Intrinsic value of Arbor Realty Trust - ABR

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$8.66

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$8.66

 
Intrinsic value

$561.13

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence* premium content

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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
  121
  194
  297
  436
  621
  858
  1,156
  1,522
  1,962
  2,482
  3,085
  3,774
  4,552
  5,418
  6,373
  7,415
  8,544
  9,756
  11,051
  12,427
  13,880
  15,411
  17,018
  18,699
  20,456
  22,288
  24,195
  26,180
  28,243
Earnings before tax, $m
  63
  22
  24
  24
  21
  14
  -1
  -26
  -62
  -114
  -183
  -269
  -380
  -514
  -672
  -857
  -1,067
  -1,303
  -1,565
  -1,853
  -2,166
  -2,503
  -2,863
  -3,246
  -3,651
  -4,078
  -4,527
  -4,996
  -5,486
  -5,996
  -6,528
Tax expense, $m
  1
  6
  6
  7
  6
  4
  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
Net income, $m
  50
  16
  18
  18
  16
  10
  -1
  -26
  -62
  -114
  -183
  -269
  -380
  -514
  -672
  -857
  -1,067
  -1,303
  -1,565
  -1,853
  -2,166
  -2,503
  -2,863
  -3,246
  -3,651
  -4,078
  -4,527
  -4,996
  -5,486
  -5,996
  -6,528

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
  4,544
  7,020
  10,499
  15,234
  21,493
  29,547
  39,661
  52,078
  67,011
  84,641
  105,104
  128,500
  154,886
  184,284
  216,685
  252,057
  290,348
  331,497
  375,438
  422,104
  471,434
  523,377
  577,893
  634,958
  694,562
  756,715
  821,441
  888,785
  958,807
  1,031,586
Adjusted assets (=assets-cash), $m
  2,832
  4,544
  7,020
  10,499
  15,234
  21,493
  29,547
  39,661
  52,078
  67,011
  84,641
  105,104
  128,500
  154,886
  184,284
  216,685
  252,057
  290,348
  331,497
  375,438
  422,104
  471,434
  523,377
  577,893
  634,958
  694,562
  756,715
  821,441
  888,785
  958,807
  1,031,586
Revenue / Adjusted assets
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
  0.075
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
  -223
  -344
  -514
  -746
  -1,053
  -1,447
  -1,942
  -2,550
  -3,282
  -4,145
  -5,147
  -6,293
  -7,586
  -9,025
  -10,612
  -12,344
  -14,220
  -16,235
  -18,387
  -20,673
  -23,088
  -25,632
  -28,302
  -31,097
  -34,016
  -37,060
  -40,230
  -43,528
  -46,958
  -50,522
Total debt, $m
  2,018
  3,460
  5,545
  8,474
  12,461
  17,731
  24,513
  33,029
  43,483
  56,057
  70,901
  88,132
  107,831
  130,048
  154,801
  182,083
  211,866
  244,107
  278,755
  315,753
  355,045
  396,581
  440,317
  486,220
  534,268
  584,455
  636,788
  691,287
  747,991
  806,949
  868,229
Total liabilities, $m
  2,384
  3,826
  5,911
  8,840
  12,827
  18,097
  24,879
  33,395
  43,849
  56,423
  71,267
  88,498
  108,197
  130,414
  155,167
  182,449
  212,232
  244,473
  279,121
  316,119
  355,411
  396,947
  440,683
  486,586
  534,634
  584,821
  637,154
  691,653
  748,357
  807,315
  868,595
Total equity, $m
  587
  718
  1,109
  1,659
  2,407
  3,396
  4,668
  6,266
  8,228
  10,588
  13,373
  16,606
  20,303
  24,472
  29,117
  34,236
  39,825
  45,875
  52,377
  59,319
  66,692
  74,487
  82,694
  91,307
  100,323
  109,741
  119,561
  129,788
  140,428
  151,491
  162,991
Total liabilities and equity, $m
  2,971
  4,544
  7,020
  10,499
  15,234
  21,493
  29,547
  39,661
  52,077
  67,011
  84,640
  105,104
  128,500
  154,886
  184,284
  216,685
  252,057
  290,348
  331,498
  375,438
  422,103
  471,434
  523,377
  577,893
  634,957
  694,562
  756,715
  821,441
  888,785
  958,806
  1,031,586
Debt-to-equity ratio
  3.438
  4.820
  5.000
  5.110
  5.180
  5.220
  5.250
  5.270
  5.280
  5.290
  5.300
  5.310
  5.310
  5.310
  5.320
  5.320
  5.320
  5.320
  5.320
  5.320
  5.320
  5.320
  5.320
  5.330
  5.330
  5.330
  5.330
  5.330
  5.330
  5.330
  5.330
Adjusted equity ratio
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158
  0.158

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  50
  16
  18
  18
  16
  10
  -1
  -26
  -62
  -114
  -183
  -269
  -380
  -514
  -672
  -857
  -1,067
  -1,303
  -1,565
  -1,853
  -2,166
  -2,503
  -2,863
  -3,246
  -3,651
  -4,078
  -4,527
  -4,996
  -5,486
  -5,996
  -6,528
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
  36
  41
  45
  46
  36
  18
  -11
  -54
  -112
  -187
  -282
  -397
  -533
  -690
  -869
  -1,070
  -1,292
  -1,534
  -1,797
  -2,080
  -2,382
  -2,702
  -3,039
  -3,395
  -3,767
  -4,156
  -4,562
  -4,985
Change in working capital, $m
  -4
  -83
  -121
  -170
  -232
  -307
  -394
  -495
  -608
  -731
  -863
  -1,002
  -1,146
  -1,292
  -1,440
  -1,587
  -1,732
  -1,875
  -2,015
  -2,152
  -2,285
  -2,416
  -2,544
  -2,670
  -2,795
  -2,919
  -3,044
  -3,170
  -3,298
  -3,429
  -3,564
Cash from operations, $m
  -198
  124
  152
  206
  273
  351
  440
  532
  626
  720
  810
  890
  958
  1,010
  1,043
  1,054
  1,042
  1,006
  946
  860
  751
  619
  464
  288
  93
  -120
  -351
  -597
  -858
  -1,133
  -1,420
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
  74
  79
  103
  130
  161
  192
  217
  234
  243
  237
  216
  175
  112
  24
  -89
  -229
  -396
  -590
  -812
  -1,060
  -1,334
  -1,632
  -1,954
  -2,299
  -2,666
  -3,054
  -3,462
  -3,890
  -4,337
  -4,803
Issuance/(repayment) of debt, $m
  379
  1,442
  2,085
  2,929
  3,987
  5,270
  6,782
  8,516
  10,455
  12,574
  14,844
  17,231
  19,699
  22,217
  24,753
  27,282
  29,783
  32,241
  34,648
  36,998
  39,293
  41,536
  43,736
  45,903
  48,048
  50,187
  52,332
  54,500
  56,703
  58,959
  61,280
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  388
  1,442
  2,085
  2,929
  3,987
  5,270
  6,782
  8,516
  10,455
  12,574
  14,844
  17,231
  19,699
  22,217
  24,753
  27,282
  29,783
  32,241
  34,648
  36,998
  39,293
  41,536
  43,736
  45,903
  48,048
  50,187
  52,332
  54,500
  56,703
  58,959
  61,280
Total cash flow (excl. dividends), $m
  -11
  1,516
  2,164
  3,032
  4,117
  5,431
  6,974
  8,732
  10,689
  12,817
  15,081
  17,446
  19,874
  22,328
  24,777
  27,193
  29,554
  31,845
  34,057
  36,186
  38,233
  40,202
  42,104
  43,948
  45,749
  47,521
  49,279
  51,038
  52,814
  54,622
  56,477
Retained Cash Flow (-), $m
  -22
  -270
  -391
  -550
  -748
  -989
  -1,273
  -1,598
  -1,962
  -2,360
  -2,785
  -3,233
  -3,697
  -4,169
  -4,645
  -5,119
  -5,589
  -6,050
  -6,502
  -6,943
  -7,373
  -7,794
  -8,207
  -8,614
  -9,016
  -9,418
  -9,820
  -10,227
  -10,640
  -11,063
  -11,499
Prev. year cash balance distribution, $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
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
 
  1,385
  1,773
  2,482
  3,369
  4,442
  5,702
  7,134
  8,727
  10,457
  12,296
  14,213
  16,178
  18,159
  20,132
  22,074
  23,965
  25,795
  27,556
  29,243
  30,859
  32,408
  33,897
  35,335
  36,733
  38,103
  39,458
  40,811
  42,173
  43,558
  44,978
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
 
  1,234
  1,390
  1,695
  1,978
  2,213
  2,377
  2,452
  2,434
  2,327
  2,145
  1,907
  1,636
  1,356
  1,086
  839
  627
  453
  315
  212
  138
  86
  52
  30
  17
  9
  5
  2
  1
  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

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 8.9
Price to Sales 2.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow -2.2
Price to Free Cash Flow -2.2
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 -65.3%. 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 51.71 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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Stock chart of ABR Financial statements 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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