Intrinsic value of First Capital Realty Inc. - FCR

Previous Close

$20.90

  Intrinsic Value

$4.95

stock screener

  Rating & Target

str. sell

-76%

Previous close

$20.90

 
Intrinsic value

$4.95

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of FCR 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  3.21
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  676
  690
  705
  724
  744
  766
  791
  818
  847
  879
  912
  948
  987
  1,028
  1,072
  1,118
  1,167
  1,219
  1,273
  1,331
  1,393
  1,457
  1,525
  1,597
  1,672
  1,752
  1,836
  1,924
  2,017
  2,115
  2,217
Variable operating expenses, $m
 
  416
  426
  437
  449
  463
  478
  494
  512
  531
  551
  573
  596
  621
  647
  675
  705
  736
  769
  804
  841
  880
  921
  965
  1,010
  1,058
  1,109
  1,162
  1,218
  1,277
  1,339
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
  200
  416
  426
  437
  449
  463
  478
  494
  512
  531
  551
  573
  596
  621
  647
  675
  705
  736
  769
  804
  841
  880
  921
  965
  1,010
  1,058
  1,109
  1,162
  1,218
  1,277
  1,339
Operating income, $m
  476
  273
  279
  287
  295
  303
  313
  324
  336
  348
  361
  376
  391
  407
  424
  443
  462
  483
  504
  527
  551
  577
  604
  632
  662
  694
  727
  762
  799
  837
  878
EBITDA, $m
  477
  274
  280
  288
  296
  305
  315
  325
  337
  349
  363
  377
  392
  409
  426
  444
  464
  484
  506
  529
  554
  579
  606
  635
  665
  697
  730
  765
  802
  841
  882
Interest expense (income), $m
  141
  144
  148
  153
  157
  163
  168
  175
  182
  190
  198
  207
  216
  226
  237
  248
  260
  273
  287
  301
  316
  332
  349
  367
  386
  406
  426
  448
  472
  496
  521
Earnings before tax, $m
  476
  129
  131
  134
  137
  141
  145
  149
  154
  158
  163
  169
  175
  181
  187
  194
  202
  209
  217
  226
  235
  245
  255
  265
  276
  288
  301
  314
  327
  342
  357
Tax expense, $m
  90
  35
  35
  36
  37
  38
  39
  40
  41
  43
  44
  46
  47
  49
  51
  52
  54
  57
  59
  61
  63
  66
  69
  72
  75
  78
  81
  85
  88
  92
  96
Net income, $m
  383
  94
  96
  98
  100
  103
  106
  109
  112
  116
  119
  123
  128
  132
  137
  142
  147
  153
  159
  165
  172
  179
  186
  194
  202
  210
  219
  229
  239
  249
  260

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  25
  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
  9,105
  9,318
  9,532
  9,777
  10,052
  10,357
  10,691
  11,055
  11,450
  11,874
  12,330
  12,817
  13,338
  13,891
  14,480
  15,105
  15,767
  16,467
  17,208
  17,991
  18,818
  19,690
  20,610
  21,580
  22,601
  23,677
  24,810
  26,002
  27,257
  28,577
  29,966
Adjusted assets (=assets-cash), $m
  9,080
  9,318
  9,532
  9,777
  10,052
  10,357
  10,691
  11,055
  11,450
  11,874
  12,330
  12,817
  13,338
  13,891
  14,480
  15,105
  15,767
  16,467
  17,208
  17,991
  18,818
  19,690
  20,610
  21,580
  22,601
  23,677
  24,810
  26,002
  27,257
  28,577
  29,966
Revenue / Adjusted assets
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
Average production assets, $m
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
Working capital, $m
  -555
  -95
  -97
  -100
  -103
  -106
  -109
  -113
  -117
  -121
  -126
  -131
  -136
  -142
  -148
  -154
  -161
  -168
  -176
  -184
  -192
  -201
  -210
  -220
  -231
  -242
  -253
  -266
  -278
  -292
  -306
Total debt, $m
  4,018
  4,121
  4,236
  4,368
  4,516
  4,680
  4,860
  5,056
  5,268
  5,496
  5,741
  6,004
  6,284
  6,582
  6,898
  7,234
  7,590
  7,967
  8,366
  8,787
  9,232
  9,701
  10,196
  10,718
  11,267
  11,846
  12,456
  13,097
  13,772
  14,483
  15,230
Total liabilities, $m
  4,909
  5,013
  5,128
  5,260
  5,408
  5,572
  5,752
  5,948
  6,160
  6,388
  6,633
  6,896
  7,176
  7,474
  7,790
  8,126
  8,482
  8,859
  9,258
  9,679
  10,124
  10,593
  11,088
  11,610
  12,159
  12,738
  13,348
  13,989
  14,664
  15,375
  16,122
Total equity, $m
  4,195
  4,305
  4,404
  4,517
  4,644
  4,785
  4,939
  5,108
  5,290
  5,486
  5,696
  5,922
  6,162
  6,418
  6,690
  6,978
  7,284
  7,608
  7,950
  8,312
  8,694
  9,097
  9,522
  9,970
  10,442
  10,939
  11,462
  12,013
  12,593
  13,203
  13,844
Total liabilities and equity, $m
  9,104
  9,318
  9,532
  9,777
  10,052
  10,357
  10,691
  11,056
  11,450
  11,874
  12,329
  12,818
  13,338
  13,892
  14,480
  15,104
  15,766
  16,467
  17,208
  17,991
  18,818
  19,690
  20,610
  21,580
  22,601
  23,677
  24,810
  26,002
  27,257
  28,578
  29,966
Debt-to-equity ratio
  0.958
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.990
  1.000
  1.000
  1.010
  1.010
  1.020
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
  1.070
  1.080
  1.080
  1.080
  1.090
  1.090
  1.090
  1.100
  1.100
Adjusted equity ratio
  0.459
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  383
  94
  96
  98
  100
  103
  106
  109
  112
  116
  119
  123
  128
  132
  137
  142
  147
  153
  159
  165
  172
  179
  186
  194
  202
  210
  219
  229
  239
  249
  260
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
Funds from operations, $m
  108
  95
  97
  99
  101
  104
  107
  110
  113
  117
  121
  125
  129
  134
  138
  144
  149
  155
  161
  167
  174
  181
  188
  196
  204
  213
  222
  232
  242
  253
  264
Change in working capital, $m
  -149
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
Cash from operations, $m
  257
  97
  99
  101
  104
  107
  110
  114
  117
  121
  125
  130
  134
  139
  144
  150
  156
  162
  168
  175
  182
  190
  198
  206
  215
  224
  234
  244
  255
  266
  278
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -570
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
Free cash flow, $m
  -313
  96
  98
  100
  103
  106
  109
  112
  116
  120
  124
  128
  133
  137
  142
  148
  154
  160
  166
  173
  180
  187
  195
  203
  212
  221
  230
  240
  251
  262
  274
Issuance/(repayment) of debt, $m
  235
  128
  115
  132
  148
  164
  180
  196
  212
  228
  245
  262
  280
  298
  317
  336
  356
  377
  399
  421
  445
  469
  495
  522
  550
  579
  609
  642
  675
  710
  747
Issuance/(repurchase) of shares, $m
  291
  15
  3
  15
  27
  38
  49
  59
  70
  81
  91
  102
  113
  124
  135
  147
  159
  171
  184
  197
  210
  224
  239
  254
  270
  287
  304
  322
  341
  360
  381
Cash from financing (excl. dividends), $m  
  527
  143
  118
  147
  175
  202
  229
  255
  282
  309
  336
  364
  393
  422
  452
  483
  515
  548
  583
  618
  655
  693
  734
  776
  820
  866
  913
  964
  1,016
  1,070
  1,128
Total cash flow (excl. dividends), $m
  213
  239
  216
  247
  278
  308
  338
  368
  398
  429
  460
  492
  525
  559
  594
  631
  668
  707
  748
  790
  835
  881
  929
  979
  1,031
  1,086
  1,144
  1,204
  1,267
  1,333
  1,402
Retained Cash Flow (-), $m
  -555
  -110
  -99
  -113
  -127
  -141
  -154
  -168
  -182
  -196
  -211
  -225
  -240
  -256
  -272
  -289
  -306
  -324
  -342
  -362
  -382
  -403
  -425
  -448
  -472
  -497
  -523
  -551
  -580
  -610
  -641
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
 
  130
  117
  134
  151
  167
  183
  199
  216
  233
  250
  267
  285
  303
  322
  342
  362
  384
  406
  429
  453
  478
  504
  531
  559
  589
  620
  653
  687
  723
  760
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  119
  99
  102
  103
  101
  97
  92
  86
  78
  70
  62
  54
  46
  38
  32
  25
  20
  15
  12
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.7
  99.6
  99.3
  98.9
  98.2
  97.4
  96.4
  95.4
  94.2
  92.9
  91.6
  90.2
  88.7
  87.2
  85.6
  84.1
  82.5
  80.9
  79.3
  77.6
  76.0
  74.4
  72.8
  71.2
  69.7
  68.1
  66.6
  65.1
  63.6
  62.1

First Capital Realty Inc. (FCR) is engaged in the business of acquiring, developing, redeveloping, owning and managing urban retail-centered properties. The Company owns, develops and manages grocery anchored, urban properties where people live and shop. The Company operates through three segments: Eastern Region, which includes operations primarily in Quebec and Ottawa; Central Region, which includes the Company's Ontario operations excluding Ottawa; and Western Region, which includes operations in Alberta and British Columbia. The Company holds interest in approximately 160 properties, totaling approximately 25.3 million square feet of gross leasable area. The Company holds interest in properties, which include Peninsula Village, 225 Peel St. (Griffintown), Cliffcrest Plaza, 338 Wellington Rd. (Wellington Corners), 2415-2595 Rue de Salaberry (Galeries Normandie) and Avenue Rd. & Lawrence Ave. assembly. The Company's subsidiary is First Capital Holdings Trust.

FINANCIAL RATIOS  of  First Capital Realty Inc. (FCR)

Valuation Ratios
P/E Ratio 13.3
Price to Sales 7.5
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 19.8
Price to Free Cash Flow 19.8
Growth Rates
Sales Growth Rate 3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 84.2%
Total Debt to Equity 95.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 9.8%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 62.4%
Gross Margin - 3 Yr. Avg. 62.6%
EBITDA Margin 91.4%
EBITDA Margin - 3 Yr. Avg. 71.3%
Operating Margin 70.4%
Oper. Margin - 3 Yr. Avg. 49.3%
Pre-Tax Margin 70.4%
Pre-Tax Margin - 3 Yr. Avg. 49.4%
Net Profit Margin 56.7%
Net Profit Margin - 3 Yr. Avg. 39.4%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 20%
Payout Ratio 52.2%

FCR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCR stock intrinsic value calculation we used $676 million for the last fiscal year's total revenue generated by First Capital Realty Inc.. The default revenue input number comes from 2016 income statement of First Capital Realty Inc.. 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 FCR stock valuation model: a) initial revenue growth rate of 2% 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 8.7%, whose default value for FCR is calculated based on our internal credit rating of First Capital Realty Inc., 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 First Capital Realty Inc..
    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 FCR stock the variable cost ratio is equal to 60.4%.

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 FCR 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 3.6% for First Capital Realty Inc..

Corporate tax rate of 27% is the nominal tax rate for First Capital Realty Inc.. 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 FCR 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 FCR are equal to 1%.

Life of production assets of 6.5 years is the average useful life of capital assets used in First Capital Realty Inc. 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 FCR is equal to -13.8%. 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 - $4195 million for First Capital Realty Inc. - 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 244.208 million for First Capital Realty Inc. 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 First Capital Realty Inc. at the current share price and the inputted number of shares is $5.1 billion.

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Financial statements of FCR
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.

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