Intrinsic value of Arbor Realty Trust - ABR

Previous Close

$8.28

  Intrinsic Value

$49.70

stock screener

  Rating & Target

str. buy

+500%

  Value-price divergence*

+5000%

Previous close

$8.28

 
Intrinsic value

$49.70

 
Up/down potential

+500%

 
Rating

str. buy

 
Value-price divergence*

+5000%

Our model is not good at valuating stocks of financial companies, such as ABR.

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

We calculate the intrinsic value of ABR 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 0.4

 

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, %
  48.95
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  213
  341
  527
  787
  1,143
  1,612
  2,216
  2,975
  3,906
  5,026
  6,348
  7,883
  9,638
  11,616
  13,821
  16,251
  18,904
  21,776
  24,862
  28,158
  31,658
  35,358
  39,253
  43,342
  47,622
  52,092
  56,754
  61,608
  66,659
  71,910
  77,369
Variable operating expenses, $m
 
  248
  381
  569
  825
  1,162
  1,597
  2,142
  2,812
  3,618
  4,569
  5,670
  6,932
  8,356
  9,942
  11,690
  13,598
  15,664
  17,884
  20,255
  22,772
  25,434
  28,236
  31,177
  34,256
  37,471
  40,824
  44,316
  47,949
  51,727
  55,653
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
  175
  248
  381
  569
  825
  1,162
  1,597
  2,142
  2,812
  3,618
  4,569
  5,670
  6,932
  8,356
  9,942
  11,690
  13,598
  15,664
  17,884
  20,255
  22,772
  25,434
  28,236
  31,177
  34,256
  37,471
  40,824
  44,316
  47,949
  51,727
  55,653
Operating income, $m
  39
  93
  145
  218
  318
  450
  619
  832
  1,094
  1,408
  1,779
  2,213
  2,705
  3,260
  3,879
  4,561
  5,306
  6,112
  6,978
  7,903
  8,886
  9,924
  11,017
  12,165
  13,366
  14,621
  15,929
  17,292
  18,710
  20,184
  21,716
EBITDA, $m
  44
  102
  158
  237
  343
  485
  666
  894
  1,174
  1,511
  1,908
  2,370
  2,897
  3,492
  4,155
  4,885
  5,683
  6,546
  7,474
  8,465
  9,517
  10,629
  11,800
  13,029
  14,316
  15,660
  17,061
  18,521
  20,039
  21,618
  23,259
Interest expense (income), $m
  53
  71
  120
  193
  294
  433
  616
  852
  1,148
  1,511
  1,948
  2,464
  3,063
  3,748
  4,520
  5,380
  6,329
  7,364
  8,484
  9,689
  10,974
  12,340
  13,784
  15,304
  16,899
  18,569
  20,314
  22,133
  24,027
  25,998
  28,047
Earnings before tax, $m
  63
  22
  25
  26
  24
  17
  3
  -20
  -54
  -103
  -169
  -252
  -358
  -487
  -641
  -819
  -1,023
  -1,252
  -1,506
  -1,785
  -2,089
  -2,416
  -2,766
  -3,139
  -3,533
  -3,948
  -4,384
  -4,841
  -5,317
  -5,814
  -6,331
Tax expense, $m
  1
  6
  7
  7
  6
  5
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  50
  16
  18
  19
  17
  12
  2
  -20
  -54
  -103
  -169
  -252
  -358
  -487
  -641
  -819
  -1,023
  -1,252
  -1,506
  -1,785
  -2,089
  -2,416
  -2,766
  -3,139
  -3,533
  -3,948
  -4,384
  -4,841
  -5,317
  -5,814
  -6,331

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  139
  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
  2,971
  4,605
  7,115
  10,641
  15,440
  21,783
  29,947
  40,197
  52,781
  67,917
  85,784
  106,525
  130,237
  156,979
  186,774
  219,613
  255,463
  294,272
  335,977
  380,512
  427,808
  477,805
  530,449
  585,702
  643,538
  703,948
  766,940
  832,541
  900,795
  971,763
  1,045,526
Adjusted assets (=assets-cash), $m
  2,832
  4,605
  7,115
  10,641
  15,440
  21,783
  29,947
  40,197
  52,781
  67,917
  85,784
  106,525
  130,237
  156,979
  186,774
  219,613
  255,463
  294,272
  335,977
  380,512
  427,808
  477,805
  530,449
  585,702
  643,538
  703,948
  766,940
  832,541
  900,795
  971,763
  1,045,526
Revenue / Adjusted assets
  0.075
  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
  76
  122
  188
  281
  408
  575
  791
  1,062
  1,394
  1,794
  2,266
  2,814
  3,441
  4,147
  4,934
  5,802
  6,749
  7,774
  8,876
  10,052
  11,302
  12,623
  14,013
  15,473
  17,001
  18,597
  20,261
  21,994
  23,797
  25,672
  27,621
Working capital, $m
  0
  -34
  -53
  -79
  -114
  -161
  -222
  -297
  -391
  -503
  -635
  -788
  -964
  -1,162
  -1,382
  -1,625
  -1,890
  -2,178
  -2,486
  -2,816
  -3,166
  -3,536
  -3,925
  -4,334
  -4,762
  -5,209
  -5,675
  -6,161
  -6,666
  -7,191
  -7,737
Total debt, $m
  2,018
  3,433
  5,504
  8,413
  12,372
  17,605
  24,340
  32,797
  43,179
  55,665
  70,406
  87,517
  107,079
  129,142
  153,723
  180,815
  210,391
  242,408
  276,815
  313,556
  352,576
  393,823
  437,255
  482,838
  530,553
  580,391
  632,360
  686,481
  742,790
  801,339
  862,193
Total liabilities, $m
  2,384
  3,799
  5,870
  8,779
  12,738
  17,971
  24,706
  33,163
  43,545
  56,031
  70,772
  87,883
  107,445
  129,508
  154,089
  181,181
  210,757
  242,774
  277,181
  313,922
  352,942
  394,189
  437,621
  483,204
  530,919
  580,757
  632,726
  686,847
  743,156
  801,705
  862,559
Total equity, $m
  587
  806
  1,245
  1,862
  2,702
  3,812
  5,241
  7,034
  9,237
  11,885
  15,012
  18,642
  22,791
  27,471
  32,685
  38,432
  44,706
  51,498
  58,796
  66,590
  74,866
  83,616
  92,829
  102,498
  112,619
  123,191
  134,215
  145,695
  157,639
  170,059
  182,967
Total liabilities and equity, $m
  2,971
  4,605
  7,115
  10,641
  15,440
  21,783
  29,947
  40,197
  52,782
  67,916
  85,784
  106,525
  130,236
  156,979
  186,774
  219,613
  255,463
  294,272
  335,977
  380,512
  427,808
  477,805
  530,450
  585,702
  643,538
  703,948
  766,941
  832,542
  900,795
  971,764
  1,045,526
Debt-to-equity ratio
  3.438
  4.260
  4.420
  4.520
  4.580
  4.620
  4.640
  4.660
  4.670
  4.680
  4.690
  4.690
  4.700
  4.700
  4.700
  4.700
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
  4.710
Adjusted equity ratio
  0.158
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  50
  16
  18
  19
  17
  12
  2
  -20
  -54
  -103
  -169
  -252
  -358
  -487
  -641
  -819
  -1,023
  -1,252
  -1,506
  -1,785
  -2,089
  -2,416
  -2,766
  -3,139
  -3,533
  -3,948
  -4,384
  -4,841
  -5,317
  -5,814
  -6,331
Depreciation, amort., depletion, $m
  5
  9
  13
  18
  25
  35
  47
  62
  81
  103
  129
  157
  192
  232
  276
  324
  377
  434
  496
  562
  631
  705
  783
  864
  950
  1,039
  1,132
  1,229
  1,329
  1,434
  1,543
Funds from operations, $m
  -202
  26
  31
  37
  43
  47
  49
  42
  26
  0
  -40
  -94
  -166
  -256
  -365
  -495
  -646
  -817
  -1,010
  -1,224
  -1,457
  -1,711
  -1,983
  -2,274
  -2,583
  -2,909
  -3,252
  -3,612
  -3,988
  -4,380
  -4,788
Change in working capital, $m
  -4
  -13
  -19
  -26
  -36
  -47
  -60
  -76
  -93
  -112
  -132
  -153
  -175
  -198
  -220
  -243
  -265
  -287
  -309
  -330
  -350
  -370
  -390
  -409
  -428
  -447
  -466
  -485
  -505
  -525
  -546
Cash from operations, $m
  -198
  39
  50
  63
  78
  94
  110
  118
  119
  112
  92
  59
  10
  -58
  -145
  -252
  -380
  -530
  -702
  -894
  -1,107
  -1,341
  -1,594
  -1,866
  -2,155
  -2,462
  -2,786
  -3,127
  -3,483
  -3,855
  -4,242
Maintenance CAPEX, $m
  0
  -4
  -7
  -11
  -16
  -23
  -32
  -44
  -59
  -78
  -100
  -127
  -157
  -192
  -232
  -276
  -324
  -377
  -434
  -496
  -562
  -631
  -705
  -783
  -864
  -950
  -1,039
  -1,132
  -1,229
  -1,329
  -1,434
New CAPEX, $m
  0
  -46
  -66
  -93
  -127
  -168
  -216
  -271
  -332
  -400
  -472
  -548
  -626
  -706
  -787
  -868
  -947
  -1,025
  -1,102
  -1,177
  -1,249
  -1,321
  -1,391
  -1,460
  -1,528
  -1,596
  -1,664
  -1,733
  -1,803
  -1,875
  -1,949
Cash from investing activities, $m
  -202
  -50
  -73
  -104
  -143
  -191
  -248
  -315
  -391
  -478
  -572
  -675
  -783
  -898
  -1,019
  -1,144
  -1,271
  -1,402
  -1,536
  -1,673
  -1,811
  -1,952
  -2,096
  -2,243
  -2,392
  -2,546
  -2,703
  -2,865
  -3,032
  -3,204
  -3,383
Free cash flow, $m
  -400
  -11
  -23
  -40
  -64
  -96
  -138
  -197
  -272
  -366
  -480
  -616
  -774
  -956
  -1,163
  -1,395
  -1,651
  -1,932
  -2,238
  -2,567
  -2,919
  -3,293
  -3,690
  -4,108
  -4,548
  -5,008
  -5,489
  -5,991
  -6,515
  -7,059
  -7,625
Issuance/(repayment) of debt, $m
  379
  1,415
  2,071
  2,909
  3,959
  5,233
  6,735
  8,457
  10,382
  12,487
  14,741
  17,111
  19,562
  22,062
  24,581
  27,092
  29,576
  32,017
  34,407
  36,741
  39,020
  41,247
  43,432
  45,584
  47,715
  49,838
  51,969
  54,121
  56,309
  58,549
  60,854
Issuance/(repurchase) of shares, $m
  0
  285
  421
  598
  823
  1,098
  1,426
  1,814
  2,257
  2,752
  3,296
  3,881
  4,508
  5,167
  5,855
  6,566
  7,296
  8,043
  8,804
  9,579
  10,366
  11,166
  11,979
  12,808
  13,654
  14,520
  15,408
  16,321
  17,262
  18,234
  19,240
Cash from financing (excl. dividends), $m  
  388
  1,700
  2,492
  3,507
  4,782
  6,331
  8,161
  10,271
  12,639
  15,239
  18,037
  20,992
  24,070
  27,229
  30,436
  33,658
  36,872
  40,060
  43,211
  46,320
  49,386
  52,413
  55,411
  58,392
  61,369
  64,358
  67,377
  70,442
  73,571
  76,783
  80,094
Total cash flow (excl. dividends), $m
  -11
  1,690
  2,469
  3,467
  4,717
  6,235
  8,023
  10,073
  12,366
  14,873
  17,557
  20,377
  23,296
  26,273
  29,272
  32,263
  35,221
  38,128
  40,974
  43,753
  46,467
  49,120
  51,721
  54,284
  56,821
  59,350
  61,887
  64,450
  67,056
  69,723
  72,468
Retained Cash Flow (-), $m
  -22
  -301
  -439
  -617
  -840
  -1,110
  -1,429
  -1,814
  -2,257
  -2,752
  -3,296
  -3,881
  -4,508
  -5,167
  -5,855
  -6,566
  -7,296
  -8,043
  -8,804
  -9,579
  -10,366
  -11,166
  -11,979
  -12,808
  -13,654
  -14,520
  -15,408
  -16,321
  -17,262
  -18,234
  -19,240
Prev. year cash balance distribution, $m
 
  83
  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
 
  1,470
  2,029
  2,850
  3,877
  5,125
  6,594
  8,260
  10,110
  12,121
  14,261
  16,495
  18,788
  21,106
  23,418
  25,697
  27,925
  30,085
  32,169
  34,174
  36,101
  37,954
  39,742
  41,476
  43,167
  44,830
  46,479
  48,129
  49,795
  51,490
  53,229
Discount rate, %
 
  12.30
  12.92
  13.56
  14.24
  14.95
  15.70
  16.48
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.19
  24.35
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.65
  43.73
  45.92
  48.22
  50.63
PV of cash for distribution, $m
 
  1,309
  1,592
  1,946
  2,277
  2,553
  2,749
  2,839
  2,819
  2,697
  2,487
  2,213
  1,900
  1,576
  1,263
  977
  731
  528
  368
  248
  161
  101
  61
  35
  20
  11
  5
  3
  1
  1
  0
Current shareholders' claim on cash, %
  100
  56.2
  32.6
  19.6
  12.2
  7.8
  5.1
  3.5
  2.4
  1.7
  1.2
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Arbor Realty Trust, Inc., a real estate finance company, invests in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets. The company primarily invests in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity, discounted mortgage notes, and other real estate-related assets. It offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower's equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing by making preferred equity investments in entities that directly or indirectly own real property. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2003 and is based in Uniondale, New York.

FINANCIAL RATIOS  of  Arbor Realty Trust (ABR)

Valuation Ratios
P/E Ratio 8.5
Price to Sales 2
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow -2.1
Price to Free Cash Flow -2.1
Growth Rates
Sales Growth Rate 49%
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 NaN
Current Ratio NaN
LT Debt to Equity 343.8%
Total Debt to Equity 343.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 8.7%
Return On Equity - 3 Yr. Avg. 12.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 64.3%
Gross Margin - 3 Yr. Avg. 60.2%
EBITDA Margin 56.8%
EBITDA Margin - 3 Yr. Avg. 76.5%
Operating Margin 17.8%
Oper. Margin - 3 Yr. Avg. 20.5%
Pre-Tax Margin 29.6%
Pre-Tax Margin - 3 Yr. Avg. 44.2%
Net Profit Margin 23.5%
Net Profit Margin - 3 Yr. Avg. 42.2%
Effective Tax Rate 1.6%
Eff/ Tax Rate - 3 Yr. Avg. 0.5%
Payout Ratio 78%

ABR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABR stock intrinsic value calculation we used $213 million for the last fiscal year's total revenue generated by Arbor Realty Trust. The default revenue input number comes from 2016 income statement of Arbor Realty Trust. 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 ABR stock valuation model: a) initial revenue growth rate of 60% 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 12.3%, whose default value for ABR is calculated based on our internal credit rating of Arbor Realty Trust, 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 Arbor Realty Trust.
    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 ABR stock the variable cost ratio is equal to 73.2%.

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 ABR 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 Arbor Realty Trust.

Corporate tax rate of 27% is the nominal tax rate for Arbor Realty Trust. 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 ABR 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 ABR are equal to 35.7%.

Life of production assets of 17.9 years is the average useful life of capital assets used in Arbor Realty Trust 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 ABR is equal to -10%. 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 - $587 million for Arbor Realty Trust - 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 51.331 million for Arbor Realty Trust 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 Arbor Realty Trust at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Top Ranked Income Stocks to Buy for July 19th   [Jul-19-17 09:59AM  Zacks]
▶ Arbor Realty Trust reports 1Q results   [May-05-17 08:14AM  Associated Press]
▶ Arbor Realty Trust Declares Preferred Stock Dividends   [May-03-17 04:05PM  GlobeNewswire]
▶ Top Ranked Income Stocks to Buy for May 1st   [May-01-17 07:23AM  Zacks]
▶ How to Uncover Institutional Buying   [Apr-19-17 02:06PM  Zacks]
▶ Top Ranked Income Stocks to Buy for April 17th   [Apr-17-17 11:37AM  Zacks]
▶ Top Ranked Income Stocks to Buy for April 12th   [Apr-12-17 10:53AM  Zacks]
▶ Top Ranked Income Stocks to Buy for April 6th   [Apr-06-17 11:05AM  Zacks]
▶ Top Ranked Income Stocks to Buy for April 4th   [Apr-04-17 09:21AM  Zacks]
▶ New Strong Buy Stocks for April 3rd   [Apr-03-17 09:26AM  Zacks]
▶ Strong Buys at New Highs   [Mar-29-17 06:47PM  Zacks]
▶ Strong Buys at New Highs   [06:47PM  at Investopedia]
▶ New Strong Buy Stocks for March 23rd   [Mar-23-17 09:45AM  Zacks]
▶ Arbor Realty Trust Declares Preferred Stock Dividends   [Feb-03-17 10:00AM  GlobeNewswire]
▶ How Arbor Realty Trust, Inc. (ABR) Stacks Up Against Its Peers   [Dec-13-16 01:42AM  at Insider Monkey]
▶ Arbor Realty Trust Declares Preferred Stock Dividends   [Nov-04-16 09:31AM  GlobeNewswire]
Stock chart of ABR Financial statements of ABR Annual reports of ABR
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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