UDR Inc Valuation – March 2019 #UDR

Company Profile (excerpt from Reuters): UDR, Inc., incorporated on May 2, 2003, is a self-administered real estate investment trust. The Company owns, operates, acquires, renovates, develops, redevelops, disposes of and manages multifamily apartment communities generally located in various markets across the United States. The Company’s segments are Same-Store Communities and Non-Mature Communities/Other. As of December 31, 2016, the Company’s consolidated real estate portfolio included 127 communities located in 18 markets, with a total of 39,454 completed apartment homes. As of December 31, 2016, the Company also had an ownership interest in 27 communities containing 6,849 apartment homes through unconsolidated joint ventures or partnerships.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of UDR – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,306,036,035 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.08 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 504.55% Pass
6. Moderate PEmg Ratio PEmg < 20 78.98 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.14 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 199.47 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 $0.57
MG Growth Estimate -3.48%
MG Value $0.87
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $8.20
MG Value based on 0% Growth $4.81
Market Implied Growth Rate 35.24%
Current Price $44.65
% of Intrinsic Value 5117.01%

UDR, 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 and PB ratios. 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 $0.74 in 2015 to an estimated $0.57 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 35.24% 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 below the price.

At the time of valuation, further research into UDR, Inc. revealed the company was trading above its Graham Number of $5.92. The company pays a dividend of $1.28 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 78.98, which was above the industry average of 61.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.75.

UDR, 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) -$16.75
Graham Number $5.92
PEmg 78.98
Current Ratio 1.08
PB Ratio 4.14
Current Dividend $1.28
Dividend Yield 2.86%
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 12/1/2018
Total Current Assets $251,150,000
Total Current Liabilities $233,364,000
Long-Term Debt $3,547,787,000
Total Assets $7,711,728,000
Intangible Assets $0
Total Liabilities $4,788,951,000
Shares Outstanding (Diluted Average) 270,872,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.15
Dec2018 $0.74
Dec2017 $0.44
Dec2016 $1.08
Dec2015 $1.29
Dec2014 $0.59
Dec2013 $0.16
Dec2012 $0.85
Dec2011 $0.05
Dec2010 -$0.68
Dec2009 -$0.64
Dec2008 $5.29
Dec2007 $1.41
Dec2006 $0.85
Dec2005 $1.03
Dec2004 $0.56
Dec2003 $0.21
Dec2002 $0.24
Dec2001 $0.27
Dec2000 $0.41
Dec1999 $0.54

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.57
Dec2018 $0.79
Dec2017 $0.78
Dec2016 $0.90
Dec2015 $0.74
Dec2014 $0.37
Dec2013 $0.16
Dec2012 $0.43
Dec2011 $0.51
Dec2010 $0.91
Dec2009 $1.66
Dec2008 $2.48
Dec2007 $0.99
Dec2006 $0.71
Dec2005 $0.58
Dec2004 $0.35
Dec2003 $0.28

Recommended Reading:

Other ModernGraham posts about the company

UDR Inc Valuation – June 2018 $UDR
UDR Inc Valuation – Initial Coverage $UDR

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SL Green Realty Corp Valuation – February 2019 $SLG
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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.

UDR Inc Valuation – June 2018 $UDR

Company Profile (excerpt from Reuters): UDR, Inc., incorporated on May 2, 2003, is a self-administered real estate investment trust. The Company owns, operates, acquires, renovates, develops, redevelops, disposes of and manages multifamily apartment communities generally located in various markets across the United States. The Company’s segments are Same-Store Communities and Non-Mature Communities/Other. As of December 31, 2016, the Company’s consolidated real estate portfolio included 127 communities located in 18 markets, with a total of 39,454 completed apartment homes. As of December 31, 2016, the Company also had an ownership interest in 27 communities containing 6,849 apartment homes through unconsolidated joint ventures or partnerships.

UDR Chart

UDR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of UDR – June 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 $9,914,593,690 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.04 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 -237.01% Fail
6. Moderate PEmg Ratio PEmg < 20 59.95 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.46 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 0.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.02 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 $0.62
MG Growth Estimate 10.01%
MG Value $17.62
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $8.96
MG Value based on 0% Growth $5.25
Market Implied Growth Rate 25.73%
Current Price $37.05
% of Intrinsic Value 210.22%

UDR, 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 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 $0.37 in 2014 to an estimated $0.62 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 25.73% 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 UDR, Inc. revealed the company was trading above its Graham Number of $7.17. The company pays a dividend of $0.93 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 59.95, which was above the industry average of 49.08. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.84.

UDR, 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) -$17.84
Graham Number $7.17
PEmg 59.95
Current Ratio 0.04
PB Ratio 3.46
Current Dividend $0.93
Dividend Yield 2.51%
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 3/1/2018
Total Current Assets $20,853,000
Total Current Liabilities $506,156,000
Long-Term Debt $3,405,673,000
Total Assets $7,709,048,000
Intangible Assets $0
Total Liabilities $4,823,270,000
Shares Outstanding (Diluted Average) 269,208,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.22
Dec2017 $0.44
Dec2016 $1.08
Dec2015 $1.29
Dec2014 $0.59
Dec2013 $0.16
Dec2012 $0.85
Dec2011 $0.05
Dec2010 -$0.68
Dec2009 -$0.64
Dec2008 $5.29
Dec2007 $1.41
Dec2006 $0.85
Dec2005 $1.03
Dec2004 $0.56
Dec2003 $0.21
Dec2002 $0.24
Dec2001 $0.27
Dec2000 $0.41
Dec1999 $0.54
Dec1998 $0.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.62
Dec2017 $0.78
Dec2016 $0.90
Dec2015 $0.74
Dec2014 $0.37
Dec2013 $0.16
Dec2012 $0.43
Dec2011 $0.51
Dec2010 $0.91
Dec2009 $1.66
Dec2008 $2.48
Dec2007 $0.99
Dec2006 $0.71
Dec2005 $0.58
Dec2004 $0.35
Dec2003 $0.28
Dec2002 $0.34

Recommended Reading:

Other ModernGraham posts about the company

UDR Inc Valuation – Initial Coverage $UDR

Other ModernGraham posts about related companies

Equity Residential Valuation – June 2018 $EQR
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Duke Realty Corp Valuation – Initial Coverage $DRE
Realty Income Corp Valuation – April 2018 $O
Ventas Inc Valuation – April 2018 $VTR
SL Green Realty Corp Valuation – April 2018 $SLG
Regency Centers Corp Valuation – Initial Coverage $REG
Host Hotels & Resorts Inc Valuation – April 2018 $HST
Vornado Realty Trust Valuation – April 2018 $VNO
Public Storage Valuation – March 2018 $PSA

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.

UDR Inc Valuation – Initial Coverage $UDR

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 – February 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 UDR Inc (UDR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): UDR, Inc. is a real estate investment trust. The Company owns, operates, acquires, renovates, develops, redevelops and manages multifamily apartment communities generally located in various markets across the United States. The Company operates through two segments: Same-Store Communities and Non-Mature Communities/Other. The Company’s consolidated real estate portfolio includes approximately 130 communities located in over 20 markets, with a total of approximately 40,730 completed apartment homes. The Company holds an ownership interest in approximately 30 communities containing over 6,700 apartment homes through unconsolidated joint ventures or partnerships. The Company is engaged in the development of a community with approximately 520 apartment homes and over four unconsolidated joint venture communities with approximately 1,170 apartment homes. The Company’s properties are located in various areas, such as California, Florida, Maryland, Oregon, Massachusetts and Texas.

UDR Chart

UDR data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of UDR – 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 $9,471,963,779 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.15 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 -34.26% Fail
6. Moderate PEmg Ratio PEmg < 20 50.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.10 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 0.15 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.80 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 $0.72
MG Growth Estimate 15.00%
MG Value $27.54
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $10.37
MG Value based on 0% Growth $6.08
Market Implied Growth Rate 20.84%
Current Price $35.90
% of Intrinsic Value 130.35%

UDR, 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 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 $0.16 in 2013 to an estimated $0.72 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.84% 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 UDR, Inc. revealed the company was trading above its Graham Number of $7.85. The company pays a dividend of $1.18 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 50.19, which was above the industry average of 31.91. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.

UDR, 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) -$17.00
Graham Number $7.85
PEmg 50.19
Current Ratio 0.15
PB Ratio 3.10
Current Dividend $1.18
Dividend Yield 3.29%
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

Balance Sheet Information 12/1/2016
Total Current Assets $41,896,000
Total Current Liabilities $271,654,000
Long-Term Debt $3,401,478,000
Total Assets $7,679,584,000
Intangible Assets $0
Total Liabilities $4,586,474,000
Shares Outstanding (Diluted Average) 267,311,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.24
Dec2016 $1.08
Dec2015 $1.29
Dec2014 $0.59
Dec2013 $0.16
Dec2012 $0.85
Dec2011 $0.05
Dec2010 -$0.68
Dec2009 -$0.64
Dec2008 $5.29
Dec2007 $1.41
Dec2006 $0.85
Dec2005 $1.03
Dec2004 $0.56
Dec2003 $0.21
Dec2002 $0.24
Dec2001 $0.27
Dec2000 $0.41
Dec1999 $0.54
Dec1998 $0.49
Dec1997 $0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.72
Dec2016 $0.90
Dec2015 $0.74
Dec2014 $0.37
Dec2013 $0.16
Dec2012 $0.43
Dec2011 $0.51
Dec2010 $0.91
Dec2009 $1.66
Dec2008 $2.48
Dec2007 $0.99
Dec2006 $0.71
Dec2005 $0.58
Dec2004 $0.35
Dec2003 $0.28
Dec2002 $0.34
Dec2001 $0.41

Recommended Reading:

Other ModernGraham posts about the company

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.

Equinix Inc Valuation – March 2019 #EQIX

Company Profile (excerpt from Reuters): Equinix, Inc. (Equinix), incorporated on June 22, 1998, operates as a real estate investment trust (REIT). The Company connects various companies directly to their customers and partners inside interconnected data centers. The Company operates through three segments: Americas, EMEA and Asia-Pacific. The Company’s platform Equinix, combines a global footprint of International Business Exchange (IBX) data centers, a range of interconnection solutions, ecosystems and support. Its customers include carriers, mobile and other bandwidth providers, cloud and information technology (IT) services providers, content providers, financial companies and enterprises. It provides each customer access to a choice of business partners and solutions based on their colocation, interconnection and managed IT service needs. Its colocation offerings include operations space, storage space, cabinets and power for customers’ colocation needs inside Equinix’s IBX data centers. Its interconnection offerings include Equinix Cloud Exchange, which enables simultaneous, direct and secure connections to multiple clouds from a single port; Equinix Performance Hub, which takes enterprise IT inside any one of its global data centers, and Equinix Data Hub, which enables secure, compliant access to business-critical data and analytics wherever users are located around the globe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQIX – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,512,444,147 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 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 138.03% Pass
6. Moderate PEmg Ratio PEmg < 20 111.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.05 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15,449.18 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 $4.03
MG Growth Estimate 15.00%
MG Value $154.98
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $58.37
MG Value based on 0% Growth $34.22
Market Implied Growth Rate 51.67%
Current Price $450.19
% of Intrinsic Value 290.49%

Equinix 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 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 $0.62 in 2015 to an estimated $4.03 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 51.67% 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 Equinix Inc revealed the company was trading above its Graham Number of $103.19. The company pays a dividend of $9.12 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 111.84, which was above the industry average of 61.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-142.24.

Equinix 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) -$142.24
Graham Number $103.19
PEmg 111.84
Current Ratio 1.00
PB Ratio 5.05
Current Dividend $9.12
Dividend Yield 2.03%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,515,682,000
Total Current Liabilities $1,515,071,000
Long-Term Debt $9,439,448,000
Total Assets $20,244,638,000
Intangible Assets $7,169,684,000
Total Liabilities $13,025,359,000
Shares Outstanding (Diluted Average) 80,920,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.27
Dec2018 $4.56
Dec2017 $3.00
Dec2016 $1.79
Dec2015 $3.21
Dec2014 -$4.96
Dec2013 $1.89
Dec2012 $2.83
Dec2011 $1.74
Dec2010 $0.82
Dec2009 $1.75
Dec2008 $2.79
Dec2007 -$0.16
Dec2006 -$0.22
Dec2005 -$1.78
Dec2004 -$3.87
Dec2003 -$8.76
Dec2002 -$7.23
Dec2001 -$76.62
Dec2000 -$111.18
Dec1999 -$159.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.03
Dec2018 $2.78
Dec2017 $1.58
Dec2016 $0.90
Dec2015 $0.62
Dec2014 -$0.30
Dec2013 $1.96
Dec2012 $1.99
Dec2011 $1.51
Dec2010 $1.26
Dec2009 $1.15
Dec2008 $0.35
Dec2007 -$1.57
Dec2006 -$2.97
Dec2005 -$9.45
Dec2004 -$22.70
Dec2003 -$45.60

Recommended Reading:

Other ModernGraham posts about the company

Equinix Inc Valuation – June 2018 $EQIX
Equinix Inc Valuation – July 2017 $EQIX
5 of the Worst Stocks to Invest In – December 2016
Equinix Inc Valuation – August 2016 $EQIX
Equinix Inc. Analysis – Initial Coverage $EQIX

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Federal Realty Investment Trust Valuation – March 2019 #FRT
UDR Inc Valuation – March 2019 #UDR
Mid-America Apartment Communities Inc Valuation – March 2019 #MAA
Extra Space Storage Inc Valuation – March 2019 #EXR
Digital Realty Trust Inc Valuation – March 2019 #DLR
Equity Residential Valuation – March 2019 #EQR
Prologis Inc Valuation – March 2019 #PLD
Duke Realty Corp Valuation – March 2019 $DRE

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.

Kimco Realty Corp Valuation – March 2019 #KIM

Company Profile (excerpt from Reuters): Kimco Realty Corporation, incorporated on March 25, 1994, is a self-administered real estate investment trust. The Company is engaged in the ownership, management, development and operation of open-air shopping centers, which are anchored generally by discount department stores, grocery stores or drugstores. As of June 30, 2017, the Company had interests in 510 shopping center properties, including 84 million square feet of gross leasable area (GLA), located in 32 states, Puerto Rico and Canada. As of March 31, 2017, the Company had 380 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling 5.8 million square feet of GLA.

KIM Chart

KIM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KIM – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,773,219,770 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 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 163.74% Pass
6. Moderate PEmg Ratio PEmg < 20 21.56 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.43 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 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 130.35 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 $0.85
MG Growth Estimate -2.95%
MG Value $2.22
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $12.39
MG Value based on 0% Growth $7.26
Market Implied Growth Rate 6.53%
Current Price $18.43
% of Intrinsic Value 830.10%

Kimco Realty Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg ratio. 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 $1.06 in 2015 to an estimated $0.85 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.53% 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 Kimco Realty Corp revealed the company was trading above its Graham Number of $12.05. The company pays a dividend of $1.12 per share, for a yield of 6.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.56, which was below the industry average of 61.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-12.51.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.51
Graham Number $12.05
PEmg 21.56
Current Ratio 1.12
PB Ratio 1.43
Current Dividend $1.12
Dividend Yield 6.08%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $342,557,000
Total Current Liabilities $305,165,000
Long-Term Debt $4,873,872,000
Total Assets $10,999,100,000
Intangible Assets $0
Total Liabilities $5,588,047,000
Shares Outstanding (Diluted Average) 419,246,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.51
Dec2018 $1.02
Dec2017 $0.87
Dec2016 $0.79
Dec2015 $2.00
Dec2014 $0.89
Dec2013 $0.43
Dec2012 $0.42
Dec2011 $0.27
Dec2010 $0.22
Dec2009 -$0.15
Dec2008 $0.78
Dec2007 $1.65
Dec2006 $1.70
Dec2005 $1.52
Dec2004 $1.15
Dec2003 $0.97
Dec2002 $0.98
Dec2001 $0.95
Dec2000 $0.84
Dec1999 $0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.85
Dec2018 $1.06
Dec2017 $1.05
Dec2016 $1.06
Dec2015 $1.06
Dec2014 $0.55
Dec2013 $0.33
Dec2012 $0.29
Dec2011 $0.33
Dec2010 $0.52
Dec2009 $0.82
Dec2008 $1.32
Dec2007 $1.53
Dec2006 $1.40
Dec2005 $1.20
Dec2004 $1.02
Dec2003 $0.94

Recommended Reading:

Other ModernGraham posts about the company

Kimco Realty Corp Valuation – June 2018 $KIM
Kimco Realty Corp Valuation – March 2017 $KIM
5 Companies for Enterprising Investors Near 52 Week Lows – March 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
5 Companies for Enterprising Investors Near 52 Week Lows – February 2017

Other ModernGraham posts about related companies

Essex Property Trust Inc Valuation – March 2019 #ESS
Federal Realty Investment Trust Valuation – March 2019 #FRT
UDR Inc Valuation – March 2019 #UDR
Mid-America Apartment Communities Inc Valuation – March 2019 #MAA
Extra Space Storage Inc Valuation – March 2019 #EXR
Digital Realty Trust Inc Valuation – March 2019 #DLR
Equity Residential Valuation – March 2019 #EQR
Prologis Inc Valuation – March 2019 #PLD
Duke Realty Corp Valuation – March 2019 $DRE
Realty Income Corp Valuation – February 2019 $O

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.

Essex Property Trust Inc Valuation – March 2019 #ESS

Company Profile (excerpt from Reuters): Essex Property Trust, Inc., incorporated on March 11, 1994, is a self-administered and self-managed real estate investment trust (REIT). The Company is engaged primarily in the ownership, operation, management, acquisition, development and redevelopment of predominantly apartment communities, located along the West Coast. Its segments include Southern California, Northern California, Seattle Metro and Other real estate assets. The Company owns all of its interest in its real estate and other investments directly or indirectly through Essex Portfolio, L.P. (the Operating Partnership). As of December 31, 2016, the Company owned or held an interest in 245 communities, aggregating 59,645 apartment homes, excluding the Company’s ownership in preferred equity investments, as well as two operating commercial buildings (totaling approximately 140,564 square feet), and six active development projects with 2,223 apartment homes in various stages of development.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ESS – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,097,355,643 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 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 196.37% Pass
6. Moderate PEmg Ratio PEmg < 20 52.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.00 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 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -107.33 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 $5.52
MG Growth Estimate 12.07%
MG Value $180.19
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $80.03
MG Value based on 0% Growth $46.91
Market Implied Growth Rate 22.09%
Current Price $290.71
% of Intrinsic Value 161.34%

Essex Property Trust 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 Overvalued after growing its EPSmg (normalized earnings) from $3.06 in 2015 to an estimated $5.52 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 22.09% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Essex Property Trust Inc revealed the company was trading above its Graham Number of $100.18. The company pays a dividend of $7.44 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 52.67, which was below the industry average of 61.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-86.69.

Essex Property Trust 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) -$86.69
Graham Number $100.18
PEmg 52.67
Current Ratio 0.83
PB Ratio 3.00
Current Dividend $7.44
Dividend Yield 2.56%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $262,729,000
Total Current Liabilities $314,960,000
Long-Term Debt $5,605,942,000
Total Assets $12,383,596,000
Intangible Assets $0
Total Liabilities $5,989,752,000
Shares Outstanding (Diluted Average) 66,061,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.69
Dec2018 $5.90
Dec2017 $6.57
Dec2016 $6.27
Dec2015 $3.49
Dec2014 $2.06
Dec2013 $4.04
Dec2012 $3.41
Dec2011 $1.24
Dec2010 $1.14
Dec2009 $2.91
Dec2008 $2.09
Dec2007 $4.24
Dec2006 $2.45
Dec2005 $3.32
Dec2004 $3.36
Dec2003 $1.57
Dec2002 $2.60
Dec2001 $2.63
Dec2000 $2.37
Dec1999 $2.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.52
Dec2018 $5.58
Dec2017 $5.10
Dec2016 $4.20
Dec2015 $3.06
Dec2014 $2.69
Dec2013 $2.85
Dec2012 $2.22
Dec2011 $1.86
Dec2010 $2.30
Dec2009 $2.92
Dec2008 $2.98
Dec2007 $3.28
Dec2006 $2.76
Dec2005 $2.84
Dec2004 $2.57
Dec2003 $2.22

Recommended Reading:

Other ModernGraham posts about the company

Essex Property Trust Inc Valuation – June 2018 $ESS
Essex Property Trust Inc Valuation – March 2017 $ESS
Essex Property Trust Inc. Analysis – October 2015 Update $ESS
Essex Property Trust Inc. Analysis – Initial Coverage $ESS

Other ModernGraham posts about related companies

Federal Realty Investment Trust Valuation – March 2019 #FRT
UDR Inc Valuation – March 2019 #UDR
Mid-America Apartment Communities Inc Valuation – March 2019 #MAA
Extra Space Storage Inc Valuation – March 2019 #EXR
Digital Realty Trust Inc Valuation – March 2019 #DLR
Equity Residential Valuation – March 2019 #EQR
Prologis Inc Valuation – March 2019 #PLD
Duke Realty Corp Valuation – March 2019 $DRE
Realty Income Corp Valuation – February 2019 $O
Ventas Inc Valuation – February 2019 $VTR

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.

Federal Realty Investment Trust Valuation – March 2019 #FRT

Company Profile (excerpt from Reuters): Federal Realty Investment Trust, incorporated on May 21, 1999, is an equity real estate investment trust (REIT). The Company specializes in the ownership, management and redevelopment of retail and mixed-use properties located primarily in affluent communities in selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in California and South Florida. As of December 31, 2016, the Company owned or had an interest in community and neighborhood shopping centers and mixed-use properties, which operated as 96 retail real estate projects and included approximately 22.6 million square feet. As of December 31, 2016, its 96 retail shopping center and mixed-use properties were located in 12 states and the District of Columbia. As of December 31, 2016, there were approximately 2,900 leases with tenants providing a range of retail products and services. These tenants range from sole proprietorships to national retailers, or corporate group of tenants.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FRT – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,809,619,332 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.83 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 52.19% Pass
6. Moderate PEmg Ratio PEmg < 20 40.21 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.95 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 13.82 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 $3.28
MG Growth Estimate 3.85%
MG Value $53.18
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $47.57
MG Value based on 0% Growth $27.89
Market Implied Growth Rate 15.85%
Current Price $131.91
% of Intrinsic Value 248.06%

Federal Realty Investment Trust is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $2.61 in 2015 to an estimated $3.28 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.85% 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 Federal Realty Investment Trust revealed the company was trading above its Graham Number of $43.9. The company pays a dividend of $4.04 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 40.21, which was below the industry average of 61.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-44.98.

Federal Realty Investment Trust performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$44.98
Graham Number $43.90
PEmg 40.21
Current Ratio 1.83
PB Ratio 3.95
Current Dividend $4.04
Dividend Yield 3.06%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $502,456,000
Total Current Liabilities $274,004,000
Long-Term Debt $3,157,685,000
Total Assets $6,289,644,000
Intangible Assets $0
Total Liabilities $3,822,314,000
Shares Outstanding (Diluted Average) 73,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.91
Dec2018 $3.18
Dec2017 $3.97
Dec2016 $3.50
Dec2015 $3.03
Dec2014 $2.41
Dec2013 $2.46
Dec2012 $2.35
Dec2011 $2.28
Dec2010 $1.98
Dec2009 $1.63
Dec2008 $2.19
Dec2007 $3.45
Dec2006 $1.92
Dec2005 $1.94
Dec2004 $1.41
Dec2003 $1.59
Dec2002 $0.85
Dec2001 $1.09
Dec2000 $1.35
Dec1999 $1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.28
Dec2018 $3.38
Dec2017 $3.35
Dec2016 $2.94
Dec2015 $2.61
Dec2014 $2.37
Dec2013 $2.28
Dec2012 $2.15
Dec2011 $2.14
Dec2010 $2.12
Dec2009 $2.20
Dec2008 $2.39
Dec2007 $2.34
Dec2006 $1.71
Dec2005 $1.53
Dec2004 $1.30
Dec2003 $1.22

Recommended Reading:

Other ModernGraham posts about the company

Federal Realty Investment Trust Valuation – June 2018 $FRT
Federal Realty Investment Trust Valuation – Initial Coverage $FRT

Other ModernGraham posts about related companies

UDR Inc Valuation – March 2019 #UDR
Mid-America Apartment Communities Inc Valuation – March 2019 #MAA
Extra Space Storage Inc Valuation – March 2019 #EXR
Digital Realty Trust Inc Valuation – March 2019 #DLR
Equity Residential Valuation – March 2019 #EQR
Prologis Inc Valuation – March 2019 #PLD
Duke Realty Corp Valuation – March 2019 $DRE
Realty Income Corp Valuation – February 2019 $O
Ventas Inc Valuation – February 2019 $VTR
SL Green Realty Corp Valuation – February 2019 $SLG

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.

Capstead Mortgage Corp Valuation – July 2018 $CMO

Company Profile (excerpt from Reuters): Capstead Mortgage Corporation, incorporated on April 15, 1985, operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMO – July 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $778,439,067 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -63.89% Fail
5. Moderate PEmg Ratio PEmg < 20 12.41 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.66 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. 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 C
MG Value based on 3% Growth $9.78
MG Value based on 0% Growth $5.73
Market Implied Growth Rate 1.95%
Current Price $8.37
% of Intrinsic Value N/A

CAPSTEAD Mtg Co/SH does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding 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 $1.33 in 2014 to an estimated $0.67 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.95% 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.

At the time of valuation, further research into CAPSTEAD Mtg Co/SH revealed the company was trading below its Graham Number of $9.99. The company pays a dividend of $0.8 per share, for a yield of 9.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.41, which was below the industry average of 49.54, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

CAPSTEAD Mtg Co/SH receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $9.99
PEmg 12.41
PB Ratio 0.66
Dividend Yield 9.56%
TTM Dividend $0.80
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 6/1/2018
Long-Term Debt & Capital Lease Obligation $12,035,110,000
Total Assets $13,256,355,000
Intangible Assets $0
Total Liabilities $12,087,499,000
Shares Outstanding (Diluted Average) 92,121,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.43
Dec2017 $0.65
Dec2016 $0.70
Dec2015 $0.97
Dec2014 $1.33
Dec2013 $0.93
Dec2012 $1.50
Dec2011 $1.75
Dec2010 $1.52
Dec2009 $1.66
Dec2008 $1.93
Dec2007 $0.19
Dec2006 -$0.87
Dec2005 $1.96
Dec2004 $1.33
Dec2003 $2.60
Dec2002 $4.85
Dec2001 $5.68
Dec2000 -$6.59
Dec1999 $2.42
Dec1998 -$16.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.67
Dec2017 $0.84
Dec2016 $0.98
Dec2015 $1.18
Dec2014 $1.33
Dec2013 $1.37
Dec2012 $1.62
Dec2011 $1.59
Dec2010 $1.30
Dec2009 $1.12
Dec2008 $0.87
Dec2007 $0.57
Dec2006 $1.17
Dec2005 $2.55
Dec2004 $2.42
Dec2003 $2.58
Dec2002 $1.01

Recommended Reading:

Other ModernGraham posts about the company

Capstead Mortgage Corporation Valuation – Initial Coverage $CMO

Other ModernGraham posts about related companies

Summit Hotel Properties Inc Valuation – July 2018 $INN
Sabra Health Care REIT Inc Valuation – July 2018 $SBRA
National Retail Properties Inc Valuation – July 2018 $NNN
Equinix Inc Valuation – June 2018 $EQIX
Kimco Realty Corp Valuation – June 2018 $KIM
Essex Property Trust Inc Valuation – June 2018 $ESS
Federal Realty Investment Trust Valuation – June 2018 $FRT
UDR Inc Valuation – June 2018 $UDR
Mid-America Apartment Communities Inc Valuation – June 2018 $MAA
Extra Space Storage Inc Valuation – June 2018 $EXR

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.

Mack-Cali Realty Corp Valuation – July 2018 $CLI

Company Profile (excerpt from Reuters): Mack-Cali Realty Corporation, incorporated on May 24, 1994, together with its subsidiaries, is a self-administered and self-managed real estate investment trust (REIT). The Company owns and operates a real estate portfolio of Class A office and office/flex properties located in the Northeast. The Company operates in three segments: commercial and other real estate, multi-family real estate and multi-family services. Its commercial and other real estate provides leasing, property management, acquisition, development, construction and tenant-related services for its commercial and other real estate, and multi-family real estate portfolio. Its multi-family services business also provides similar services for third parties. As of December 31, 2016, the Company owned or had interests in 248 properties, consisting of 119 office and 110 flex properties, totaling approximately 26.6 million square feet, leased to approximately 1,600 commercial tenants and 19 multi-family rental properties containing 5,614 residential units, plus developable land (collectively, the Properties). As of December 31, 2016, the Properties are located in six states, in the Northeast, and the District of Columbia.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLI – July 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 $1,736,979,953 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 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 -37.53% Fail
6. Moderate PEmg Ratio PEmg < 20 172.59 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.14 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 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 92.21 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 $0.11
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $1.62
MG Value based on 0% Growth $0.95
Market Implied Growth Rate 82.04%
Current Price $19.33
% of Intrinsic Value N/A

Mack Cali Realty Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, 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 $0.31 in 2014 to an estimated $0.11 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 82.04% 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 Mack Cali Realty Corp revealed the company was trading above its Graham Number of $1.72. The company pays a dividend of $0.75 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 172.59, which was above the industry average of 49.54. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.36.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.36
Graham Number $1.72
PEmg 172.59
Current Ratio 1.12
PB Ratio 1.14
Current Dividend $0.75
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

 

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $261,908,000
Total Current Liabilities $233,548,000
Long-Term Debt $2,615,211,000
Total Assets $4,815,606,000
Intangible Assets $100,732,000
Total Liabilities $3,114,695,000
Shares Outstanding (Diluted Average) 100,604,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.01
Dec2017 $0.06
Dec2016 $1.30
Dec2015 -$1.41
Dec2014 $0.32
Dec2013 -$0.17
Dec2012 $0.47
Dec2011 $0.81
Dec2010 $0.67
Dec2009 $0.71
Dec2008 $0.79
Dec2007 $1.61
Dec2006 $2.28
Dec2005 $1.51
Dec2004 $1.65
Dec2003 $2.43
Dec2002 $2.43
Dec2001 $2.32
Dec2000 $3.10
Dec1999 $1.78
Dec1998 $2.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.11
Dec2017 $0.12
Dec2016 $0.13
Dec2015 -$0.30
Dec2014 $0.31
Dec2013 $0.37
Dec2012 $0.65
Dec2011 $0.80
Dec2010 $0.94
Dec2009 $1.17
Dec2008 $1.46
Dec2007 $1.83
Dec2006 $1.98
Dec2005 $1.91
Dec2004 $2.20
Dec2003 $2.45
Dec2002 $2.42

Recommended Reading:

Other ModernGraham posts about the company

Mack Cali Realty Corp Valuation – Initial Coverage $CLI

Other ModernGraham posts about related companies

Chesapeake Lodging Trust Valuation – July 2018 $CHSP
Alexander & Baldwin Inc Valuation – July 2018 $ALEX
Summit Hotel Properties Inc Valuation – July 2018 $INN
Sabra Health Care REIT Inc Valuation – July 2018 $SBRA
National Retail Properties Inc Valuation – July 2018 $NNN
Equinix Inc Valuation – June 2018 $EQIX
Kimco Realty Corp Valuation – June 2018 $KIM
Essex Property Trust Inc Valuation – June 2018 $ESS
Federal Realty Investment Trust Valuation – June 2018 $FRT
UDR Inc Valuation – June 2018 $UDR

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.

Chesapeake Lodging Trust Valuation – July 2018 $CHSP

Company Profile (excerpt from Reuters): Chesapeake Lodging Trust, incorporated on June 12, 2009, is a real estate investment trust. The Company is focused on investments primarily in upper-upscale hotels in various business and convention markets and, on a selective basis, select-service hotels in urban settings or other locations in the United States. The Company operates through the hotel ownership segment. The Company conducts its operations primarily though Chesapeake Lodging, L.P., its operating partnership (the Operating Partnership).

CHSP Chart

CHSP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHSP – July 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 $1,889,031,633 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.29 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 1352.17% Pass
6. Moderate PEmg Ratio PEmg < 20 28.62 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.80 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 1.29 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 43.13 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 $1.09
MG Growth Estimate 8.28%
MG Value $27.24
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $15.77
MG Value based on 0% Growth $9.24
Market Implied Growth Rate 10.06%
Current Price $31.12
% of Intrinsic Value 114.23%

Chesapeake Lodging Trust does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, 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 $0.7 in 2014 to an estimated $1.09 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.06% 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 Chesapeake Lodging Trust revealed the company was trading above its Graham Number of $20.81. The company pays a dividend of $1.6 per share, for a yield of 5.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.62, which was below the industry average of 49.54, 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 $-14.13.

Chesapeake Lodging Trust 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) -$14.13
Graham Number $20.81
PEmg 28.62
Current Ratio 1.29
PB Ratio 1.80
Current Dividend $1.60
Dividend Yield 5.14%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $85,249,000
Total Current Liabilities $65,968,000
Long-Term Debt $831,684,000
Total Assets $1,964,199,000
Intangible Assets $35,112,000
Total Liabilities $929,090,000
Shares Outstanding (Diluted Average) 59,719,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.10
Dec2017 $1.11
Dec2016 $1.13
Dec2015 $0.99
Dec2014 $1.00
Dec2013 $0.75
Dec2012 $0.66
Dec2011 $0.30
Dec2010 -$0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.09
Dec2017 $1.05
Dec2016 $0.98
Dec2015 $0.85
Dec2014 $0.70
Dec2013 $0.48
Dec2012 $0.29
Dec2011 $0.08
Dec2010 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – January 2017
8 Best Stocks for Value Investors This Week – 12/27/16
Chesapeake Lodging Trust Valuation – December 2016 $CHSP

Other ModernGraham posts about related companies

Sabra Health Care REIT Inc Valuation – July 2018 $SBRA
National Retail Properties Inc Valuation – July 2018 $NNN
Equinix Inc Valuation – June 2018 $EQIX
Kimco Realty Corp Valuation – June 2018 $KIM
Essex Property Trust Inc Valuation – June 2018 $ESS
Federal Realty Investment Trust Valuation – June 2018 $FRT
UDR Inc Valuation – June 2018 $UDR
Mid-America Apartment Communities Inc Valuation – June 2018 $MAA
Extra Space Storage Inc Valuation – June 2018 $EXR
Digital Realty Trust Inc Valuation – June 2018 $DLR

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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