Kimco Realty Corp Valuation – August 2016 $KIM

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 – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Kimco Realty Corp (KIM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Kimco Realty Corporation is a real estate investment trust. The Company is engaged principally in the ownership, management, development and operation of open-air shopping centers. The Company holds interests in approximately 610 shopping center properties, aggregating over 100 million square feet of gross leasable area (GLA), located in approximately 40 states of the United States, Puerto Rico and Canada. The Company holds approximately 450 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling over 7.3 million square feet of GLA. The Company’s shopping centers are anchored generally by discount department stores, supermarkets or drugstores. The Company’s shopping center properties have various national and regional companies as tenants, such as TJX Companies, The Home Depot, Bed Bath & Beyond, Royal Ahold, Albertsons, Wal-Mart, Kohl’s, Petsmart and Ross Stores.

KIM Chart

KIM data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of KIM – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,563,676,930 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.63 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 85.53% Pass
6. Moderate PEmg Ratio PEmg < 20 24.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.36 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.22 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

KIM value chart August 2016

EPSmg $1.24
MG Growth Estimate 15.00%
MG Value $47.87
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $18.03
MG Value based on 0% Growth $10.57
Market Implied Growth Rate 7.79%
Current Price $29.93
% of Intrinsic Value 62.53%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.29 in 2012 to an estimated $1.24 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.79% 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 Kimco Realty Corp revealed the company was trading above its Graham Number of $19.53. The company pays a dividend of $1.01 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24.09, which was below the industry average of 34.03, 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 $-13.21.

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

Stage 3: Information for Further Research

KIM charts August 2016

Net Current Asset Value (NCAV) -$13.21
Graham Number $19.53
PEmg 24.09
Current Ratio 4.63
PB Ratio 2.36
Current Dividend $1.01
Dividend Yield 3.36%
Number of Consecutive Years of Dividend Growth 6


Useful Links:

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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $541,338,000
Total Current Liabilities $116,857,000
Long-Term Debt $5,188,817,000
Total Assets $11,392,432,000
Intangible Assets $0
Total Liabilities $6,078,305,000
Shares Outstanding (Diluted Average) 419,302,000

Earnings Per Share History

Next Fiscal Year Estimate $1.34
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
Dec1998 $0.66
Dec1997 $0.59
Dec1996 $0.54

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.24
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
Dec2002 $0.89
Dec2001 $0.81
Dec2000 $0.72

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for Enterprising Dividend Investors – November 2015
10 Undervalued Companies for the Enterprising Dividend Stock Investor – October 2015
10 Undervalued Companies for the Enterprising Dividend Stock Investor – August 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Kimco Realty Corporation Analysis – August 2015 Update $KIM

Other ModernGraham posts about related companies

Equity Residential Valuation – August 2016 $EQR
Host Hotels and Resorts Inc Valuation – July 2016 $HST
Iron Mountain Inc Valuation – July 2016 $IRM
Vornado Realty Trust Valuation – July 2016 $VNO
Public Storage Valuation – July 2016 $PSA
Macerich Co Valuation – July 2016 $MAC
HCP Inc Valuation – July 2016 $HCP
Apartment Investment & Management Co Valuation – July 2016 $AIV
Crown Castle International Corp Valuation – June 2016 $CCI
General Growth Properties Inc Valuation – June 2016 $GGP


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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