Alexander & Baldwin Inc Valuation – July 2018 $ALEX

Company Profile (excerpt from Reuters): Alexander & Baldwin, Inc. (A&B), incorporated in March 19, 2012, is a real estate company. The Company operates through three segments: Commercial Real Estate, Land Operations, and Materials and Construction. In addition to its 15 retail centers in Hawaii, the Company owned seven industrial assets, seven office properties and a portfolio of urban ground leases comprising 106 acres in Hawaii, as of December 31, 2016. On the United States mainland, the Company owned seven remaining commercial assets, as of December 31, 2016. Its total portfolio gross leasable area (GLA) was 4.7 million square feet, as of December 31, 2016.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALEX – 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 $1,674,345,366 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.45 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 97.51% Pass
6. Moderate PEmg Ratio PEmg < 20 15.76 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.27 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 1.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 14.42 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 $1.48
MG Growth Estimate 11.60%
MG Value $46.81
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $21.41
MG Value based on 0% Growth $12.55
Market Implied Growth Rate 3.63%
Current Price $23.27
% of Intrinsic Value 49.71%

Alexander & Baldwin Inc 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. 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 Undervalued after growing its EPSmg (normalized earnings) from $0.83 in 2014 to an estimated $1.48 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.63% 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 Alexander & Baldwin Inc revealed the company was trading above its Graham Number of $13.3. The company pays a dividend of $0.21 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 15.76, 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 $-11.18.

Alexander & Baldwin 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) -$11.18
Graham Number $13.30
PEmg 15.76
Current Ratio 1.45
PB Ratio 1.27
Current Dividend $0.21
Dividend Yield 0.90%
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 $178,500,000
Total Current Liabilities $123,300,000
Long-Term Debt $795,800,000
Total Assets $2,310,700,000
Intangible Assets $182,800,000
Total Liabilities $985,500,000
Shares Outstanding (Diluted Average) 72,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.60
Dec2017 $4.34
Dec2016 -$0.18
Dec2015 $0.54
Dec2014 $1.25
Dec2013 $0.76
Dec2012 $0.44
Dec2011 $0.55
Dec2010 $0.78
Dec2009 $1.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.48
Dec2017 $1.72
Dec2016 $0.46
Dec2015 $0.76
Dec2014 $0.83
Dec2013 $0.66
Dec2012 $0.59
Dec2011 $0.61
Dec2010 $0.55
Dec2009 $0.36

Recommended Reading:

Other ModernGraham posts about the company

Alexander & Baldwin Inc Valuation – December 2016 $ALEX
5 Speculative and Overvalued Companies to Avoid – August 2015
Alexander & Baldwin Inc Analysis – Initial Coverage $ALEX

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.

Summit Hotel Properties Inc Valuation – July 2018 $INN

Company Profile (excerpt from Reuters): Summit Hotel Properties, Inc., incorporated on June 30, 2010, is a real estate investment trust (REIT). The Company is focused primarily on owning premium-branded, select-service hotels in the Upscale segment of the United States lodging industry. The Company’s portfolio consisted of 83 hotels with a total of 12,242 guestrooms located in 26 states. The Company’s hotels are located in markets, such as business and corporate headquarters, retail centers, airports and tourist attractions. The Company’s portfolio is located in urban and suburban markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INN – 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 $1,471,771,055 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.19 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -806.25% Fail
6. Moderate PEmg Ratio PEmg < 20 18.79 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.22 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.19 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.52 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 $0.74
MG Growth Estimate 15.00%
MG Value $28.34
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $10.67
MG Value based on 0% Growth $6.26
Market Implied Growth Rate 5.15%
Current Price $13.83
% of Intrinsic Value 48.81%

Summit Hotel Properties Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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 $-0.07 in 2014 to an estimated $0.74 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.15% 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 Summit Hotel Properties Inc revealed the company was trading above its Graham Number of $11.37. The company pays a dividend of $0.67 per share, for a yield of 4.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.79, 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 $-8.64.

Summit Hotel Properties Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.64
Graham Number $11.37
PEmg 18.79
Current Ratio 2.19
PB Ratio 1.22
Current Dividend $0.67
Dividend Yield 4.87%
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 3/1/2018
Total Current Assets $143,614,000
Total Current Liabilities $65,689,000
Long-Term Debt $975,316,000
Total Assets $2,221,878,000
Intangible Assets $22,764,000
Total Liabilities $1,041,005,000
Shares Outstanding (Diluted Average) 103,899,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.47
Dec2017 $0.79
Dec2016 $1.00
Dec2015 $1.24
Dec2014 $0.05
Dec2013 -$0.12
Dec2012 -$0.17
Dec2011 -$0.12
Dec2010 -$0.11
Dec2009 -$0.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.74
Dec2017 $0.78
Dec2016 $0.65
Dec2015 $0.37
Dec2014 -$0.07
Dec2013 -$0.13
Dec2012 -$0.12
Dec2011 -$0.09
Dec2010 -$0.06
Dec2009 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

Summit Hotel Properties Inc Valuation – Initial Coverage $INN

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR

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.

Sabra Health Care REIT Inc Valuation – July 2018 $SBRA

Company Profile (excerpt from Reuters): Sabra Health Care REIT, Inc., incorporated on May 10, 2010, is a real estate investment trust. The Company, through its subsidiaries, owns and invests in real estate serving the healthcare industry. The Company’s segment includes investments in healthcare-related real estate properties. The Company’s primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. As of December 31, 2016, the Company’s investment portfolio consisted of 183 real estate properties held for investment (consisting of 97 skilled nursing/transitional care facilities, 85 senior housing facilities and one acute care hospital); 10 investments in loans receivable (consisting of four mortgage loans, one construction loan, one mezzanine loan, three pre-development loans and one debtor-in-possession (DIP) loan) and 12 preferred equity investments.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBRA – 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 $3,971,824,677 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 744.19% Pass
6. Moderate PEmg Ratio PEmg < 20 18.31 Pass
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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 54.52 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 $1.19
MG Growth Estimate 14.72%
MG Value $45.30
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $17.31
MG Value based on 0% Growth $10.15
Market Implied Growth Rate 4.90%
Current Price $21.86
% of Intrinsic Value 48.26%

Sabra Health Care REIT 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. 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 $0.6 in 2014 to an estimated $1.19 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.9% 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 Sabra Health Care REIT Inc revealed the company was trading below its Graham Number of $23.82. The company pays a dividend of $1.73 per share, for a yield of 7.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.31, 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 $-18.48.

Sabra Health Care REIT Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.48
Graham Number $23.82
PEmg 18.31
Current Ratio 1.31
PB Ratio 1.14
Current Dividend $1.73
Dividend Yield 7.91%
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 3/1/2018
Total Current Assets $258,550,000
Total Current Liabilities $196,897,000
Long-Term Debt $3,361,106,000
Total Assets $6,984,569,000
Intangible Assets $161,423,000
Total Liabilities $3,558,003,000
Shares Outstanding (Diluted Average) 178,516,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.31
Dec2017 $1.40
Dec2016 $0.92
Dec2015 $1.11
Dec2014 $0.78
Dec2013 $0.68
Dec2012 $0.52
Dec2011 $0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.19
Dec2017 $1.08
Dec2016 $0.88
Dec2015 $0.81
Dec2014 $0.60
Dec2013 $0.45
Dec2012 $0.29
Dec2011 $0.14

Recommended Reading:

Other ModernGraham posts about the company

10 Best Dividend Paying Stocks for the Enterprising Investor – January 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – December 2016
8 Best Stocks for Value Investors of the Week – 12/10/16
10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016
Sabra Health Care REIT Inc Valuation – Initial Coverage $SBRA

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR

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.

National Retail Properties Inc Valuation – July 2018 $NNN

Company Profile (excerpt from Reuters): National Retail Properties, Inc. (NNN), incorporated on May 12, 1994, is a real estate investment trust (REIT). The Company’s assets are primarily real estate assets. The Company acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and are primarily held for investment. As of December 31, 2016, NNN owned 2,535 properties with an aggregate gross leasable area of approximately 27,204,000 square feet, located in 48 states. The Company focuses on investing in a range of property and tenant types; leases, mortgages and other types of real estate interests; loans secured by personal property; loans secured by partnership or membership interests in partnerships or limited liability companies, and securities of other REITs, or other issuers, including for the purpose of exercising control over such entities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NNN – 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 $6,797,872,126 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.05 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 82.63% Pass
6. Moderate PEmg Ratio PEmg < 20 32.13 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.78 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 1.05 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1,609.85 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 $1.40
MG Growth Estimate 3.90%
MG Value $22.80
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $20.28
MG Value based on 0% Growth $11.89
Market Implied Growth Rate 11.82%
Current Price $44.94
% of Intrinsic Value 197.10%

National Retail Properties, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $1.11 in 2014 to an estimated $1.4 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.82% 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 National Retail Properties, Inc. revealed the company was trading above its Graham Number of $26.37. The company pays a dividend of $1.86 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 32.13, 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 $-17.98.

National Retail 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) -$17.98
Graham Number $26.37
PEmg 32.13
Current Ratio 1.05
PB Ratio 1.78
Current Dividend $1.86
Dividend Yield 4.14%
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 3/1/2018
Total Current Assets $38,017,000
Total Current Liabilities $36,379,000
Long-Term Debt $2,636,942,000
Total Assets $6,660,656,000
Intangible Assets $0
Total Liabilities $2,796,150,000
Shares Outstanding (Diluted Average) 153,393,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.48
Dec2017 $1.45
Dec2016 $1.38
Dec2015 $1.20
Dec2014 $1.24
Dec2013 $1.10
Dec2012 $1.11
Dec2011 $0.96
Dec2010 $0.80
Dec2009 $0.60
Dec2008 $1.56
Dec2007 $2.26
Dec2006 $3.05
Dec2005 $1.56
Dec2004 $1.15
Dec2003 $1.13
Dec2002 $1.09
Dec2001 $0.91
Dec2000 $1.26
Dec1999 $1.16
Dec1998 $1.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.40
Dec2017 $1.33
Dec2016 $1.25
Dec2015 $1.16
Dec2014 $1.11
Dec2013 $1.00
Dec2012 $0.97
Dec2011 $1.01
Dec2010 $1.24
Dec2009 $1.58
Dec2008 $2.02
Dec2007 $2.11
Dec2006 $1.89
Dec2005 $1.26
Dec2004 $1.11
Dec2003 $1.09
Dec2002 $1.09

Recommended Reading:

Other ModernGraham posts about the company

National Retail Properties Inc Valuation – November 2016 $NNN
National Retail Properties Inc. Analysis – Initial Coverage $NNN

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR
Prologis Inc Valuation – May 2018 $PLD

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 – June 2018 $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.

EQIX Chart

EQIX data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQIX – 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 $33,281,682,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 79.58% Pass
6. Moderate PEmg Ratio PEmg < 20 186.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.67 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 2.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.49 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 $2.24
MG Growth Estimate 15.00%
MG Value $86.19
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $32.46
MG Value based on 0% Growth $19.03
Market Implied Growth Rate 89.24%
Current Price $418.57
% of Intrinsic Value 485.64%

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 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 net 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 $-0.3 in 2014 to an estimated $2.24 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 89.24% 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 Equinix Inc revealed the company was trading above its Graham Number of $75.84. The company pays a dividend of $8 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 186.97, which was above the industry average of 49.08. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-123.77.

Equinix Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$123.77
Graham Number $75.84
PEmg 186.97
Current Ratio 2.36
PB Ratio 4.67
Current Dividend $8.00
Dividend Yield 1.91%
Number of Consecutive Years of Dividend Growth 3

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 $2,943,484,000
Total Current Liabilities $1,246,475,000
Long-Term Debt $9,317,149,000
Total Assets $19,941,928,000
Intangible Assets $6,841,763,000
Total Liabilities $12,801,377,000
Shares Outstanding (Diluted Average) 79,649,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.95
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 $2.24
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
Dec2002 -$66.29

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR
Prologis Inc Valuation – May 2018 $PLD
Duke Realty Corp Valuation – Initial Coverage $DRE
Realty Income Corp Valuation – April 2018 $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.

Kimco Realty Corp Valuation – June 2018 $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 – 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 $7,605,660,094 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.30 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 494.12% Pass
6. Moderate PEmg Ratio PEmg < 20 21.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 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 3.30 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 16.79 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 $0.84
MG Growth Estimate 7.97%
MG Value $20.43
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $12.12
MG Value based on 0% Growth $7.11
Market Implied Growth Rate 6.46%
Current Price $17.90
% of Intrinsic Value 87.63%

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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.55 in 2014 to an estimated $0.84 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.46% 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 Kimco Realty Corp revealed the company was trading above its Graham Number of $10.13. The company pays a dividend of $1.09 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 21.41, which was below the industry average of 49.08, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-12.8.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.80
Graham Number $10.13
PEmg 21.41
Current Ratio 3.30
PB Ratio 1.38
Current Dividend $1.09
Dividend Yield 6.09%
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 3/1/2018
Total Current Assets $435,849,000
Total Current Liabilities $132,209,000
Long-Term Debt $5,097,322,000
Total Assets $11,372,502,000
Intangible Assets $0
Total Liabilities $5,870,100,000
Shares Outstanding (Diluted Average) 424,521,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.36
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
Dec1998 $0.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.84
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
Dec2002 $0.89

Recommended Reading:

Other ModernGraham posts about the company

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
10 Best Dividend Paying Stocks for the Enterprising Investor – January 2017

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR
Prologis Inc Valuation – May 2018 $PLD
Duke Realty Corp Valuation – Initial Coverage $DRE
Realty Income Corp Valuation – April 2018 $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 – June 2018 $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.

ESS Chart

ESS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ESS – 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 $15,873,243,402 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 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 225.33% Pass
6. Moderate PEmg Ratio PEmg < 20 47.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 51.76 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 $5.07
MG Growth Estimate 13.27%
MG Value $177.52
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $73.45
MG Value based on 0% Growth $43.06
Market Implied Growth Rate 19.31%
Current Price $238.63
% of Intrinsic Value 134.42%

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 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 $2.69 in 2014 to an estimated $5.07 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.31% 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 Essex Property Trust Inc revealed the company was trading above its Graham Number of $96.67. The company pays a dividend of $7 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 47.11, which was below the industry average of 49.08, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-86.

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) -$86.00
Graham Number $96.67
PEmg 47.11
Current Ratio 1.31
PB Ratio 2.43
Current Dividend $7.00
Dividend Yield 2.93%
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 3/1/2018
Total Current Assets $467,395,000
Total Current Liabilities $356,902,000
Long-Term Debt $5,718,970,000
Total Assets $12,642,667,000
Intangible Assets $0
Total Liabilities $6,150,508,000
Shares Outstanding (Diluted Average) 66,083,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.37
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
Dec1998 $1.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.07
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
Dec2002 $2.45

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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
Equity Residential Valuation – June 2018 $EQR
Prologis Inc Valuation – May 2018 $PLD
Duke Realty Corp Valuation – Initial Coverage $DRE
Realty Income Corp Valuation – April 2018 $O
Ventas Inc Valuation – April 2018 $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.

Starwood Property Trust Inc Valuation – April 2017 $STWD

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Starwood Property Trust Inc (STWD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a real estate investment trust. The Company operates through three business segments: Real estate lending (the Lending Segment), which engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, and other real estate and real estate-related debt investments; Real estate investing and servicing (the Investing and Servicing Segment), which includes a servicing business in the United States that manages and works out problem assets; an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, and a mortgage loan business, and Real estate property (the Property Segment), which engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties.

STWD Chart

STWD data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. 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.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD – April 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,936,504,324 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 401.85% Pass
5. Moderate PEmg Ratio PEmg < 20 12.17 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.22 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 Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.87
MG Growth Estimate 3.72%
MG Value $29.84
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $27.14
MG Value based on 0% Growth $15.91
Market Implied Growth Rate 1.84%
Current Price $22.79
% of Intrinsic Value 76.37%

Starwood Property 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 over the last ten years, and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.5 in 2013 to an estimated $1.87 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 1.84% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Starwood Property Trust, Inc. revealed the company was trading below its Graham Number of $29.28. The company pays a dividend of $1.92 per share, for a yield of 8.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.17, 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.

Starwood Property Trust, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $29.28
PEmg 12.17
PB Ratio 1.22
Dividend Yield 8.42%
TTM Dividend $1.92
Number of Consecutive Years of Dividend Growth 0

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $2,011,544,000
Total Assets $77,256,266,000
Intangible Assets $359,685,000
Total Liabilities $72,733,992,000
Shares Outstanding (Diluted Average) 241,794,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.01
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 $1.87
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

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
10 Low PE Stock Picks for the Enterprising Investor – February 2017
5 Undervalued Companies for Value Investors with a Low Beta – January 2017

Other ModernGraham posts about related companies

Corecivic Inc Valuation – Initial Coverage $CXW
Kimco Realty Corp Valuation – March 2017 $KIM
LaSalle Hotel Properties Valuation – Initial Coverage $LHO
Cousins Properties Inc Valuation – Initial Coverage $CUZ
Cominar Real Estate Investment Trust – Initial Coverage $TSE:CUF.UN
Essex Property Trust Inc Valuation – March 2017 $ESS
Caretrust REIT Inc Valuation – Initial Coverage $CTRE
Federal Realty Investment Trust Valuation – Initial Coverage $FRT
Extra Space Storage Inc Valuation – Initial Coverage $EXR
UDR Inc Valuation – Initial Coverage $UDR

Disclaimer:

The author held a long position in Starwood Property Trust Inc (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.

Dream Office REIT – Initial Coverage $TSE:D.UN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Dream Office REIT (TSE:D.UN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Dream Office Real Estate Investment Trust (the Trust), formerly Dundee Real Estate Investment Trust, is a Canada-based open-ended investment trust. The Trust’s segments include Western Canada, Calgary downtown, Calgary suburban, Toronto downtown, Toronto suburban, Eastern Canada and Other. It is engaged in building and maintaining a diversified portfolio of office properties in Canada, based on an established platform, and providing cash distributions to unitholders and managing distributions over time. The Trust’s portfolio consists of central business district and suburban office properties, located in urban centers across Canada, including Toronto, Calgary, Edmonton, Montreal, Ottawa and Vancouver. Its ownership interests include over 170 office properties (approximately 200 buildings) and approximately one redevelopment property. The Trust owns approximately 23.4 million square feet of gross leasable area (GLA). The Trust is managed by Dream Asset Management Corporation (DAM).

D.UN Chart

D.UN data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. 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.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-D.UN – April 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 $2,100,635,071 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 Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -401.37% Fail
6. Moderate PEmg Ratio PEmg < 20 -4.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.93 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 -1,455.50 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 -$4.41
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$63.99
MG Value based on 0% Growth -$37.51
Market Implied Growth Rate -6.51%
Current Price $19.95
% of Intrinsic Value N/A

Dream Office Real Estate Investment Trst 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 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 $4.06 in 2013 to an estimated $-4.41 for 2017. This level of negative earnings does not support a positive valuation.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 Dream Office Real Estate Investment Trst revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.56 per share, for a yield of 7.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -4.52, 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 $-24.38.

Dream Office Real Estate Investment Trst 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) -$24.38
Graham Number $0.00
PEmg -4.52
Current Ratio 1.00
PB Ratio 0.92
Current Dividend $1.56
Dividend Yield 7.84%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $431,662,000
Total Current Liabilities $433,257,000
Long-Term Debt $2,321,530,000
Total Assets $5,486,516,000
Intangible Assets $0
Total Liabilities $3,114,751,000
Shares Outstanding (Diluted Average) 110,041,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$7.99
Dec2016 -$7.99
Dec2015 -$0.51
Dec2014 $1.48
Dec2013 $4.30
Dec2012 $2.98
Dec2011 $6.06
Dec2010 $4.37
Dec2009 $0.60
Dec2008 $0.50
Dec2007 $19.94
Dec2006 $0.35
Dec2005 $0.16
Dec2004 $0.18
Dec2003 $0.71
Dec2002 $0.69
Dec2001 $1.71
Dec2000 $0.72
Dec1999 $0.56
Dec1998 $1.04
Dec1997 $0.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$4.41
Dec2016 -$1.73
Dec2015 $1.89
Dec2014 $3.33
Dec2013 $4.06
Dec2012 $3.60
Dec2011 $4.70
Dec2010 $4.40
Dec2009 $4.38
Dec2008 $5.59
Dec2007 $6.84
Dec2006 $0.34
Dec2005 $0.45
Dec2004 $0.66
Dec2003 $0.90
Dec2002 $0.97
Dec2001 $1.07

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Corecivic Inc Valuation – Initial Coverage $CXW
Kimco Realty Corp Valuation – March 2017 $KIM
LaSalle Hotel Properties Valuation – Initial Coverage $LHO
Cousins Properties Inc Valuation – Initial Coverage $CUZ
Cominar Real Estate Investment Trust – Initial Coverage $TSE:CUF.UN
Essex Property Trust Inc Valuation – March 2017 $ESS
Caretrust REIT Inc Valuation – Initial Coverage $CTRE
Federal Realty Investment Trust Valuation – Initial Coverage $FRT
Extra Space Storage Inc Valuation – Initial Coverage $EXR
UDR Inc Valuation – Initial Coverage $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.

Liberty Property Trust Valuation – Initial Coverage $LPT

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Liberty Property Trust (LPT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Liberty Property Trust (the Trust) is a self-administered and self-managed Maryland real estate investment trust (REIT). The Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership (the Operating Partnership). The Company’s segments include Carolinas/Richmond; Chicago/Milwaukee; Florida; Houston; Lehigh/Central PA; Minnesota; Philadelphia; Southeastern PA; United Kingdom, and Other, which includes Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; DC Metro; New Jersey; Southern California, and other. The Company owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom. As of December 31, 2016, the Company owned and operated 450 industrial and 55 office properties totaling 86.0 million square feet.

LPT Chart

LPT data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. 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.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of LPT – April 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 $5,968,486,012 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.13 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 53.07% Pass
6. Moderate PEmg Ratio PEmg < 20 25.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.97 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 1.13 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 128.03 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 $1.59
MG Growth Estimate 2.71%
MG Value $22.14
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $23.06
MG Value based on 0% Growth $13.52
Market Implied Growth Rate 8.43%
Current Price $40.33
% of Intrinsic Value 182.17%

Liberty Property Trust 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 $1.35 in 2013 to an estimated $1.59 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.43% 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 Liberty Property Trust revealed the company was trading above its Graham Number of $20.9. The company pays a dividend of $1.9 per share, for a yield of 4.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.35, 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 $-19.13.

Liberty Property 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) -$19.13
Graham Number $20.90
PEmg 25.36
Current Ratio 1.13
PB Ratio 1.97
Current Dividend $1.90
Dividend Yield 4.71%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $179,264,000
Total Current Liabilities $159,293,000
Long-Term Debt $2,556,936,000
Total Assets $5,992,813,000
Intangible Assets $0
Total Liabilities $2,989,422,000
Shares Outstanding (Diluted Average) 146,889,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.95
Dec2016 $2.43
Dec2015 $1.61
Dec2014 $1.48
Dec2013 $1.60
Dec2012 $1.17
Dec2011 $1.59
Dec2010 $1.12
Dec2009 $0.52
Dec2008 $1.62
Dec2007 $1.80
Dec2006 $2.95
Dec2005 $2.82
Dec2004 $1.88
Dec2003 $2.05
Dec2002 $1.97
Dec2001 $2.15
Dec2000 $2.17
Dec1999 $1.95
Dec1998 $1.59
Dec1997 $1.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.59
Dec2016 $1.83
Dec2015 $1.51
Dec2014 $1.44
Dec2013 $1.35
Dec2012 $1.22
Dec2011 $1.27
Dec2010 $1.27
Dec2009 $1.55
Dec2008 $2.11
Dec2007 $2.34
Dec2006 $2.52
Dec2005 $2.26
Dec2004 $2.00
Dec2003 $2.06
Dec2002 $2.03
Dec2001 $1.99

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Corecivic Inc Valuation – Initial Coverage $CXW
Kimco Realty Corp Valuation – March 2017 $KIM
LaSalle Hotel Properties Valuation – Initial Coverage $LHO
Cousins Properties Inc Valuation – Initial Coverage $CUZ
Cominar Real Estate Investment Trust – Initial Coverage $TSE:CUF.UN
Essex Property Trust Inc Valuation – March 2017 $ESS
Caretrust REIT Inc Valuation – Initial Coverage $CTRE
Federal Realty Investment Trust Valuation – Initial Coverage $FRT
Extra Space Storage Inc Valuation – Initial Coverage $EXR
UDR Inc Valuation – Initial Coverage $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.

Back To Top