Intrinsic value of America First Multifamily Investors - ATAX

Previous Close

$6.10

  Intrinsic Value

$1.46

stock screener

  Rating & Target

str. sell

-76%

  Value-price divergence*

-42%

Previous close

$6.10

 
Intrinsic value

$1.46

 
Up/down potential

-76%

 
Rating

str. sell

 
Value-price divergence*

-42%

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

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

We calculate the intrinsic value of ATAX 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, %
  12.31
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  73
  74
  76
  78
  80
  83
  85
  88
  91
  95
  99
  102
  107
  111
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172
  181
  189
  198
  208
  218
  228
  239
Variable operating expenses, $m
 
  18
  19
  19
  20
  20
  21
  22
  23
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
Fixed operating expenses, $m
 
  28
  28
  29
  30
  31
  31
  32
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  53
  54
  55
  57
Total operating expenses, $m
  44
  46
  47
  48
  50
  51
  52
  54
  56
  57
  59
  60
  62
  64
  67
  69
  71
  74
  76
  79
  81
  84
  87
  91
  94
  97
  100
  104
  108
  111
  116
Operating income, $m
  29
  28
  29
  30
  31
  32
  33
  34
  36
  38
  40
  42
  44
  46
  49
  52
  55
  58
  61
  65
  69
  73
  78
  82
  87
  92
  98
  104
  110
  117
  124
EBITDA, $m
  36
  36
  36
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  67
  71
  75
  79
  83
  88
  93
  99
  104
  111
  117
  124
  131
  139
  147
Interest expense (income), $m
  15
  21
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
Earnings before tax, $m
  29
  8
  8
  8
  9
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  38
  41
  44
  47
  51
  54
  58
Tax expense, $m
  5
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
Net income, $m
  24
  6
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  40
  43

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  21
  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
  944
  943
  964
  989
  1,017
  1,048
  1,081
  1,118
  1,158
  1,201
  1,247
  1,297
  1,349
  1,405
  1,465
  1,528
  1,595
  1,666
  1,741
  1,820
  1,903
  1,992
  2,085
  2,183
  2,286
  2,395
  2,510
  2,630
  2,757
  2,891
  3,031
Adjusted assets (=assets-cash), $m
  923
  943
  964
  989
  1,017
  1,048
  1,081
  1,118
  1,158
  1,201
  1,247
  1,297
  1,349
  1,405
  1,465
  1,528
  1,595
  1,666
  1,741
  1,820
  1,903
  1,992
  2,085
  2,183
  2,286
  2,395
  2,510
  2,630
  2,757
  2,891
  3,031
Revenue / Adjusted assets
  0.079
  0.078
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
  0.079
Average production assets, $m
  128
  130
  133
  136
  140
  145
  149
  154
  160
  166
  172
  179
  186
  194
  202
  211
  220
  230
  240
  251
  263
  275
  288
  301
  316
  331
  346
  363
  381
  399
  418
Working capital, $m
  0
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
Total debt, $m
  607
  599
  613
  629
  647
  667
  689
  713
  739
  767
  797
  829
  864
  900
  939
  980
  1,024
  1,070
  1,119
  1,171
  1,225
  1,283
  1,343
  1,407
  1,475
  1,546
  1,620
  1,699
  1,782
  1,869
  1,960
Total liabilities, $m
  623
  615
  629
  645
  663
  683
  705
  729
  755
  783
  813
  845
  880
  916
  955
  996
  1,040
  1,086
  1,135
  1,187
  1,241
  1,299
  1,359
  1,423
  1,491
  1,562
  1,636
  1,715
  1,798
  1,885
  1,976
Total equity, $m
  321
  328
  336
  344
  354
  365
  376
  389
  403
  418
  434
  451
  470
  489
  510
  532
  555
  580
  606
  633
  662
  693
  726
  760
  796
  833
  873
  915
  959
  1,006
  1,055
Total liabilities and equity, $m
  944
  943
  965
  989
  1,017
  1,048
  1,081
  1,118
  1,158
  1,201
  1,247
  1,296
  1,350
  1,405
  1,465
  1,528
  1,595
  1,666
  1,741
  1,820
  1,903
  1,992
  2,085
  2,183
  2,287
  2,395
  2,509
  2,630
  2,757
  2,891
  3,031
Debt-to-equity ratio
  1.891
  1.820
  1.830
  1.830
  1.830
  1.830
  1.830
  1.830
  1.830
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
Adjusted equity ratio
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24
  6
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  40
  43
Depreciation, amort., depletion, $m
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
Funds from operations, $m
  13
  13
  13
  14
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  54
  58
  62
  66
Change in working capital, $m
  -2
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
Cash from operations, $m
  15
  13
  13
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  59
  63
Maintenance CAPEX, $m
  0
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
New CAPEX, $m
  -11
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
Cash from investing activities, $m
  -83
  -10
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -30
  -31
  -32
  -34
  -36
  -38
  -39
  -41
Free cash flow, $m
  -68
  3
  3
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  18
  20
  21
Issuance/(repayment) of debt, $m
  67
  13
  14
  16
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  87
  92
Issuance/(repurchase) of shares, $m
  41
  1
  2
  3
  3
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  8
  8
  8
  8
  8
  7
  7
  6
Cash from financing (excl. dividends), $m  
  106
  14
  16
  19
  21
  24
  27
  29
  32
  34
  37
  39
  41
  45
  47
  49
  52
  54
  58
  61
  64
  67
  70
  72
  75
  79
  83
  87
  90
  94
  98
Total cash flow (excl. dividends), $m
  38
  17
  18
  21
  24
  26
  29
  31
  34
  36
  39
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  108
  113
  119
Retained Cash Flow (-), $m
  -8
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
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
 
  10
  11
  12
  14
  15
  17
  18
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  57
  60
  64
  67
  70
Discount rate, %
 
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
 
  9
  9
  9
  9
  8
  8
  7
  6
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.7
  99.2
  98.6
  97.7
  96.8
  95.7
  94.5
  93.3
  92.1
  90.8
  89.5
  88.2
  87.0
  85.8
  84.6
  83.4
  82.3
  81.3
  80.3
  79.3
  78.5
  77.6
  76.8
  76.1
  75.4
  74.8
  74.3
  73.8
  73.3
  72.9

America First Multifamily Investors, L.P. is engaged in acquiring, holding, selling and dealing with a portfolio of mortgage revenue bonds, which have been issued to provide construction and/or permanent financing for multifamily and student housing (collectively Residential Properties) and commercial properties. Its segments are Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts and mortgage-backed securities (MBS) Investments. Its Mortgage Revenue Bond Investments segment consists of its portfolio of mortgage revenue bonds, which have been issued to provide construction and/or permanent financing for the residential properties and a commercial property. The MF Properties segment consists of indirect equity interests in multifamily, student housing, and senior citizen residential properties, which are not financed by mortgage revenue bonds held by the Company, but which it intends to finance by such bonds through a restructuring.

FINANCIAL RATIOS  of  America First Multifamily Investors (ATAX)

Valuation Ratios
P/E Ratio 15.3
Price to Sales 5
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 24.5
Price to Free Cash Flow 91.8
Growth Rates
Sales Growth Rate 12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 266.7%
Cap. Spend. - 3 Yr. Gr. Rate -4.7%
Financial Strength
Quick Ratio 1
Current Ratio NaN
LT Debt to Equity 176.6%
Total Debt to Equity 189.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 2.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 7.6%
Return On Equity - 3 Yr. Avg. 7.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 76.7%
Gross Margin - 3 Yr. Avg. 75.8%
EBITDA Margin 69.9%
EBITDA Margin - 3 Yr. Avg. 67.1%
Operating Margin 39.7%
Oper. Margin - 3 Yr. Avg. 35.9%
Pre-Tax Margin 39.7%
Pre-Tax Margin - 3 Yr. Avg. 35.9%
Net Profit Margin 32.9%
Net Profit Margin - 3 Yr. Avg. 35.7%
Effective Tax Rate 17.2%
Eff/ Tax Rate - 3 Yr. Avg. 5.7%
Payout Ratio 141.7%

ATAX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATAX stock intrinsic value calculation we used $73 million for the last fiscal year's total revenue generated by America First Multifamily Investors. The default revenue input number comes from 2016 income statement of America First Multifamily Investors. 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 ATAX stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.9%, whose default value for ATAX is calculated based on our internal credit rating of America First Multifamily Investors, 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 America First Multifamily Investors.
    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 ATAX stock the variable cost ratio is equal to 24.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for ATAX 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 America First Multifamily Investors.

Corporate tax rate of 27% is the nominal tax rate for America First Multifamily Investors. 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 ATAX 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 ATAX are equal to 174.7%.

Life of production assets of 18.2 years is the average useful life of capital assets used in America First Multifamily Investors 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 ATAX is equal to 26%. 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 - $321 million for America First Multifamily Investors - 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 60.253 million for America First Multifamily Investors 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 America First Multifamily Investors at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

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▶ America First posts 2Q profit   [Aug-07-17 11:57PM  Associated Press]
▶ America First posts 1Q profit   [May-05-17 08:24AM  Associated Press]
Financial statements of ATAX
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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