Education Realty Trust Inc Valuation – Initial Coverage $EDR

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 Undervalued Stocks for the Enterprising Investor – August 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 Education Realty Trust Inc (EDR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Education Realty Trust, Inc. (EdR) is a self-managed and self-advised real estate investment trust (REIT). The Trust is engaged in developing, acquiring, owning and managing collegiate housing communities located near university campuses. The Trust operates through three segments: collegiate housing leasing, development consulting services and management services. The Trust develops collegiate housing communities for its own account and also provides third-party development consulting services on collegiate housing development projects for universities and other third parties. As of December 31, 2016, the Trust owned 64 collegiate housing communities located in 22 states containing 32,729 beds in 12,294 apartment units on or near 38 university campuses. As of December 31, 2016, the Trust provided third-party management services for 22 collegiate housing communities located in 11 states containing 11,767 beds in 4,214 apartment units on or near 17 university campuses.

EDR Chart

EDR data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of EDR – September 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 $2,850,356,287 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.18 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 -145.22% Fail
6. Moderate PEmg Ratio PEmg < 20 65.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.64 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 3.18 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.11 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 $0.59
MG Growth Estimate 15.00%
MG Value $22.87
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $8.61
MG Value based on 0% Growth $5.05
Market Implied Growth Rate 28.69%
Current Price $39.14
% of Intrinsic Value 171.11%

Education Realty Trust, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  insufficient earnings stability or growth over the last ten years, and the 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 Overvalued after growing its EPSmg (normalized earnings) from $-0.31 in 2013 to an estimated $0.59 for 2017.  This level of demonstrated earnings growth does not support the market’s implied estimate of 28.69% 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 Education Realty Trust, Inc. revealed the company was trading above its Graham Number of $17.69.  The company pays a dividend of $1.5 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 65.88, which was above the industry average of 51.63.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.48.

Education Realty 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) -$6.48
Graham Number $17.69
PEmg 65.88
Current Ratio 3.18
PB Ratio 1.64
Current Dividend $1.50
Dividend Yield 3.83%
Number of Consecutive Years of Dividend Growth 6

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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $558,580,000
Total Current Liabilities $175,379,000
Long-Term Debt $809,205,000
Total Assets $2,802,943,000
Intangible Assets $0
Total Liabilities $1,037,111,000
Shares Outstanding (Diluted Average) 73,841,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.56
Dec2016 $0.65
Dec2015 $0.40
Dec2014 $1.09
Dec2013 $0.11
Dec2012 $0.25
Dec2011 -$0.42
Dec2010 -$2.19
Dec2009 -$0.54
Dec2008 -$0.84
Dec2007 -$0.60
Dec2006 -$1.38
Dec2005 -$2.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.59
Dec2016 $0.57
Dec2015 $0.45
Dec2014 $0.24
Dec2013 -$0.31
Dec2012 -$0.59
Dec2011 -$0.98
Dec2010 -$1.21
Dec2009 -$0.84
Dec2008 -$0.98
Dec2007 -$0.97
Dec2006 -$1.00
Dec2005 -$0.67

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.

Apartment Investment & Management Co Valuation – March 2018 $AIV

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

AIV Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of AIV – March 2018

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

What kind of Intelligent Investor are you?

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

 

Stage 2: Determination of Intrinsic Value

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

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

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

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

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

Stage 3: Information for Further Research

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

Useful Links:

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

Most Recent Balance Sheet Figures

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

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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

Disclaimer:

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

Crown Castle International Corp Valuation – March 2018 $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.

CCI Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CCI – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $44,385,439,600 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.88 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 -369.37% Fail
6. Moderate PEmg Ratio PEmg < 20 74.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.61 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 0.88 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -101.35 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.46
MG Growth Estimate 15.00%
MG Value $56.26
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $21.19
MG Value based on 0% Growth $12.42
Market Implied Growth Rate 33.07%
Current Price $109.08
% of Intrinsic Value 193.88%

Crown Castle International Corp. (REIT) 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 $1.46 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 33.07% 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 International Corp. (REIT) revealed the company was trading above its Graham Number of $26.53. The company pays a dividend of $3.9 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 74.64, which was above the industry average of 42.02. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-45.98.

Crown Castle International Corp. (REIT) 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) -$45.98
Graham Number $26.53
PEmg 74.64
Current Ratio 0.88
PB Ratio 3.61
Current Dividend $3.90
Dividend Yield 3.58%
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 12/1/2017
Total Current Assets $1,133,780,000
Total Current Liabilities $1,292,082,000
Long-Term Debt $16,044,369,000
Total Assets $32,229,570,000
Intangible Assets $15,983,227,000
Total Liabilities $19,890,488,000
Shares Outstanding (Diluted Average) 407,908,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.03
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 $1.46
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:

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Crown Castle International (CCI) Annual Valuation – 2014

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AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC

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.

GGP Inc Valuation – March 2018 $GGP

Company Profile (obtained from Marketwatch): General Growth Properties, Inco.. The Group is a self-administered and self-managed real estate investment trust, referred to as a ‘REIT’. It operates in two segments: Retails and Master Planned Communities. The Retails segment includes the operation, development and management of retail and other rental property, primarily shopping centers. The Master Planned Communities segment includes the development and sale of land, primarily in large-scale, long-term community development projects in and around Columbia, Maryland, Summerlin, Nevada and Houston, Texas. The shopping centers are located in the major and middle markets of the United States. It has elected to be taxed as a real estate investment trust for federal income tax purposes.

GGP Chart

GGP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GGP – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,700,288,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 -154.69% Fail
6. Moderate PEmg Ratio PEmg < 20 26.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.35 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -58.55 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 $0.83
MG Growth Estimate 15.00%
MG Value $31.93
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $12.03
MG Value based on 0% Growth $7.05
Market Implied Growth Rate 8.79%
Current Price $21.63
% of Intrinsic Value 67.74%

GGP 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 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 Undervalued after growing its EPSmg (normalized earnings) from $0.16 in 2014 to an estimated $0.83 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.79% 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 GGP Inc revealed the company was trading above its Graham Number of $9.3. The company pays a dividend of $0.88 per share, for a yield of 4.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.08, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.28.

GGP 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) -$14.28
Graham Number $9.30
PEmg 26.08
Current Ratio 0.80
PB Ratio 2.35
Current Dividend $0.88
Dividend Yield 4.07%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $916,243,000
Total Current Liabilities $1,138,940,000
Long-Term Debt $13,038,659,000
Total Assets $23,349,954,000
Intangible Assets $269,110,000
Total Liabilities $14,554,294,000
Shares Outstanding (Diluted Average) 955,257,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.43
Dec2017 $0.68
Dec2016 $1.34
Dec2015 $1.43
Dec2014 $0.69
Dec2013 $0.31
Dec2012 -$0.52
Dec2011 -$0.37
Dec2010 $0.00
Dec2009 -$4.11
Dec2008 $0.02
Dec2007 $1.18
Dec2006 $0.24
Dec2005 $0.32
Dec2004 $1.21
Dec2003 $1.22
Dec2002 $0.98
Dec2001 $0.43
Dec2000 $0.73
Dec1999 $0.56
Dec1998 $0.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.83
Dec2017 $0.98
Dec2016 $0.97
Dec2015 $0.63
Dec2014 $0.16
Dec2013 -$0.38
Dec2012 -$0.82
Dec2011 -$0.86
Dec2010 -$0.92
Dec2009 -$1.08
Dec2008 $0.49
Dec2007 $0.76
Dec2006 $0.64
Dec2005 $0.83
Dec2004 $1.03
Dec2003 $0.89
Dec2002 $0.69

Recommended Reading:

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Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR

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.

Starwood Property Trust Inc Valuation – March 2018 $STWD

Company Profile (obtained from Marketwatch): Starwood Property Trust, Inc. engages in originating, acquiring, financing, and managing commercial mortgage loans and other commercial real estate debt and equity investments. It operates through the following segments: Real Estate Lending; Real Estate Investing and Servicing, and Real Estate Property. The Real Estate Lending segment involves in providing a one-stop solution for borrowers and able to lend for balance sheet across the capital stack, including providing first mortgages, subordinate debt, mezzanine loans, and B-notes. The Real Estate Investing and Servicing segment offers commercial mortgage-backed securities and commercial real estate debt investing business. The Real Estate Property segment consists of real estate assets to complement its real estate lending and real estate investing and services segments. The company was founded on August 17, 2009 and is headquartered in Greenwich, CT.

STWD Chart

STWD data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,533,172,894 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 110.16% Pass
5. Moderate PEmg Ratio PEmg < 20 11.61 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.24 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 $1.83
MG Growth Estimate -0.15%
MG Value $14.99
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $26.48
MG Value based on 0% Growth $15.52
Market Implied Growth Rate 1.56%
Current Price $21.20
% of Intrinsic Value 141.46%

Starwood 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 insufficient earnings stability over the last ten years, and the poor dividend history. 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 $1.84 in 2014 to an estimated $1.83 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.56% 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 Starwood Property Trust, Inc. revealed the company was trading below its Graham Number of $28.75. The company pays a dividend of $1.92 per share, for a yield of 9.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.61, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Starwood Property Trust, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $28.75
PEmg 11.61
PB Ratio 1.24
Dividend Yield 9.06%
TTM Dividend $1.92
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 12/1/2017
Long-Term Debt & Capital Lease Obligation $2,125,235,000
Total Assets $62,941,289,000
Intangible Assets $323,529,000
Total Liabilities $58,462,875,000
Shares Outstanding (Diluted Average) 262,151,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.15
Dec2017 $1.52
Dec2016 $1.50
Dec2015 $1.91
Dec2014 $2.24
Dec2013 $1.82
Dec2012 $1.76
Dec2011 $1.38
Dec2010 $1.14
Dec2009 -$0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.83
Dec2017 $1.71
Dec2016 $1.82
Dec2015 $1.92
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.17
Dec2011 $0.75
Dec2010 $0.36
Dec2009 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

Best Stocks Below Their Graham Number – August 2017
Starwood Property Trust Inc Valuation – April 2017 $STWD
10 Low PE Stock Picks for the Enterprising Investor – April 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017

Other ModernGraham posts about related companies

Simon Property Group Inc Valuation – March 2018 $SPG
Welltower Inc Valuation – March 2018 $WELL
Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS

Disclaimer:

The author held a long position in STWD but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  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 – March 2018 $SPG

Company Profile (obtained from Marketwatch): Simon Property Group, Inc. operates as a self-administered and self-managed real estate investment trust. It owns, develops and manages retail real estate properties which primarily consist of regional malls, premium outlets and mills. Simon Property Group specializes in the ownership, development, management, leasing, acquisition and expansion of income-producing retail real estate assets. The company was founded by Fred Simon, Herbert Simon and Melvin Simon in December 1993 and is headquartered in Indianapolis, IN.

SPG Chart

SPG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPG – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $50,248,202,370 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 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 166.37% Pass
6. Moderate PEmg Ratio PEmg < 20 27.12 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 13.20 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 -205.63 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 $5.77
MG Growth Estimate 5.69%
MG Value $114.79
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $83.71
MG Value based on 0% Growth $49.07
Market Implied Growth Rate 9.31%
Current Price $156.57
% of Intrinsic Value 136.40%

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 Overvalued after growing its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $5.77 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Simon Property Group Inc revealed the company was trading above its Graham Number of $38.27. The company pays a dividend of $7.15 per share, for a yield of 4.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 27.12, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-83.69.

Simon Property Group 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) -$83.69
Graham Number $38.27
PEmg 27.12
Current Ratio 0.96
PB Ratio 13.20
Current Dividend $7.15
Dividend Yield 4.57%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,555,775,000
Total Current Liabilities $2,675,568,000
Long-Term Debt $24,632,463,000
Total Assets $32,257,638,000
Intangible Assets $208,557,000
Total Liabilities $28,571,470,000
Shares Outstanding (Diluted Average) 310,847,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.55
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 $5.77
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 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

Welltower Inc Valuation – March 2018 $WELL
Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS
Douglas Emmett Inc Valuation – Initial Coverage $DEI

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 – March 2018 $WELL

Company Profile (obtained from Marketwatch): Welltower, Inc. is a real estate investment trust. The company invests with seniors housing operators, post acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. It owns properties in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties. The company operates through the following segments: Triple-net, Seniors Housing Operating, and Outpatient Medical. The Triple-net properties segment include long-term/post-acute care facilities, assisted living facilities, independent living/continuing care retirement communities, care homes (United Kingdom), independent support living facilities (Canada), care homes with nursing (United Kingdom) and combinations thereof. The Seniors Housing Operating properties segment includes the seniors housing communities. The Outpatient Medical properties segment includes outpatient medical buildings. The company was founded by Bruce G. Thompson and Fritz Wolfe in 1970 and is headquartered in Toledo, OH.

WELL Chart

WELL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WELL – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,577,058,560 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.38 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 64.91% Pass
6. Moderate PEmg Ratio PEmg < 20 30.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.36 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 33.54 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 $1.72
MG Growth Estimate 12.76%
MG Value $58.52
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $24.94
MG Value based on 0% Growth $14.62
Market Implied Growth Rate 11.12%
Current Price $52.86
% of Intrinsic Value 90.33%

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 $1.72 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 11.12% 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 $32.07. The company pays a dividend of $3.48 per share, for a yield of 6.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.73, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-32.93.

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) -$32.93
Graham Number $32.07
PEmg 30.73
Current Ratio 1.38
PB Ratio 1.36
Current Dividend $3.48
Dividend Yield 6.58%
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 12/1/2017
Total Current Assets $1,259,462,000
Total Current Liabilities $911,863,000
Long-Term Debt $11,659,698,000
Total Assets $27,944,445,000
Intangible Assets $68,321,000
Total Liabilities $13,521,298,000
Shares Outstanding (Diluted Average) 372,322,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.24
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 $1.72
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 – November 2016 $HCN
HCP Inc Valuation – July 2016 $HCP
5 Undervalued Companies with a Low Beta – May 2016
10 Companies Benjamin Graham Would Invest In Today – May 2016
6 Best Stocks For Value Investors This Week – 5/14/16

Other ModernGraham posts about related companies

Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS
Douglas Emmett Inc Valuation – Initial Coverage $DEI
Lexington Realty Trust Valuation – Initial Coverage $LXP

Disclaimer:

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

Boston Properties Inc Valuation – March 2018 $BXP

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

BXP Chart

BXP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BXP – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,344,290,442 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.69 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 83.99% Pass
6. Moderate PEmg Ratio PEmg < 20 39.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.17 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 11.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.97
MG Growth Estimate 0.14%
MG Value $26.09
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $43.12
MG Value based on 0% Growth $25.28
Market Implied Growth Rate 15.73%
Current Price $118.87
% of Intrinsic Value 455.59%

Boston Properties, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.95 in 2014 to an estimated $2.97 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.73% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Boston Properties, Inc. revealed the company was trading above its Graham Number of $45.86. The company pays a dividend of $3.05 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 39.97, which was below the industry average of 51.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-77.89.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$77.89
Graham Number $45.86
PEmg 39.97
Current Ratio 2.69
PB Ratio 3.17
Current Dividend $3.05
Dividend Yield 2.57%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,488,291,000
Total Current Liabilities $554,186,000
Long-Term Debt $10,271,611,000
Total Assets $19,372,233,000
Intangible Assets $0
Total Liabilities $13,558,276,000
Shares Outstanding (Diluted Average) 154,969,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS
Douglas Emmett Inc Valuation – Initial Coverage $DEI
Lexington Realty Trust Valuation – Initial Coverage $LXP
LTC Properties Inc Valuation – Initial Coverage $LTC
REIT Industry Review – April 2017

Disclaimer:

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

AvalonBay Communities Inc Valuation – February 2018 $AVB

Company Profile (obtained from Marketwatch): AvalonBay Communities, Inc. operates as a real estate investment trust, which engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities. It operates through the following segments: Established Communities, Other Stabilized Communities, and Development or Redevelopment Communities. The Established Communities segment refers to the operating communities that were owned and had stabilized occupancy. The Other Stabilized Communities segment includes all other completed communities that have stabilized occupancy. The Development or Redevelopment Communities segment consists of communities that are under construction. The company was founded by Gilbert M. Meyer in 1978 and is headquartered in Arlington, VA.

AVB Chart

AVB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVB – February 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 $21,545,664,869 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.37 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 104.40% Pass
6. Moderate PEmg Ratio PEmg < 20 27.38 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 0.37 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -18.41 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 $5.70
MG Growth Estimate 5.70%
MG Value $113.45
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $82.64
MG Value based on 0% Growth $48.44
Market Implied Growth Rate 9.44%
Current Price $156.02
% of Intrinsic Value 137.52%

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 $5.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.44% 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 $84.91. The company pays a dividend of $5.68 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 27.38, which was below the industry average of 51.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-56.36.

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) -$56.36
Graham Number $84.91
PEmg 27.38
Current Ratio 0.37
PB Ratio 2.08
Current Dividend $5.68
Dividend Yield 3.64%
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 12/1/2017
Total Current Assets $234,592,000
Total Current Liabilities $632,776,000
Long-Term Debt $7,329,470,000
Total Assets $18,414,821,000
Intangible Assets $0
Total Liabilities $8,026,775,000
Shares Outstanding (Diluted Average) 138,248,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.26
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 $5.70
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 – May 2016 $AVB
AvalonBay Communities Inc. Annual Valuation – 2014 $AVB

Other ModernGraham posts about related companies

Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS
Douglas Emmett Inc Valuation – Initial Coverage $DEI
Lexington Realty Trust Valuation – Initial Coverage $LXP
LTC Properties Inc Valuation – Initial Coverage $LTC
REIT Industry Review – April 2017

Disclaimer:

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

Weyerhauser Co Valuation – February 2018 $WY

Company Profile (obtained from Marketwatch): Weyerhaeuser Co. engages in the manufacture, distribution, and sale of forest products. It operates through the following segments: Timberlands; Real Estate, Energy and Natural Resources (Real Estate & ENR); and Wood Products. The Timberlands segment manages private commercial forestland worldwide, which engages in growing and harvesting trees for lumber, building, pulp, paper and other wood products. The Real Estate & ENR segment deliver premiums to timber value by identifying and monetizing higher and better use lands and capturing the full value of surface and subsurface assets. The Wood Products segment delivers lumber, structural panels, engineered wood products and complementary building products for residential, multi-family, industrial and light commercial applications. The company was founded by Frederick Weyerhaeuser in January 1900 and is headquartered in Seattle, WA.

WY Chart

WY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WY – February 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 $26,615,286,938 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 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 29.04 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.01 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 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 11.33 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 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 10.27%
Current Price $35.26
% 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, 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 $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 10.27% 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 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 29.04, which was below the industry average of 51.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.82.

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) -$9.82
Graham Number $17.84
PEmg 29.04
Current Ratio 1.47
PB Ratio 3.01
Current Dividend $1.25
Dividend Yield 3.55%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,715,000,000
Total Current Liabilities $1,165,000,000
Long-Term Debt $6,232,000,000
Total Assets $18,059,000,000
Intangible Assets $40,000,000
Total Liabilities $9,160,000,000
Shares Outstanding (Diluted Average) 758,490,000

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

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
Weyerhaeuser Co Valuation – November 2015 Update $WY

Other ModernGraham posts about related companies

Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS
Douglas Emmett Inc Valuation – Initial Coverage $DEI
Lexington Realty Trust Valuation – Initial Coverage $LXP
LTC Properties Inc Valuation – Initial Coverage $LTC
REIT Industry Review – April 2017
Starwood Property Trust Inc Valuation – April 2017 $STWD
Dream Office REIT – Initial Coverage $TSE:D.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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