005 $0.06
Dec2004 -$0.04
Dec2003 $0.09
Dec2002 $0.22

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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.

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