Intrinsic value of Canadian Apartment Properties Real Estat - CAR-UN

Previous Close

$33.04

  Intrinsic Value

$19.97

stock screener

  Rating & Target

sell

-40%

  Value-price divergence*

+98%

Previous close

$33.04

 
Intrinsic value

$19.97

 
Up/down potential

-40%

 
Rating

sell

 
Value-price divergence*

+98%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CAR-UN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.80
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
Revenue, $m
  597
  639
  682
  727
  774
  823
  874
  927
  982
  1,040
  1,100
  1,163
  1,228
  1,296
  1,368
  1,442
  1,521
  1,602
  1,688
  1,777
  1,871
  1,969
  2,072
  2,179
  2,292
  2,410
  2,534
  2,664
  2,801
  2,944
  3,094
Variable operating expenses, $m
 
  97
  104
  111
  118
  125
  133
  141
  149
  158
  167
  177
  187
  197
  208
  219
  231
  244
  257
  270
  284
  299
  315
  331
  348
  366
  385
  405
  426
  447
  470
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  61
  97
  104
  111
  118
  125
  133
  141
  149
  158
  167
  177
  187
  197
  208
  219
  231
  244
  257
  270
  284
  299
  315
  331
  348
  366
  385
  405
  426
  447
  470
Operating income, $m
  536
  542
  579
  617
  657
  698
  741
  786
  833
  882
  933
  986
  1,041
  1,099
  1,160
  1,223
  1,289
  1,359
  1,431
  1,507
  1,586
  1,670
  1,757
  1,848
  1,944
  2,044
  2,149
  2,259
  2,375
  2,496
  2,623
EBITDA, $m
  548
  544
  581
  620
  660
  701
  745
  790
  837
  886
  937
  990
  1,046
  1,104
  1,165
  1,229
  1,295
  1,365
  1,438
  1,514
  1,594
  1,677
  1,765
  1,856
  1,952
  2,053
  2,159
  2,269
  2,386
  2,507
  2,635
Interest expense (income), $m
  109
  123
  132
  141
  151
  161
  172
  183
  195
  207
  219
  232
  246
  260
  275
  291
  307
  324
  342
  360
  380
  400
  421
  444
  467
  492
  518
  545
  573
  603
  634
Earnings before tax, $m
  439
  418
  447
  476
  506
  537
  569
  603
  638
  675
  714
  754
  796
  839
  885
  933
  983
  1,035
  1,090
  1,147
  1,207
  1,269
  1,335
  1,404
  1,476
  1,552
  1,631
  1,715
  1,802
  1,894
  1,990
Tax expense, $m
  0
  113
  121
  128
  137
  145
  154
  163
  172
  182
  193
  204
  215
  227
  239
  252
  265
  279
  294
  310
  326
  343
  361
  379
  399
  419
  440
  463
  487
  511
  537
Net income, $m
  439
  305
  326
  347
  369
  392
  416
  440
  466
  493
  521
  550
  581
  613
  646
  681
  717
  755
  795
  837
  881
  927
  975
  1,025
  1,078
  1,133
  1,191
  1,252
  1,315
  1,382
  1,452

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,893
  8,405
  8,977
  9,571
  10,189
  10,832
  11,502
  12,199
  12,926
  13,683
  14,473
  15,298
  16,159
  17,058
  17,998
  18,980
  20,007
  21,082
  22,206
  23,383
  24,615
  25,906
  27,258
  28,675
  30,159
  31,715
  33,347
  35,057
  36,851
  38,732
  40,705
Adjusted assets (=assets-cash), $m
  7,893
  8,405
  8,977
  9,571
  10,189
  10,832
  11,502
  12,199
  12,926
  13,683
  14,473
  15,298
  16,159
  17,058
  17,998
  18,980
  20,007
  21,082
  22,206
  23,383
  24,615
  25,906
  27,258
  28,675
  30,159
  31,715
  33,347
  35,057
  36,851
  38,732
  40,705
Revenue / Adjusted assets
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
  0.076
Average production assets, $m
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  36
  37
  39
  41
  44
  46
  48
  51
  53
  56
  59
Working capital, $m
  -396
  -176
  -188
  -200
  -213
  -226
  -240
  -255
  -270
  -286
  -302
  -320
  -338
  -357
  -376
  -397
  -418
  -441
  -464
  -489
  -514
  -541
  -570
  -599
  -630
  -663
  -697
  -733
  -770
  -809
  -851
Total debt, $m
  3,524
  3,765
  4,035
  4,316
  4,608
  4,913
  5,229
  5,559
  5,903
  6,261
  6,635
  7,025
  7,432
  7,858
  8,302
  8,767
  9,252
  9,761
  10,293
  10,849
  11,432
  12,043
  12,682
  13,352
  14,054
  14,790
  15,562
  16,371
  17,219
  18,109
  19,042
Total liabilities, $m
  3,735
  3,976
  4,246
  4,527
  4,819
  5,124
  5,440
  5,770
  6,114
  6,472
  6,846
  7,236
  7,643
  8,069
  8,513
  8,978
  9,463
  9,972
  10,504
  11,060
  11,643
  12,254
  12,893
  13,563
  14,265
  15,001
  15,773
  16,582
  17,430
  18,320
  19,253
Total equity, $m
  4,158
  4,430
  4,731
  5,044
  5,370
  5,709
  6,061
  6,429
  6,812
  7,211
  7,628
  8,062
  8,516
  8,990
  9,485
  10,002
  10,544
  11,110
  11,703
  12,323
  12,972
  13,652
  14,365
  15,112
  15,894
  16,714
  17,574
  18,475
  19,420
  20,412
  21,451
Total liabilities and equity, $m
  7,893
  8,406
  8,977
  9,571
  10,189
  10,833
  11,501
  12,199
  12,926
  13,683
  14,474
  15,298
  16,159
  17,059
  17,998
  18,980
  20,007
  21,082
  22,207
  23,383
  24,615
  25,906
  27,258
  28,675
  30,159
  31,715
  33,347
  35,057
  36,850
  38,732
  40,704
Debt-to-equity ratio
  0.848
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.890
  0.890
  0.890
  0.890
  0.890
Adjusted equity ratio
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  439
  305
  326
  347
  369
  392
  416
  440
  466
  493
  521
  550
  581
  613
  646
  681
  717
  755
  795
  837
  881
  927
  975
  1,025
  1,078
  1,133
  1,191
  1,252
  1,315
  1,382
  1,452
Depreciation, amort., depletion, $m
  12
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
Funds from operations, $m
  480
  308
  329
  350
  372
  395
  419
  444
  470
  497
  525
  555
  585
  618
  651
  686
  723
  762
  802
  844
  888
  934
  983
  1,033
  1,086
  1,142
  1,201
  1,262
  1,326
  1,393
  1,464
Change in working capital, $m
  119
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
Cash from operations, $m
  361
  322
  341
  362
  385
  408
  433
  458
  485
  513
  542
  572
  603
  636
  671
  707
  745
  784
  825
  868
  914
  961
  1,011
  1,063
  1,117
  1,175
  1,235
  1,298
  1,364
  1,433
  1,505
Maintenance CAPEX, $m
  0
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
New CAPEX, $m
  -388
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
Cash from investing activities, $m
  -550
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
Free cash flow, $m
  -189
  319
  337
  359
  381
  405
  429
  454
  480
  508
  537
  566
  598
  630
  665
  700
  738
  777
  818
  860
  905
  952
  1,001
  1,053
  1,107
  1,164
  1,223
  1,285
  1,351
  1,419
  1,491
Issuance/(repayment) of debt, $m
  261
  241
  270
  281
  292
  304
  317
  330
  344
  358
  374
  390
  407
  425
  444
  465
  486
  508
  532
  557
  583
  610
  639
  670
  702
  736
  772
  809
  848
  890
  933
Issuance/(repurchase) of shares, $m
  162
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  298
  241
  270
  281
  292
  304
  317
  330
  344
  358
  374
  390
  407
  425
  444
  465
  486
  508
  532
  557
  583
  610
  639
  670
  702
  736
  772
  809
  848
  890
  933
Total cash flow (excl. dividends), $m
  109
  560
  608
  640
  674
  709
  746
  784
  824
  866
  910
  957
  1,005
  1,056
  1,109
  1,165
  1,223
  1,285
  1,349
  1,417
  1,488
  1,563
  1,641
  1,723
  1,809
  1,900
  1,995
  2,095
  2,199
  2,309
  2,425
Retained Cash Flow (-), $m
  -498
  -272
  -301
  -313
  -326
  -339
  -353
  -367
  -383
  -399
  -416
  -435
  -454
  -474
  -495
  -518
  -541
  -566
  -593
  -620
  -649
  -680
  -713
  -747
  -782
  -820
  -860
  -901
  -945
  -991
  -1,040
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  288
  307
  327
  348
  370
  393
  416
  441
  467
  494
  522
  551
  582
  614
  647
  682
  719
  757
  797
  839
  883
  928
  977
  1,027
  1,080
  1,135
  1,193
  1,254
  1,318
  1,385
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  265
  257
  248
  236
  223
  207
  191
  173
  155
  137
  120
  102
  86
  72
  58
  46
  36
  28
  21
  15
  11
  7
  5
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Canadian Apartment Properties Real Estate Investment Trust (CAP REIT) operates as an open-end real estate investment trust. It owns interests in multi-unit residential rental properties, including apartments, townhouses, and land lease adult lifestyle communities located in Canada. As of December 31, 2007, the company had ownership interests in a portfolio of 27,853 residential suites and 2 Ontario adult lifestyle land lease communities comprising 1,258 sites. As a Mutual Fund Trust, CAP REIT is required to distribute its income to its Unit holders to such an extent that it will not be liable for income tax under Part I of the Income Tax Act (Canada). The company was founded in 1997 and is headquartered in Toronto, Canada.

FINANCIAL RATIOS  of  Canadian Apartment Properties Real Estat (CAR-UN)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 7.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 12.3
Price to Free Cash Flow -164.5
Growth Rates
Sales Growth Rate 11.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -58.4%
Cap. Spend. - 3 Yr. Gr. Rate -1.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 79.2%
Total Debt to Equity 84.8%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 10.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 60.8%
EBITDA Margin 93.8%
EBITDA Margin - 3 Yr. Avg. 87.7%
Operating Margin 89.8%
Oper. Margin - 3 Yr. Avg. 85.5%
Pre-Tax Margin 73.5%
Pre-Tax Margin - 3 Yr. Avg. 67.1%
Net Profit Margin 73.5%
Net Profit Margin - 3 Yr. Avg. 67.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 24.8%

CAR-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CAR-UN stock intrinsic value calculation we used $597 million for the last fiscal year's total revenue generated by Canadian Apartment Properties Real Estat. The default revenue input number comes from 2016 income statement of Canadian Apartment Properties Real Estat. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CAR-UN stock valuation model: a) initial revenue growth rate of 7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.8%, whose default value for CAR-UN is calculated based on our internal credit rating of Canadian Apartment Properties Real Estat, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Canadian Apartment Properties Real Estat.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CAR-UN stock the variable cost ratio is equal to 15.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CAR-UN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Canadian Apartment Properties Real Estat.

Corporate tax rate of 27% is the nominal tax rate for Canadian Apartment Properties Real Estat. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CAR-UN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CAR-UN are equal to 1.9%.

Life of production assets of 1 years is the average useful life of capital assets used in Canadian Apartment Properties Real Estat operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CAR-UN is equal to -27.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4158 million for Canadian Apartment Properties Real Estat - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 135.593 million for Canadian Apartment Properties Real Estat is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Canadian Apartment Properties Real Estat at the current share price and the inputted number of shares is $4.5 billion.

RELATED COMPANIES Price Int.Val. Rating
Stock chart of CAR-UN Financial statements of CAR-UN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.