Intrinsic value of Apple Hospitality REIT - APLE

Previous Close

$19.12

  Intrinsic Value

$3.94

stock screener

  Rating & Target

str. sell

-79%

  Value-price divergence*

+42%

Previous close

$19.12

 
Intrinsic value

$3.94

 
Up/down potential

-79%

 
Rating

str. sell

 
Value-price divergence*

+42%

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

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

We calculate the intrinsic value of APLE 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 4.3

 

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, %
  15.92
  28.70
  26.33
  24.20
  22.28
  20.55
  18.99
  17.60
  16.34
  15.20
  14.18
  13.26
  12.44
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
Revenue, $m
  1,041
  1,340
  1,693
  2,102
  2,570
  3,099
  3,687
  4,336
  5,044
  5,811
  6,635
  7,515
  8,450
  9,438
  10,478
  11,570
  12,713
  13,907
  15,153
  16,449
  17,798
  19,201
  20,659
  22,174
  23,749
  25,385
  27,086
  28,855
  30,696
  32,611
  34,606
Variable operating expenses, $m
 
  880
  1,112
  1,381
  1,689
  2,036
  2,422
  2,849
  3,314
  3,818
  4,359
  4,937
  5,552
  6,201
  6,884
  7,602
  8,353
  9,137
  9,955
  10,807
  11,693
  12,615
  13,573
  14,568
  15,603
  16,678
  17,796
  18,958
  20,167
  21,426
  22,736
Fixed operating expenses, $m
 
  180
  185
  190
  194
  199
  204
  209
  214
  220
  225
  231
  237
  243
  249
  255
  261
  268
  274
  281
  288
  296
  303
  311
  318
  326
  334
  343
  351
  360
  369
Total operating expenses, $m
  856
  1,060
  1,297
  1,571
  1,883
  2,235
  2,626
  3,058
  3,528
  4,038
  4,584
  5,168
  5,789
  6,444
  7,133
  7,857
  8,614
  9,405
  10,229
  11,088
  11,981
  12,911
  13,876
  14,879
  15,921
  17,004
  18,130
  19,301
  20,518
  21,786
  23,105
Operating income, $m
  185
  279
  396
  531
  687
  864
  1,061
  1,278
  1,516
  1,773
  2,051
  2,347
  2,662
  2,995
  3,345
  3,714
  4,099
  4,502
  4,923
  5,361
  5,816
  6,290
  6,783
  7,295
  7,827
  8,381
  8,956
  9,555
  10,177
  10,825
  11,501
EBITDA, $m
  333
  470
  636
  830
  1,053
  1,304
  1,585
  1,894
  2,233
  2,599
  2,994
  3,415
  3,863
  4,336
  4,835
  5,359
  5,907
  6,480
  7,077
  7,699
  8,347
  9,020
  9,720
  10,448
  11,204
  11,990
  12,807
  13,657
  14,541
  15,462
  16,420
Interest expense (income), $m
  42
  48
  63
  81
  102
  126
  152
  182
  215
  251
  290
  332
  376
  423
  473
  526
  581
  639
  700
  763
  829
  897
  968
  1,042
  1,118
  1,198
  1,281
  1,367
  1,457
  1,550
  1,647
Earnings before tax, $m
  145
  231
  332
  450
  585
  738
  908
  1,096
  1,301
  1,522
  1,761
  2,015
  2,286
  2,571
  2,872
  3,188
  3,518
  3,863
  4,223
  4,598
  4,988
  5,394
  5,815
  6,253
  6,709
  7,183
  7,675
  8,187
  8,720
  9,275
  9,854
Tax expense, $m
  0
  62
  90
  122
  158
  199
  245
  296
  351
  411
  475
  544
  617
  694
  775
  861
  950
  1,043
  1,140
  1,241
  1,347
  1,456
  1,570
  1,688
  1,811
  1,939
  2,072
  2,211
  2,355
  2,504
  2,660
Net income, $m
  145
  169
  243
  329
  427
  539
  663
  800
  949
  1,111
  1,285
  1,471
  1,668
  1,877
  2,097
  2,327
  2,568
  2,820
  3,083
  3,356
  3,641
  3,937
  4,245
  4,565
  4,898
  5,243
  5,603
  5,977
  6,366
  6,771
  7,193

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
  4,980
  6,410
  8,098
  10,058
  12,298
  14,826
  17,642
  20,746
  24,135
  27,804
  31,747
  35,958
  40,430
  45,157
  50,136
  55,361
  60,830
  66,543
  72,500
  78,704
  85,159
  91,871
  98,847
  106,096
  113,630
  121,459
  129,599
  138,063
  146,869
  156,034
  165,578
Adjusted assets (=assets-cash), $m
  4,980
  6,410
  8,098
  10,058
  12,298
  14,826
  17,642
  20,746
  24,135
  27,804
  31,747
  35,958
  40,430
  45,157
  50,136
  55,361
  60,830
  66,543
  72,500
  78,704
  85,159
  91,871
  98,847
  106,096
  113,630
  121,459
  129,599
  138,063
  146,869
  156,034
  165,578
Revenue / Adjusted assets
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
Average production assets, $m
  4,233
  5,447
  6,882
  8,547
  10,451
  12,599
  14,992
  17,630
  20,510
  23,627
  26,978
  30,556
  34,357
  38,374
  42,605
  47,045
  51,693
  56,548
  61,610
  66,882
  72,368
  78,071
  83,999
  90,160
  96,562
  103,215
  110,132
  117,325
  124,808
  132,597
  140,707
Working capital, $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 debt, $m
  1,338
  1,760
  2,256
  2,832
  3,491
  4,234
  5,062
  5,974
  6,971
  8,049
  9,209
  10,447
  11,761
  13,151
  14,615
  16,151
  17,759
  19,439
  21,190
  23,014
  24,912
  26,885
  28,936
  31,067
  33,282
  35,584
  37,977
  40,466
  43,054
  45,749
  48,555
Total liabilities, $m
  1,463
  1,885
  2,381
  2,957
  3,616
  4,359
  5,187
  6,099
  7,096
  8,174
  9,334
  10,572
  11,886
  13,276
  14,740
  16,276
  17,884
  19,564
  21,315
  23,139
  25,037
  27,010
  29,061
  31,192
  33,407
  35,709
  38,102
  40,591
  43,179
  45,874
  48,680
Total equity, $m
  3,517
  4,526
  5,717
  7,101
  8,683
  10,467
  12,455
  14,646
  17,039
  19,629
  22,413
  25,386
  28,543
  31,881
  35,396
  39,085
  42,946
  46,979
  51,185
  55,565
  60,122
  64,861
  69,786
  74,904
  80,222
  85,750
  91,497
  97,473
  103,690
  110,160
  116,898
Total liabilities and equity, $m
  4,980
  6,411
  8,098
  10,058
  12,299
  14,826
  17,642
  20,745
  24,135
  27,803
  31,747
  35,958
  40,429
  45,157
  50,136
  55,361
  60,830
  66,543
  72,500
  78,704
  85,159
  91,871
  98,847
  106,096
  113,629
  121,459
  129,599
  138,064
  146,869
  156,034
  165,578
Debt-to-equity ratio
  0.380
  0.390
  0.390
  0.400
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.420
Adjusted equity ratio
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706
  0.706

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  145
  169
  243
  329
  427
  539
  663
  800
  949
  1,111
  1,285
  1,471
  1,668
  1,877
  2,097
  2,327
  2,568
  2,820
  3,083
  3,356
  3,641
  3,937
  4,245
  4,565
  4,898
  5,243
  5,603
  5,977
  6,366
  6,771
  7,193
Depreciation, amort., depletion, $m
  148
  190
  241
  299
  365
  441
  524
  616
  717
  826
  943
  1,068
  1,201
  1,342
  1,490
  1,645
  1,807
  1,977
  2,154
  2,339
  2,530
  2,730
  2,937
  3,152
  3,376
  3,609
  3,851
  4,102
  4,364
  4,636
  4,920
Funds from operations, $m
  359
  359
  483
  628
  793
  979
  1,187
  1,416
  1,667
  1,937
  2,229
  2,540
  2,870
  3,219
  3,586
  3,972
  4,376
  4,797
  5,237
  5,695
  6,172
  6,667
  7,182
  7,717
  8,274
  8,852
  9,454
  10,079
  10,730
  11,407
  12,113
Change in working capital, $m
  27
  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 operations, $m
  332
  359
  483
  628
  793
  979
  1,187
  1,416
  1,667
  1,937
  2,229
  2,540
  2,870
  3,219
  3,586
  3,972
  4,376
  4,797
  5,237
  5,695
  6,172
  6,667
  7,182
  7,717
  8,274
  8,852
  9,454
  10,079
  10,730
  11,407
  12,113
Maintenance CAPEX, $m
  0
  -148
  -190
  -241
  -299
  -365
  -441
  -524
  -616
  -717
  -826
  -943
  -1,068
  -1,201
  -1,342
  -1,490
  -1,645
  -1,807
  -1,977
  -2,154
  -2,339
  -2,530
  -2,730
  -2,937
  -3,152
  -3,376
  -3,609
  -3,851
  -4,102
  -4,364
  -4,636
New CAPEX, $m
  -65
  -1,215
  -1,434
  -1,665
  -1,904
  -2,148
  -2,393
  -2,638
  -2,880
  -3,118
  -3,351
  -3,578
  -3,800
  -4,018
  -4,230
  -4,440
  -4,648
  -4,855
  -5,062
  -5,272
  -5,485
  -5,704
  -5,928
  -6,160
  -6,402
  -6,654
  -6,917
  -7,193
  -7,483
  -7,788
  -8,110
Cash from investing activities, $m
  -170
  -1,363
  -1,624
  -1,906
  -2,203
  -2,513
  -2,834
  -3,162
  -3,496
  -3,835
  -4,177
  -4,521
  -4,868
  -5,219
  -5,572
  -5,930
  -6,293
  -6,662
  -7,039
  -7,426
  -7,824
  -8,234
  -8,658
  -9,097
  -9,554
  -10,030
  -10,526
  -11,044
  -11,585
  -12,152
  -12,746
Free cash flow, $m
  162
  -1,004
  -1,142
  -1,278
  -1,410
  -1,534
  -1,646
  -1,746
  -1,830
  -1,897
  -1,948
  -1,982
  -1,999
  -2,000
  -1,986
  -1,958
  -1,917
  -1,865
  -1,803
  -1,731
  -1,652
  -1,567
  -1,476
  -1,380
  -1,280
  -1,178
  -1,072
  -965
  -856
  -745
  -633
Issuance/(repayment) of debt, $m
  80
  422
  496
  576
  659
  743
  828
  913
  996
  1,079
  1,159
  1,238
  1,315
  1,390
  1,464
  1,536
  1,608
  1,680
  1,751
  1,824
  1,898
  1,973
  2,051
  2,131
  2,215
  2,302
  2,393
  2,489
  2,589
  2,695
  2,806
Issuance/(repurchase) of shares, $m
  -9
  840
  949
  1,055
  1,155
  1,245
  1,325
  1,392
  1,443
  1,479
  1,498
  1,502
  1,489
  1,461
  1,418
  1,362
  1,293
  1,213
  1,123
  1,024
  916
  801
  680
  553
  421
  284
  144
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  67
  1,262
  1,445
  1,631
  1,814
  1,988
  2,153
  2,305
  2,439
  2,558
  2,657
  2,740
  2,804
  2,851
  2,882
  2,898
  2,901
  2,893
  2,874
  2,848
  2,814
  2,774
  2,731
  2,684
  2,636
  2,586
  2,537
  2,489
  2,589
  2,695
  2,806
Total cash flow (excl. dividends), $m
  229
  258
  304
  353
  403
  455
  507
  558
  610
  660
  709
  758
  805
  851
  896
  940
  984
  1,028
  1,072
  1,116
  1,161
  1,208
  1,255
  1,304
  1,355
  1,409
  1,464
  1,524
  1,733
  1,950
  2,172
Retained Cash Flow (-), $m
  -870
  -1,009
  -1,192
  -1,383
  -1,582
  -1,784
  -1,988
  -2,191
  -2,393
  -2,590
  -2,784
  -2,973
  -3,157
  -3,338
  -3,515
  -3,689
  -3,861
  -4,033
  -4,206
  -4,380
  -4,557
  -4,738
  -4,925
  -5,118
  -5,319
  -5,528
  -5,746
  -5,976
  -6,217
  -6,471
  -6,738
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
 
  -751
  -888
  -1,031
  -1,179
  -1,330
  -1,481
  -1,633
  -1,783
  -1,930
  -2,074
  -2,215
  -2,353
  -2,487
  -2,619
  -2,749
  -2,877
  -3,005
  -3,134
  -3,264
  -3,396
  -3,531
  -3,670
  -3,814
  -3,963
  -4,119
  -4,282
  -4,452
  -4,484
  -4,521
  -4,565
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -707
  -783
  -845
  -893
  -925
  -938
  -934
  -913
  -877
  -828
  -769
  -702
  -630
  -557
  -484
  -414
  -347
  -287
  -232
  -185
  -144
  -110
  -83
  -60
  -43
  -30
  -21
  -13
  -8
  -5
Current shareholders' claim on cash, %
  100
  83.5
  71.2
  61.8
  54.5
  48.7
  44.1
  40.4
  37.4
  34.9
  32.8
  31.1
  29.7
  28.5
  27.4
  26.6
  25.9
  25.3
  24.8
  24.4
  24.1
  23.8
  23.6
  23.5
  23.4
  23.3
  23.3
  23.3
  23.3
  23.3
  23.3

Apple Hospitality REIT, Inc. is a hospitality real estate investment trust. The Company invests in real estate, primarily in the lodging sector, in the United States. As of December 31, 2016, the Company owned 235 hotels with an aggregate of 30,073 rooms located in urban, suburban and developing markets throughout 33 states. As of December 31, 2016, the Company's hotels included various brands, such as Hilton Garden Inn, Courtyard, Homewood Suites, Residence Inn, SpringHill Suites, TownePlace Suites, Fairfield Inn, Home2 Suites, Marriott, Embassy Suites, Hilton and Renaissance. As of December 31, 2016, the Company's hotels were located in various states of the United States, such as Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, Ohio, South Carolina, Texas, Utah and Virginia.

FINANCIAL RATIOS  of  Apple Hospitality REIT (APLE)

Valuation Ratios
P/E Ratio 29.4
Price to Sales 4.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 16
Growth Rates
Sales Growth Rate 15.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.8%
Cap. Spend. - 3 Yr. Gr. Rate 16.7%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 38%
Total Debt to Equity 38%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2.3%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. 3.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 54.9%
Gross Margin - 3 Yr. Avg. 54.6%
EBITDA Margin 32.2%
EBITDA Margin - 3 Yr. Avg. 27.4%
Operating Margin 17.8%
Oper. Margin - 3 Yr. Avg. 12.3%
Pre-Tax Margin 13.9%
Pre-Tax Margin - 3 Yr. Avg. 9.4%
Net Profit Margin 13.9%
Net Profit Margin - 3 Yr. Avg. 9.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 7.7%
Payout Ratio 157.9%

APLE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APLE stock intrinsic value calculation we used $1041 million for the last fiscal year's total revenue generated by Apple Hospitality REIT. The default revenue input number comes from 2016 income statement of Apple Hospitality REIT. 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 APLE stock valuation model: a) initial revenue growth rate of 28.7% 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 6.2%, whose default value for APLE is calculated based on our internal credit rating of Apple Hospitality REIT, 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 Apple Hospitality REIT.
    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 APLE stock the variable cost ratio is equal to 65.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $176 million in the base year in the intrinsic value calculation for APLE 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 Apple Hospitality REIT.

Corporate tax rate of 27% is the nominal tax rate for Apple Hospitality REIT. 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 APLE 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 APLE are equal to 406.6%.

Life of production assets of 28.6 years is the average useful life of capital assets used in Apple Hospitality REIT 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 APLE is equal to 0%. 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 - $3517 million for Apple Hospitality REIT - 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 223.03 million for Apple Hospitality REIT 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 Apple Hospitality REIT at the current share price and the inputted number of shares is $4.3 billion.

RELATED COMPANIES Price Int.Val. Rating
SOHO Sotherly Hotel 5.96 4.84  hold
SHO Sunstone Hotel 16.68 2.74  str.sell
FCH Felcor Lodging 7.30 0.41  str.sell
CLDT Chatham Lodgin 22.14 5.67  str.sell
HPT Hospitality Pr 29.05 4.76  str.sell
CHSP Chesapeake Lod 28.51 4.97  str.sell
INN Summit Hotel P 16.12 3.43  str.sell
AHT Ashford Hospit 7.01 20.77  str.buy
RLJ RLJ Lodging Tr 22.38 6.69  str.sell

COMPANY NEWS

▶ Apple Hospitality REIT Announces October 2017 Distribution   [Sep-22-17 09:00AM  Business Wire]
▶ Apple Hospitality REIT Provides Hurricane Irma Update   [Sep-15-17 09:00AM  Business Wire]
▶ Apple Hospitality REIT Provides Hurricane Harvey Update   [Sep-06-17 09:00AM  Business Wire]
▶ Here's How To Really Retire Rich   [Aug-29-17 08:20AM  Forbes]
▶ 2 Top Finance Stocks Under $20   [Aug-06-17 10:33AM  Motley Fool]
▶ Apple Hospitality REITs Dividend Trends   [Jul-26-17 12:09PM  Market Realist]
▶ Apple Hospitality REIT Announces August 2017 Distribution   [Jul-20-17 09:00AM  Business Wire]
▶ Apple Hospitality REIT Announces July 2017 Distribution   [Jun-21-17 09:00AM  Business Wire]
▶ 5 Top Hotel REITs for 2017   [May-26-17 03:42PM  Motley Fool]
▶ A 6.5% Yield Paying Monthly Dividends   [May-22-17 11:20AM  GuruFocus.com]
▶ 3 Top Hotel Stocks to Buy in 2017   [May-19-17 01:43PM  Motley Fool]
▶ 2 Bargain Hotel REITs To Buy, 1 To Sell   [May-07-17 09:33AM  Forbes]
▶ 5 Top Dividend Stocks in Real Estate   [08:03AM  Motley Fool]
▶ Apple Hospitality REIT Announces May 2017 Distribution   [Apr-20-17 09:00AM  Business Wire]
▶ Apple Hospitality Remains a Welcoming Place to Invest   [Apr-05-17 01:00PM  TheStreet.com]
▶ 3 Stocks to Buy with Dividends Yielding More than 5%   [Mar-12-17 09:23AM  Motley Fool]
▶ Apple Hospitality REIT Announces March 2017 Distribution   [Feb-21-17 09:00AM  Business Wire]
▶ 5 Stocks That Cut You a Check Each Month   [Feb-19-17 09:39AM  at Motley Fool]
▶ REIT Risk: The Lodging Sector Series   [Jan-23-17 07:00AM  at Forbes]
▶ Reasons To Be Bullish On Lodging REITs in 2017   [Dec-20-16 09:44AM  at Barrons.com]
▶ This Stock Has a 6.5% Dividend and Room to Grow   [Nov-16-16 01:03PM  at Motley Fool]
▶ Andrew Baird, CPA, Joins Capital Square 1031 as Controller   [Oct-31-16 01:24PM  GlobeNewswire]
Financial statements of APLE
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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