Intrinsic value of Alexander&Baldwin - ALEX

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$46.01

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$46.01

 
Intrinsic value

$32.08

 
Up/down potential

-30%

 
Rating

sell

 
Value-price divergence* premium content

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

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

We calculate the intrinsic value of ALEX 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 2.3

 

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, %
  -17.97
  54.20
  49.28
  44.85
  40.87
  37.28
  34.05
  31.15
  28.53
  26.18
  24.06
  22.15
  20.44
  18.90
  17.51
  16.26
  15.13
  14.12
  13.21
  12.38
  11.65
  10.98
  10.38
  9.85
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
Revenue, $m
  388
  598
  893
  1,294
  1,822
  2,502
  3,354
  4,398
  5,653
  7,133
  8,850
  10,810
  13,020
  15,480
  18,190
  21,147
  24,346
  27,783
  31,452
  35,347
  39,464
  43,797
  48,345
  53,105
  58,076
  63,259
  68,656
  74,271
  80,110
  86,178
  92,484
Variable operating expenses, $m
 
  255
  376
  540
  757
  1,035
  1,384
  1,812
  2,326
  2,933
  3,636
  4,429
  5,334
  6,342
  7,453
  8,664
  9,975
  11,383
  12,886
  14,482
  16,169
  17,944
  19,808
  21,758
  23,794
  25,918
  28,129
  30,430
  32,822
  35,308
  37,892
Fixed operating expenses, $m
 
  186
  190
  195
  200
  205
  210
  215
  221
  226
  232
  237
  243
  250
  256
  262
  269
  275
  282
  289
  297
  304
  312
  319
  327
  336
  344
  353
  361
  370
  380
Total operating expenses, $m
  346
  441
  566
  735
  957
  1,240
  1,594
  2,027
  2,547
  3,159
  3,868
  4,666
  5,577
  6,592
  7,709
  8,926
  10,244
  11,658
  13,168
  14,771
  16,466
  18,248
  20,120
  22,077
  24,121
  26,254
  28,473
  30,783
  33,183
  35,678
  38,272
Operating income, $m
  42
  157
  327
  559
  866
  1,262
  1,760
  2,371
  3,106
  3,974
  4,982
  6,144
  7,442
  8,888
  10,482
  12,221
  14,103
  16,125
  18,283
  20,576
  22,998
  25,549
  28,226
  31,028
  33,954
  37,005
  40,183
  43,489
  46,926
  50,499
  54,212
EBITDA, $m
  162
  329
  578
  918
  1,368
  1,947
  2,675
  3,568
  4,642
  5,910
  7,380
  9,061
  10,955
  13,065
  15,390
  17,927
  20,672
  23,622
  26,771
  30,114
  33,647
  37,368
  41,272
  45,358
  49,625
  54,075
  58,709
  63,531
  68,544
  73,754
  79,169
Interest expense (income), $m
  26
  24
  48
  82
  128
  189
  266
  364
  484
  628
  797
  994
  1,219
  1,472
  1,754
  2,065
  2,404
  2,770
  3,164
  3,585
  4,031
  4,503
  5,000
  5,521
  6,067
  6,637
  7,231
  7,850
  8,493
  9,162
  9,858
Earnings before tax, $m
  35
  133
  279
  476
  738
  1,073
  1,493
  2,007
  2,622
  3,347
  4,185
  5,150
  6,223
  7,416
  8,727
  10,156
  11,699
  13,354
  15,119
  16,991
  18,967
  21,046
  23,226
  25,506
  27,887
  30,369
  32,952
  35,639
  38,433
  41,337
  44,354
Tax expense, $m
  2
  36
  75
  129
  199
  290
  403
  542
  708
  904
  1,130
  1,390
  1,680
  2,002
  2,356
  2,742
  3,159
  3,606
  4,082
  4,587
  5,121
  5,682
  6,271
  6,887
  7,530
  8,200
  8,897
  9,623
  10,377
  11,161
  11,976
Net income, $m
  -10
  97
  203
  348
  539
  783
  1,090
  1,465
  1,914
  2,443
  3,055
  3,759
  4,543
  5,414
  6,371
  7,414
  8,540
  9,749
  11,037
  12,403
  13,846
  15,363
  16,955
  18,620
  20,358
  22,169
  24,055
  26,017
  28,056
  30,176
  32,379

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2
  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
  2,156
  3,324
  4,962
  7,187
  10,125
  13,899
  18,632
  24,435
  31,407
  39,629
  49,165
  60,057
  72,332
  86,000
  101,055
  117,482
  135,257
  154,351
  174,733
  196,373
  219,243
  243,319
  268,584
  295,027
  322,643
  351,437
  381,422
  412,618
  445,053
  478,766
  513,799
Adjusted assets (=assets-cash), $m
  2,154
  3,324
  4,962
  7,187
  10,125
  13,899
  18,632
  24,435
  31,407
  39,629
  49,165
  60,057
  72,332
  86,000
  101,055
  117,482
  135,257
  154,351
  174,733
  196,373
  219,243
  243,319
  268,584
  295,027
  322,643
  351,437
  381,422
  412,618
  445,053
  478,766
  513,799
Revenue / Adjusted assets
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
Average production assets, $m
  670
  1,033
  1,542
  2,234
  3,147
  4,321
  5,792
  7,596
  9,763
  12,319
  15,283
  18,669
  22,485
  26,734
  31,414
  36,520
  42,046
  47,981
  54,317
  61,045
  68,154
  75,638
  83,492
  91,712
  100,297
  109,248
  118,569
  128,266
  138,349
  148,829
  159,719
Working capital, $m
  -27
  20
  30
  44
  62
  85
  114
  150
  192
  243
  301
  368
  443
  526
  618
  719
  828
  945
  1,069
  1,202
  1,342
  1,489
  1,644
  1,806
  1,975
  2,151
  2,334
  2,525
  2,724
  2,930
  3,144
Total debt, $m
  515
  1,027
  1,746
  2,723
  4,013
  5,670
  7,747
  10,295
  13,356
  16,965
  21,151
  25,933
  31,322
  37,322
  43,931
  51,143
  58,946
  67,328
  76,276
  85,776
  95,816
  106,385
  117,476
  129,085
  141,208
  153,849
  167,012
  180,707
  194,946
  209,746
  225,126
Total liabilities, $m
  947
  1,459
  2,178
  3,155
  4,445
  6,102
  8,179
  10,727
  13,788
  17,397
  21,583
  26,365
  31,754
  37,754
  44,363
  51,575
  59,378
  67,760
  76,708
  86,208
  96,248
  106,817
  117,908
  129,517
  141,640
  154,281
  167,444
  181,139
  195,378
  210,178
  225,558
Total equity, $m
  1,209
  1,865
  2,784
  4,032
  5,680
  7,797
  10,453
  13,708
  17,619
  22,232
  27,581
  33,692
  40,578
  48,246
  56,692
  65,907
  75,879
  86,591
  98,025
  110,165
  122,995
  136,502
  150,676
  165,510
  181,003
  197,156
  213,978
  231,479
  249,675
  268,588
  288,241
Total liabilities and equity, $m
  2,156
  3,324
  4,962
  7,187
  10,125
  13,899
  18,632
  24,435
  31,407
  39,629
  49,164
  60,057
  72,332
  86,000
  101,055
  117,482
  135,257
  154,351
  174,733
  196,373
  219,243
  243,319
  268,584
  295,027
  322,643
  351,437
  381,422
  412,618
  445,053
  478,766
  513,799
Debt-to-equity ratio
  0.426
  0.550
  0.630
  0.680
  0.710
  0.730
  0.740
  0.750
  0.760
  0.760
  0.770
  0.770
  0.770
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
Adjusted equity ratio
  0.560
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561
  0.561

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -10
  97
  203
  348
  539
  783
  1,090
  1,465
  1,914
  2,443
  3,055
  3,759
  4,543
  5,414
  6,371
  7,414
  8,540
  9,749
  11,037
  12,403
  13,846
  15,363
  16,955
  18,620
  20,358
  22,169
  24,055
  26,017
  28,056
  30,176
  32,379
Depreciation, amort., depletion, $m
  120
  172
  251
  359
  502
  685
  915
  1,197
  1,536
  1,935
  2,398
  2,917
  3,513
  4,177
  4,908
  5,706
  6,570
  7,497
  8,487
  9,538
  10,649
  11,818
  13,046
  14,330
  15,671
  17,070
  18,526
  20,042
  21,617
  23,255
  24,956
Funds from operations, $m
  137
  269
  455
  707
  1,041
  1,469
  2,005
  2,662
  3,450
  4,378
  5,453
  6,676
  8,056
  9,591
  11,279
  13,120
  15,110
  17,246
  19,524
  21,941
  24,495
  27,182
  30,001
  32,950
  36,029
  39,239
  42,581
  46,058
  49,673
  53,430
  57,335
Change in working capital, $m
  26
  7
  10
  14
  18
  23
  29
  36
  43
  50
  58
  67
  75
  84
  92
  101
  109
  117
  125
  132
  140
  147
  155
  162
  169
  176
  184
  191
  199
  206
  214
Cash from operations, $m
  111
  878
  445
  694
  1,023
  1,446
  1,976
  2,627
  3,407
  4,328
  5,395
  6,610
  7,981
  9,507
  11,187
  13,019
  15,001
  17,129
  19,399
  21,809
  24,355
  27,035
  29,846
  32,788
  35,860
  39,063
  42,398
  45,867
  49,475
  53,224
  57,120
Maintenance CAPEX, $m
  0
  -105
  -161
  -241
  -349
  -492
  -675
  -905
  -1,187
  -1,526
  -1,925
  -2,388
  -2,917
  -3,513
  -4,177
  -4,908
  -5,706
  -6,570
  -7,497
  -8,487
  -9,538
  -10,649
  -11,818
  -13,046
  -14,330
  -15,671
  -17,070
  -18,526
  -20,042
  -21,617
  -23,255
New CAPEX, $m
  -116
  -363
  -509
  -692
  -913
  -1,173
  -1,471
  -1,804
  -2,167
  -2,556
  -2,964
  -3,386
  -3,816
  -4,249
  -4,680
  -5,106
  -5,525
  -5,936
  -6,336
  -6,727
  -7,109
  -7,484
  -7,854
  -8,220
  -8,585
  -8,951
  -9,321
  -9,698
  -10,083
  -10,480
  -10,890
Cash from investing activities, $m
  -26
  -468
  -670
  -933
  -1,262
  -1,665
  -2,146
  -2,709
  -3,354
  -4,082
  -4,889
  -5,774
  -6,733
  -7,762
  -8,857
  -10,014
  -11,231
  -12,506
  -13,833
  -15,214
  -16,647
  -18,133
  -19,672
  -21,266
  -22,915
  -24,622
  -26,391
  -28,224
  -30,125
  -32,097
  -34,145
Free cash flow, $m
  85
  410
  -226
  -239
  -240
  -219
  -170
  -82
  53
  246
  506
  836
  1,248
  1,745
  2,330
  3,005
  3,769
  4,624
  5,566
  6,595
  7,707
  8,901
  10,174
  11,522
  12,945
  14,440
  16,007
  17,643
  19,350
  21,127
  22,976
Issuance/(repayment) of debt, $m
  -72
  514
  719
  977
  1,289
  1,657
  2,078
  2,548
  3,061
  3,609
  4,186
  4,782
  5,389
  6,000
  6,609
  7,211
  7,803
  8,382
  8,948
  9,500
  10,040
  10,570
  11,091
  11,608
  12,123
  12,641
  13,163
  13,695
  14,239
  14,800
  15,380
Issuance/(repurchase) of shares, $m
  1
  0
  426
  511
  598
  680
  748
  790
  797
  757
  658
  493
  249
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -73
  514
  1,145
  1,488
  1,887
  2,337
  2,826
  3,338
  3,858
  4,366
  4,844
  5,275
  5,638
  6,000
  6,609
  7,211
  7,803
  8,382
  8,948
  9,500
  10,040
  10,570
  11,091
  11,608
  12,123
  12,641
  13,163
  13,695
  14,239
  14,800
  15,380
Total cash flow (excl. dividends), $m
  13
  924
  493
  738
  1,050
  1,438
  1,908
  2,465
  3,114
  3,856
  4,692
  5,617
  6,637
  7,745
  8,939
  10,216
  11,572
  13,006
  14,514
  16,095
  17,747
  19,471
  21,265
  23,130
  25,069
  27,081
  29,170
  31,338
  33,590
  35,927
  38,355
Retained Cash Flow (-), $m
  15
  -656
  -919
  -1,249
  -1,648
  -2,117
  -2,655
  -3,256
  -3,911
  -4,613
  -5,349
  -6,111
  -6,886
  -7,668
  -8,446
  -9,215
  -9,972
  -10,712
  -11,434
  -12,140
  -12,830
  -13,507
  -14,174
  -14,834
  -15,493
  -16,154
  -16,821
  -17,501
  -18,196
  -18,913
  -19,654
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
 
  268
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  78
  493
  1,001
  1,601
  2,294
  3,079
  3,955
  4,917
  5,964
  7,091
  8,296
  9,576
  10,928
  12,349
  13,838
  15,393
  17,014
  18,701
Discount rate, %
 
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
 
  252
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  18
  93
  154
  199
  225
  235
  231
  215
  192
  164
  135
  107
  82
  61
  43
  30
  20
  13
Current shareholders' claim on cash, %
  100
  100.0
  89.2
  81.2
  75.3
  70.8
  67.4
  64.8
  62.8
  61.4
  60.5
  59.9
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7
  59.7

Alexander & Baldwin, Inc. engages in the real estate development and leasing, materials and construction, and agribusiness in Hawaii. The company operates in four segments: Real Estate Development and Sales, Real Estate Leasing, Materials and Construction, and Agribusiness. The Real Estate Development and Sales segment is involved in the stewardship, planning, entitlement, development, investments, and sale of land, and commercial and residential properties principally in Hawaii. The Real Estate Leasing segment owns, operates, and manages a portfolio of 58 retail, office, and industrial properties in Hawaii and on the Mainland, as well as leases land in Hawaii to third-party. The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes, and sells basalt aggregate; produces and sells asphaltic and ready-mix concrete; provides and markets various construction- and traffic-control-related products; and manufactures and sells precast concrete products. The Agribusiness segment produces bulk raw sugar, specialty food grade sugars, and molasses; markets and distributes specialty food-grade sugars; provides general trucking, and mobile equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity. The company was formerly known as A & B II, Inc. and changed its name to Alexander & Baldwin, Inc. in June 2012. Alexander & Baldwin, Inc. was founded in 1870 and is headquartered in Honolulu, Hawaii.

FINANCIAL RATIOS  of  Alexander&Baldwin (ALEX)

Valuation Ratios
P/E Ratio -225.4
Price to Sales 5.8
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow -450.9
Growth Rates
Sales Growth Rate -18%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 157.8%
Cap. Spend. - 3 Yr. Gr. Rate -25.5%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 39.1%
Total Debt to Equity 42.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 0.7%
Ret/ On Assets - 3 Yr. Avg. 2.2%
Return On Total Capital -0.6%
Ret/ On T. Cap. - 3 Yr. Avg. 1.4%
Return On Equity -0.8%
Return On Equity - 3 Yr. Avg. 2.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 30.7%
Gross Margin - 3 Yr. Avg. 30%
EBITDA Margin 46.6%
EBITDA Margin - 3 Yr. Avg. 37.4%
Operating Margin 10.8%
Oper. Margin - 3 Yr. Avg. 15.5%
Pre-Tax Margin 9%
Pre-Tax Margin - 3 Yr. Avg. 12.8%
Net Profit Margin -2.6%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 5.7%
Eff/ Tax Rate - 3 Yr. Avg. 17.5%
Payout Ratio -120%

ALEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALEX stock intrinsic value calculation we used $388 million for the last fiscal year's total revenue generated by Alexander&Baldwin. The default revenue input number comes from 2016 income statement of Alexander&Baldwin. 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 ALEX stock valuation model: a) initial revenue growth rate of 54.2% 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 6.7%, whose default value for ALEX is calculated based on our internal credit rating of Alexander&Baldwin, 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 Alexander&Baldwin.
    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 ALEX stock the variable cost ratio is equal to 43.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $181 million in the base year in the intrinsic value calculation for ALEX 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 4.7% for Alexander&Baldwin.

Corporate tax rate of 27% is the nominal tax rate for Alexander&Baldwin. 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 ALEX 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 ALEX are equal to 172.7%.

Life of production assets of 6.4 years is the average useful life of capital assets used in Alexander&Baldwin 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 ALEX is equal to 3.4%. 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 - $1209 million for Alexander&Baldwin - 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 49.416 million for Alexander&Baldwin 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 Alexander&Baldwin at the current share price and the inputted number of shares is $2.3 billion.


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COMPANY NEWS

▶ Alexander & Baldwin reports net income of $300,000 for Q4   [Feb-28-17 10:40PM  at bizjournals.com]
▶ Safeway to anchor new Ho`okele Shopping Center   [Feb-23-17 04:13PM  PR Newswire]
▶ Ruth's Chris Steak House expanding to Kauai   [Feb-09-17 08:00PM  at bizjournals.com]
▶ Hawaii yoga apparel retailer to close Kailua store   [Feb-07-17 12:30PM  at bizjournals.com]
▶ Chef Roy Yamaguchi to open new restaurant concept in Kailua   [Jan-14-17 09:46PM  at bizjournals.com]
▶ HC&S holds last sugar harvest on Maui: Slideshow   [Dec-13-16 05:50AM  at bizjournals.com]
▶ A&B chief hints at another large project coming soon   [Nov-01-16 01:40PM  at bizjournals.com]
▶ Hawaii developer may convert to real estate investment trust   [Oct-27-16 08:25PM  at bizjournals.com]
▶ Alexander & Baldwin Increases Dividend   [Oct-25-16 08:34PM  PR Newswire]
▶ Two retailers opening at Kailua Shopping Center   [Oct-24-16 09:21PM  at bizjournals.com]
▶ Ambassador Hotel Waikiki may be sold for $95M   [Sep-02-16 01:30PM  at bizjournals.com]
▶ Shopping complex replacing Macy's Kailua building has a new name   [Jun-09-16 05:55PM  at bizjournals.com]
▶ Alexander & Baldwin invests $13.5M in Hawaii solar energy farms   [May-06-16 05:50PM  at bizjournals.com]
▶ A&B reports first-quarter net loss of $7.5 million   [May-05-16 09:06PM  at bizjournals.com]
Stock chart of ALEX Financial statements of ALEX
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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