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Cousins Properties Inc Valuation – September 2018 $CUZ

Company Profile (excerpt from Reuters): Cousins Properties Incorporated (Cousins) is a self-administered and self-managed real estate investment trust (REIT). The Company’s segments include Office, Mixed-Use, Other, Atlanta, Austin, Charlotte, Orlando, Tampa, Phoenix and Other. The Company develops, acquires, leases, manages and owns primarily Class A office properties and opportunistic mixed-use developments in Sunbelt markets with a focus on Georgia, Texas and North Carolina. The Company manages a 15.8 million-square-foot trophy office portfolio in the Sun Belt markets of Atlanta, Austin, Charlotte, Orlando, Tampa and Tempe. As of December 31, 2016, the Company’s portfolio of real estate assets consisted of interests in 16.2 million square feet of office space and 786,000 square feet of mixed-use space.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CUZ – September 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 $3,875,947,876 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 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 -167.38% Fail
6. Moderate PEmg Ratio PEmg < 20 27.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.39 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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 35.26 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 $0.33
MG Growth Estimate 15.00%
MG Value $12.81
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $4.82
MG Value based on 0% Growth $2.83
Market Implied Growth Rate 9.61%
Current Price $9.22
% of Intrinsic Value 71.99%

Cousins Properties 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, 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 Undervalued after growing its EPSmg (normalized earnings) from $0.14 in 2014 to an estimated $0.33 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.61% 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 Cousins Properties Inc revealed the company was trading above its Graham Number of $4.22. The company pays a dividend of $0.3 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 27.72, which was below the industry average of 75.38, 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 $-2.82.

Cousins 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) -$2.82
Graham Number $4.22
PEmg 27.72
Current Ratio 1.31
PB Ratio 1.39
Current Dividend $0.30
Dividend Yield 3.25%
Number of Consecutive Years of Dividend Growth 1

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 6/1/2018
Total Current Assets $129,450,000
Total Current Liabilities $98,562,000
Long-Term Debt $1,089,264,000
Total Assets $4,166,252,000
Intangible Assets $164,753,000
Total Liabilities $1,333,908,000
Shares Outstanding (Diluted Average) 427,501,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.12
Dec2017 $0.52
Dec2016 $0.31
Dec2015 $0.58
Dec2014 $0.22
Dec2013 $0.76
Dec2012 $0.32
Dec2011 -$1.36
Dec2010 -$0.27
Dec2009 $0.22
Dec2008 $0.15
Dec2007 $0.33
Dec2006 $4.14
Dec2005 $0.67
Dec2004 $7.84
Dec2003 $4.83
Dec2002 $0.96
Dec2001 $1.41
Dec2000 $1.25
Dec1999 $2.12
Dec1998 $0.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.33
Dec2017 $0.45
Dec2016 $0.42
Dec2015 $0.36
Dec2014 $0.14
Dec2013 $0.05
Dec2012 -$0.27
Dec2011 -$0.44
Dec2010 $0.32
Dec2009 $0.78
Dec2008 $1.58
Dec2007 $2.72
Dec2006 $3.83
Dec2005 $3.50
Dec2004 $4.36
Dec2003 $2.46
Dec2002 $1.29

Recommended Reading:

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Cousins Properties Inc Valuation – Initial Coverage $CUZ

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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.

Cousins Properties Inc Valuation – Initial Coverage $CUZ

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 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  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 Cousins Properties Inc (CUZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cousins Properties Incorporated is a self-administered and self-managed real estate investment trust. The Company’s segments include Office, Mixed-Use, Other, Atlanta, Austin, Charlotte, Orlando, Tampa, Phoenix and Other. It develops, acquires, leases, manages and owns primarily Class A office properties and opportunistic mixed-use developments in Sunbelt markets with a focus on Georgia, Texas and North Carolina. It manages a 15.8 million-square-foot trophy office portfolio in the Sun Belt markets of Atlanta, Austin, Charlotte, Orlando, Tampa and Tempe. As of December 31, 2016, its portfolio of real estate assets consisted of interests in 16.2 million square feet of office space and 786,000 square feet of mixed-use space. The Company, through Cousins TRS Services LLC, owns and manages its own real estate portfolio and performs certain real estate related services for other parties. Its properties include Colorado Tower, 816 Congress, Emory Point Apartments and Emory Point Retail.

CUZ Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CUZ – March 2017

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 $3,409,670,385 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 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 1110.00% Pass
6. Moderate PEmg Ratio PEmg < 20 21.15 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.85 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 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -57.27 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 $0.39
MG Growth Estimate 15.00%
MG Value $14.84
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $5.59
MG Value based on 0% Growth $3.28
Market Implied Growth Rate 6.33%
Current Price $8.15
% of Intrinsic Value 54.94%

Cousins Properties 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, insufficient earnings stability 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 Undervalued after growing its EPSmg (normalized earnings) from $0.05 in 2013 to an estimated $0.39 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.33% 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 Cousins Properties Inc revealed the company was trading above its Graham Number of $6.69. The company pays a dividend of $0.32 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.15, which was below the industry average of 31.91, 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 $-6.24.

Cousins 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) -$6.24
Graham Number $6.69
PEmg 21.15
Current Ratio 0.83
PB Ratio 0.85
Current Dividend $0.32
Dividend Yield 3.93%
Number of Consecutive Years of Dividend Growth 1

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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 12/1/2016
Total Current Assets $118,468,000
Total Current Liabilities $142,582,000
Long-Term Debt $1,380,920,000
Total Assets $4,171,607,000
Intangible Assets $245,529,000
Total Liabilities $1,716,050,000
Shares Outstanding (Diluted Average) 256,023,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.32
Dec2016 $0.31
Dec2015 $0.58
Dec2014 $0.22
Dec2013 $0.76
Dec2012 $0.32
Dec2011 -$1.36
Dec2010 -$0.27
Dec2009 $0.22
Dec2008 $0.15
Dec2007 $0.33
Dec2006 $4.14
Dec2005 $0.67
Dec2004 $7.84
Dec2003 $4.83
Dec2002 $0.96
Dec2001 $1.41
Dec2000 $1.25
Dec1999 $2.12
Dec1998 $0.94
Dec1997 $0.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.39
Dec2016 $0.42
Dec2015 $0.36
Dec2014 $0.14
Dec2013 $0.05
Dec2012 -$0.27
Dec2011 -$0.44
Dec2010 $0.32
Dec2009 $0.78
Dec2008 $1.58
Dec2007 $2.72
Dec2006 $3.83
Dec2005 $3.50
Dec2004 $4.36
Dec2003 $2.46
Dec2002 $1.29
Dec2001 $1.41

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None. This is the first time ModernGraham has covered the company.

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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.

HCP Inc Valuation – January 2019 $HCP

Company Profile (excerpt from Reuters): HCP, Inc., incorporated on March 21, 1985, is a self-administered real estate investment trust (REIT). The Company invests primarily in real estate serving the healthcare industry in the United States. The Company’s segments include senior housing triple-net (SH NNN), senior housing operating portfolio (SHOP), life science and medical office. As of December 31, 2016, the Company had interests in and managed 15 hospitals, 61 care homes in the United Kingdom and five post-acute/skilled nursing facilities (SNFs). Services provided by its tenants and operators in hospitals are paid for by private sources, third-party payors, such as insurance or through Medicare and Medicaid programs. Its hospital property types include acute care, long-term acute care, specialty and rehabilitation hospitals. Its care homes are registered to provide various levels of services, ranging from personal care to nursing care. SNFs offer restorative, rehabilitative and custodial nursing care for people.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HCP – 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 $14,276,913,709 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 4.46% Fail
6. Moderate PEmg Ratio PEmg < 20 44.33 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.48 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 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 40.06 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.67
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $9.73
MG Value based on 0% Growth $5.71
Market Implied Growth Rate 17.91%
Current Price $29.76
% of Intrinsic Value N/A

HCP, 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, 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, and the lack of earnings stability or 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 $1.85 in 2014 to an estimated $0.67 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.91% 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 HCP, Inc. revealed the company was trading above its Graham Number of $12.24. The company pays a dividend of $1.48 per share, for a yield of 5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 44.33, 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 $-14.6.

HCP, 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) -$14.60
Graham Number $12.24
PEmg 44.33
Current Ratio 1.41
PB Ratio 2.48
Current Dividend $1.48
Dividend Yield 4.97%
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

Balance Sheet Information 9/1/2018
Total Current Assets $580,505,000
Total Current Liabilities $410,804,000
Long-Term Debt $6,798,253,000
Total Assets $13,083,958,000
Intangible Assets $305,805,000
Total Liabilities $7,443,583,000
Shares Outstanding (Diluted Average) 470,118,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.59
Dec2017 $0.88
Dec2016 $1.34
Dec2015 -$1.21
Dec2014 $2.00
Dec2013 $2.13
Dec2012 $1.90
Dec2011 $1.29
Dec2010 $1.00
Dec2009 $0.40
Dec2008 $1.79
Dec2007 $2.71
Dec2006 $2.66
Dec2005 $1.12
Dec2004 $1.11
Dec2003 $0.97
Dec2002 $0.96
Dec2001 $0.85
Dec2000 $1.07
Dec1999 $1.13
Dec1998 $1.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.67
Dec2017 $0.82
Dec2016 $0.93
Dec2015 $0.90
Dec2014 $1.85
Dec2013 $1.63
Dec2012 $1.35
Dec2011 $1.20
Dec2010 $1.34
Dec2009 $1.58
Dec2008 $2.07
Dec2007 $2.05
Dec2006 $1.60
Dec2005 $1.05
Dec2004 $1.01
Dec2003 $0.97
Dec2002 $1.00

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HCP Inc Valuation – March 2018 $HCP
HCP Inc Valuation – January 2016 Update $HCP
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HCP Inc. Valuation – October 2015 Update $HCP
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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 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:

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

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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.

Simon Property Group Inc Valuation – January 2019 $SPG

Company Profile (excerpt from Reuters): Simon Property Group, Inc., incorporated on March 10, 1998, is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company’s partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development. Internationally, as of December 31, 2016, it had ownership interests in nine Premium Outlets in Japan, three Premium Outlets in South Korea, two Premium Outlets in Canada, one Premium Outlet in Mexico, and one Premium Outlet in Malaysia. As of December 31, 2016, it also owned an interest in six Designer Outlet properties in Europe and one Designer Outlet property in Canada. As of December 31, 2016, it also had four international outlet properties under development. As of December 31, 2016, it owned a 20.3% equity stake in Klepierre SA, or Klepierre, a real estate company, which owns, or has an interest in, shopping centers located in 16 countries in Europe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPG – 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 $55,118,563,758 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.51 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 195.02% Pass
6. Moderate PEmg Ratio PEmg < 20 26.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 13.65 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 0.51 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -17.11 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 $6.41
MG Growth Estimate 7.96%
MG Value $156.47
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $92.90
MG Value based on 0% Growth $54.46
Market Implied Growth Rate 9.17%
Current Price $172.00
% of Intrinsic Value 109.93%

Simon Property Group 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $6.41 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 9.17% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Simon Property Group Inc revealed the company was trading above its Graham Number of $44.34. The company pays a dividend of $7.15 per share, for a yield of 4.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.85, 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 $-83.3.

Simon Property Group 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) -$83.30
Graham Number $44.34
PEmg 26.85
Current Ratio 0.51
PB Ratio 13.65
Current Dividend $7.15
Dividend Yield 4.16%
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 $1,418,448,000
Total Current Liabilities $2,802,649,000
Long-Term Debt $23,678,264,000
Total Assets $31,079,693,000
Intangible Assets $0
Total Liabilities $27,182,192,000
Shares Outstanding (Diluted Average) 309,294,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.45
Dec2017 $6.24
Dec2016 $5.87
Dec2015 $5.88
Dec2014 $4.52
Dec2013 $4.24
Dec2012 $4.72
Dec2011 $3.48
Dec2010 $2.10
Dec2009 $1.05
Dec2008 $1.87
Dec2007 $1.95
Dec2006 $2.19
Dec2005 $1.82
Dec2004 $1.44
Dec2003 $1.65
Dec2002 $1.99
Dec2001 $0.85
Dec2000 $1.08
Dec1999 $0.97
Dec1998 $1.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.41
Dec2017 $5.71
Dec2016 $5.31
Dec2015 $4.87
Dec2014 $4.19
Dec2013 $3.72
Dec2012 $3.19
Dec2011 $2.31
Dec2010 $1.76
Dec2009 $1.65
Dec2008 $1.92
Dec2007 $1.90
Dec2006 $1.86
Dec2005 $1.64
Dec2004 $1.50
Dec2003 $1.46
Dec2002 $1.31

Recommended Reading:

Other ModernGraham posts about the company

Simon Property Group Inc Valuation – March 2018 $SPG
Simon Property Group Inc Valuation – June 2016 $SPG
Simon Property Group Annual Valuation – 2015 $SPG
10 Companies in the Spotlight This Week – 12/28/13
ModernGraham Valuation: Simon Property Group (SPG)

Other ModernGraham posts about related companies

Crown Castle International Corp Valuation – January 2019 $CCI
Welltower Inc Valuation – January 2019 $WELL
Boston Properties Inc Valuation – January 2019 $BXP
AvalonBay Communities Inc Valuation – December 2018 $AVB
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
CareTrust REIT Inc Valuation – August 2018 $CTRE

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.

Crown Castle International Corp Valuation – January 2019 $CCI

Company Profile (excerpt from Reuters): Crown Castle International Corp., incorporated on May 27, 2014, is a real estate investment trust (REIT), which owns, operates and leases shared wireless infrastructure that is geographically dispersed throughout the United States and Puerto Rico. The Company’s segments include towers and small cells. As of December 31, 2016, the Company had approximately 40,000 towers and other structures, such as rooftops (collectively towers) and approximately 26,500 route miles of fiber (collectively small cells, and together with towers, wireless infrastructure). The towers segment provides access, including space or capacity to its towers, which are geographically dispersed throughout the United States. The towers segment also reflects certain network services relating to its towers, consisting of site development services and installation services. As of December 31, 2016, the small cells segment provided access, including space or capacity, to the Company’s approximately 17,000 route miles of fiber primarily supporting small cell networks. The small cells segment also offers fiber-based solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCI – 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 $43,904,860,878 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 Fail
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 -389.19% Fail
6. Moderate PEmg Ratio PEmg < 20 68.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.55 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 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -296.60 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 $1.53
MG Growth Estimate 15.00%
MG Value $59.08
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $22.25
MG Value based on 0% Growth $13.04
Market Implied Growth Rate 29.89%
Current Price $104.78
% of Intrinsic Value 177.34%

CROWN CASTLE IN/SH SH 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 poor dividend history, 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 $0.54 in 2014 to an estimated $1.53 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 29.89% 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 CROWN CASTLE IN/SH SH revealed the company was trading above its Graham Number of $29.23. The company pays a dividend of $3.9 per share, for a yield of 3.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 68.28, 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 $-45.91.

CROWN CASTLE IN/SH SH 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) -$45.91
Graham Number $29.23
PEmg 68.28
Current Ratio 0.96
PB Ratio 3.55
Current Dividend $3.90
Dividend Yield 3.72%
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 $1,249,000,000
Total Current Liabilities $1,304,000,000
Long-Term Debt $16,313,000,000
Total Assets $32,644,000,000
Intangible Assets $15,694,000,000
Total Liabilities $20,349,000,000
Shares Outstanding (Diluted Average) 416,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.25
Dec2017 $1.01
Dec2016 $0.95
Dec2015 $4.42
Dec2014 $1.04
Dec2013 $0.26
Dec2012 $0.64
Dec2011 $0.52
Dec2010 -$1.16
Dec2009 -$0.47
Dec2008 -$0.25
Dec2007 -$0.87
Dec2006 -$0.30
Dec2005 -$2.06
Dec2004 $0.88
Dec2003 -$2.36
Dec2002 -$1.38
Dec2001 -$2.22
Dec2000 -$1.48
Dec1999 -$0.96
Dec1998 -$1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.53
Dec2017 $1.63
Dec2016 $1.78
Dec2015 $1.92
Dec2014 $0.54
Dec2013 $0.18
Dec2012 $0.04
Dec2011 -$0.32
Dec2010 -$0.70
Dec2009 -$0.57
Dec2008 -$0.59
Dec2007 -$0.82
Dec2006 -$0.88
Dec2005 -$1.26
Dec2004 -$1.01
Dec2003 -$1.86
Dec2002 -$1.54

Recommended Reading:

Other ModernGraham posts about the company

Crown Castle International Corp Valuation – March 2018 $CCI
Crown Castle International Corp Valuation – June 2016 $CCI
21 Companies in the Spotlight This Week – 5/9/15
Crown Castle International Corporation Annual Valuation – 2015 $CCI
16 Companies in the Spotlight This Week – 4/26/14

Other ModernGraham posts about related companies

Welltower Inc Valuation – January 2019 $WELL
Boston Properties Inc Valuation – January 2019 $BXP
AvalonBay Communities Inc Valuation – December 2018 $AVB
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
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR

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.

Welltower Inc Valuation – January 2019 $WELL

Company Profile (excerpt from Reuters):Welltower Inc., incorporated on April 4, 1985, invests with seniors housing operators, post-acute providers and health systems to fund real estate and infrastructure. The Company invests in seniors housing and healthcare real estate. It operates in three segments: triple-net, seniors housing operating and outpatient medical. Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities, and outpatient medical properties. The Company’s primary objectives are to protect stockholder capital and enhance stockholder value.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WELL – 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 $26,411,528,722 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 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 91.93% Pass
6. Moderate PEmg Ratio PEmg < 20 34.98 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.72 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 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 54.93 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 $2.01
MG Growth Estimate 15.00%
MG Value $77.39
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $29.15
MG Value based on 0% Growth $17.09
Market Implied Growth Rate 13.24%
Current Price $70.31
% of Intrinsic Value 90.86%

Welltower 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.93 in 2014 to an estimated $2.01 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 13.24% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Welltower Inc revealed the company was trading above its Graham Number of $41.84. The company pays a dividend of $3.48 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 34.98, 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 $-36.48.

Welltower 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) -$36.48
Graham Number $41.84
PEmg 34.98
Current Ratio 1.23
PB Ratio 1.72
Current Dividend $3.48
Dividend Yield 4.95%
Number of Consecutive Years of Dividend Growth 10

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 $1,319,537,000
Total Current Liabilities $1,074,994,000
Long-Term Debt $13,432,683,000
Total Assets $30,249,119,000
Intangible Assets $68,321,000
Total Liabilities $14,979,918,000
Shares Outstanding (Diluted Average) 374,487,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.11
Dec2017 $1.26
Dec2016 $2.81
Dec2015 $2.34
Dec2014 $1.45
Dec2013 $0.28
Dec2012 $0.98
Dec2011 $0.90
Dec2010 $0.83
Dec2009 $1.49
Dec2008 $2.76
Dec2007 $1.43
Dec2006 $1.31
Dec2005 $1.15
Dec2004 $1.39
Dec2003 $1.60
Dec2002 $1.48
Dec2001 $1.52
Dec2000 $1.91
Dec1999 $2.21
Dec1998 $2.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.01
Dec2017 $1.85
Dec2016 $1.95
Dec2015 $1.41
Dec2014 $0.93
Dec2013 $0.74
Dec2012 $1.12
Dec2011 $1.28
Dec2010 $1.50
Dec2009 $1.77
Dec2008 $1.81
Dec2007 $1.35
Dec2006 $1.33
Dec2005 $1.37
Dec2004 $1.52
Dec2003 $1.63
Dec2002 $1.72

Recommended Reading:

Other ModernGraham posts about the company

Welltower Inc Valuation – March 2018 $WELL

Other ModernGraham posts about related companies

Boston Properties Inc Valuation – January 2019 $BXP
AvalonBay Communities Inc Valuation – December 2018 $AVB
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
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR
Uniti Group Inc Valuation – August 2018 $UNIT

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 – 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

Other ModernGraham posts about related companies

AvalonBay Communities Inc Valuation – December 2018 $AVB
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
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR
Uniti Group Inc Valuation – August 2018 $UNIT
Kite Realty Group Trust Valuation – August 2018 $KRG

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.

AvalonBay Communities Inc Valuation – December 2018 $AVB

Company Profile (excerpt from Reuters): AvalonBay Communities, Inc., incorporated on March 13, 1995, is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. The Company’s segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Established Communities are operating communities that were owned and had stabilized occupancy and operating expenses. Other Stabilized Communities are all other operating communities that have stabilized occupancy and operating expenses, but that were not owned or had not achieved stabilization, as well as communities that are planned for disposition. Development/Redevelopment Communities consist of communities that are under construction, communities where substantial redevelopment is in progress and communities under lease-up. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. The Company operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVB – December 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 $25,171,790,614 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 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 114.99% Pass
6. Moderate PEmg Ratio PEmg < 20 30.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.42 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 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -40.50 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 $6.01
MG Growth Estimate 6.84%
MG Value $133.38
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $87.18
MG Value based on 0% Growth $51.11
Market Implied Growth Rate 10.89%
Current Price $182.11
% of Intrinsic Value 136.54%

AvalonBay Communities 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 $4.13 in 2014 to an estimated $6.01 for 2018. This level of demonstrated earnings growth does not support 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 the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into AvalonBay Communities Inc revealed the company was trading above its Graham Number of $93.82. The company pays a dividend of $5.68 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 30.29, which was below the industry average of 80.08, 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 $-56.29.

AvalonBay Communities 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) -$56.29
Graham Number $93.82
PEmg 30.29
Current Ratio 0.72
PB Ratio 2.42
Current Dividend $5.68
Dividend Yield 3.12%
Number of Consecutive Years of Dividend Growth 6

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 $478,342,000
Total Current Liabilities $664,357,000
Long-Term Debt $7,533,228,000
Total Assets $18,662,119,000
Intangible Assets $0
Total Liabilities $8,264,721,000
Shares Outstanding (Diluted Average) 138,323,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.20
Dec2017 $6.35
Dec2016 $7.52
Dec2015 $5.51
Dec2014 $5.21
Dec2013 $2.78
Dec2012 $4.32
Dec2011 $4.87
Dec2010 $2.07
Dec2009 $1.93
Dec2008 $5.17
Dec2007 $4.38
Dec2006 $3.42
Dec2005 $4.05
Dec2004 $2.92
Dec2003 $3.73
Dec2002 $2.23
Dec2001 $3.02
Dec2000 $2.53
Dec1999 $2.03
Dec1998 $1.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.01
Dec2017 $6.10
Dec2016 $5.68
Dec2015 $4.68
Dec2014 $4.13
Dec2013 $3.46
Dec2012 $3.75
Dec2011 $3.54
Dec2010 $3.05
Dec2009 $3.62
Dec2008 $4.31
Dec2007 $3.82
Dec2006 $3.45
Dec2005 $3.37
Dec2004 $2.99
Dec2003 $2.91
Dec2002 $2.45

Recommended Reading:

Other ModernGraham posts about the company

AvalonBay Communities Inc Valuation – February 2018 $AVB
AvalonBay Communities Inc Valuation – May 2016 $AVB
AvalonBay Communities Inc. Annual Valuation – 2014 $AVB

Other ModernGraham posts about related companies

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
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR
Uniti Group Inc Valuation – August 2018 $UNIT
Kite Realty Group Trust Valuation – August 2018 $KRG
Kilroy Realty Corp Valuation – August 2018 $KRC
Crombie Real Estate Investment Trust Valuation – August 2018 $TSE-CRR.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.

Weyerhaeuser Co Valuation – December 2018 $WY

Company Profile (excerpt from Reuters): Weyerhaeuser Company, incorporated on January 18, 1900, is a timber, land and forest products company. As of December 31, 2016, the Company owned or controlled 13.1 million acres of timberlands, primarily in the United States, and manages additional timberlands under long-term licenses in Canada. The Company’s segments include Timberlands; Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products. The Timberlands segment’s offerings include logs, timber and recreational access through leases. The Real Estate & ENR segment includes sales of timberlands; rights to explore for and extract hard minerals, oil and gas production, and coal, and equity interests in its Real Estate Development Ventures. The Wood Products segment includes softwood lumber, engineered wood products, structural panels, medium density fiberboard and building materials distribution.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WY – December 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 $17,763,531,314 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.35 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 -7.82% Fail
6. Moderate PEmg Ratio PEmg < 20 19.53 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.98 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 1.35 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 13.43 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 $1.21
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $17.60
MG Value based on 0% Growth $10.32
Market Implied Growth Rate 5.52%
Current Price $23.71
% of Intrinsic Value N/A

Weyerhaeuser 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. The Enterprising Investor has concerns regarding the level of debt relative to the 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 $1.8 in 2014 to an estimated $1.21 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% 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 Weyerhaeuser Co revealed the company was trading above its Graham Number of $17.84. The company pays a dividend of $1.25 per share, for a yield of 5.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.53, which was below the industry average of 80.08, 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 $-8.79.

Weyerhaeuser 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) -$8.79
Graham Number $17.84
PEmg 19.53
Current Ratio 1.35
PB Ratio 1.98
Current Dividend $1.25
Dividend Yield 5.27%
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 $1,714,000,000
Total Current Liabilities $1,273,000,000
Long-Term Debt $5,921,000,000
Total Assets $17,427,000,000
Intangible Assets $40,000,000
Total Liabilities $8,370,000,000
Shares Outstanding (Diluted Average) 757,389,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.20
Dec2017 $0.77
Dec2016 $1.39
Dec2015 $0.89
Dec2014 $3.18
Dec2013 $0.95
Dec2012 $0.71
Dec2011 $0.61
Dec2010 $3.99
Dec2009 -$0.96
Dec2008 -$2.23
Dec2007 $1.44
Dec2006 $0.74
Dec2005 $1.19
Dec2004 $2.17
Dec2003 $0.50
Dec2002 $0.44
Dec2001 $0.64
Dec2000 $1.49
Dec1999 $1.02
Dec1998 $0.59

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.21
Dec2017 $1.29
Dec2016 $1.51
Dec2015 $1.47
Dec2014 $1.80
Dec2013 $1.10
Dec2012 $0.92
Dec2011 $0.88
Dec2010 $0.87
Dec2009 -$0.45
Dec2008 $0.09
Dec2007 $1.24
Dec2006 $1.09
Dec2005 $1.18
Dec2004 $1.13
Dec2003 $0.68
Dec2002 $0.79

Recommended Reading:

Other ModernGraham posts about the company

Weyerhauser Co Valuation – February 2018 $WY
Weyerhaeuser Company Valuation – May 2016 $WY
10 Companies Benjamin Graham Would Invest In Today – March 2016
10 Undervalued Companies for Enterprising Dividend Investors – November 2015
11 Best Stocks For Value Investors This Week – 11/21/15

Other ModernGraham posts about related companies

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
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR
Uniti Group Inc Valuation – August 2018 $UNIT
Kite Realty Group Trust Valuation – August 2018 $KRG
Kilroy Realty Corp Valuation – August 2018 $KRC
Crombie Real Estate Investment Trust Valuation – August 2018 $TSE-CRR.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.

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