Intrinsic value of Blackstone Mortgage Trust Cl A - BXMT

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$30.63

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$30.63

 
Intrinsic value

$9.46

 
Up/down potential

-69%

 
Rating

str. sell

 
Value-price divergence* premium content

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

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

We calculate the intrinsic value of BXMT 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 2.9

 

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, %
  21.17
  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
  498
  508
  520
  533
  548
  565
  583
  603
  624
  647
  672
  699
  727
  757
  789
  823
  860
  898
  938
  981
  1,026
  1,073
  1,124
  1,176
  1,232
  1,291
  1,353
  1,418
  1,486
  1,558
  1,634
Variable operating expenses, $m
 
  245
  250
  257
  264
  272
  281
  290
  301
  312
  324
  337
  350
  365
  380
  397
  414
  433
  452
  473
  494
  517
  542
  567
  594
  622
  652
  683
  716
  751
  787
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
  251
  245
  250
  257
  264
  272
  281
  290
  301
  312
  324
  337
  350
  365
  380
  397
  414
  433
  452
  473
  494
  517
  542
  567
  594
  622
  652
  683
  716
  751
  787
Operating income, $m
  247
  263
  269
  276
  284
  292
  302
  312
  323
  335
  348
  362
  377
  392
  409
  427
  445
  465
  486
  508
  531
  556
  582
  609
  638
  669
  701
  734
  770
  807
  846
EBITDA, $m
  247
  263
  269
  276
  284
  292
  302
  312
  323
  335
  348
  362
  377
  392
  409
  427
  445
  465
  486
  508
  531
  556
  582
  609
  638
  669
  701
  734
  770
  807
  846
Interest expense (income), $m
  165
  215
  220
  225
  231
  238
  245
  253
  262
  271
  281
  292
  304
  316
  329
  343
  358
  374
  391
  409
  428
  447
  468
  490
  513
  538
  564
  591
  619
  649
  681
Earnings before tax, $m
  247
  48
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  150
  158
  165
Tax expense, $m
  1
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
Net income, $m
  238
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  76
  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
  8,813
  8,912
  9,117
  9,351
  9,614
  9,905
  10,225
  10,573
  10,950
  11,356
  11,792
  12,259
  12,756
  13,286
  13,849
  14,446
  15,079
  15,749
  16,458
  17,207
  17,997
  18,832
  19,711
  20,639
  21,616
  22,645
  23,728
  24,869
  26,069
  27,331
  28,659
Adjusted assets (=assets-cash), $m
  8,737
  8,912
  9,117
  9,351
  9,614
  9,905
  10,225
  10,573
  10,950
  11,356
  11,792
  12,259
  12,756
  13,286
  13,849
  14,446
  15,079
  15,749
  16,458
  17,207
  17,997
  18,832
  19,711
  20,639
  21,616
  22,645
  23,728
  24,869
  26,069
  27,331
  28,659
Revenue / Adjusted assets
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
Average production assets, $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
Working capital, $m
  0
  254
  260
  266
  274
  282
  291
  301
  312
  324
  336
  349
  364
  379
  395
  412
  430
  449
  469
  490
  513
  537
  562
  588
  616
  645
  676
  709
  743
  779
  817
Total debt, $m
  6,231
  6,284
  6,430
  6,598
  6,786
  6,994
  7,223
  7,472
  7,741
  8,032
  8,343
  8,677
  9,033
  9,411
  9,814
  10,241
  10,694
  11,173
  11,679
  12,215
  12,780
  13,377
  14,006
  14,669
  15,367
  16,103
  16,878
  17,693
  18,551
  19,454
  20,403
Total liabilities, $m
  6,319
  6,372
  6,518
  6,686
  6,874
  7,082
  7,311
  7,560
  7,829
  8,120
  8,431
  8,765
  9,121
  9,499
  9,902
  10,329
  10,782
  11,261
  11,767
  12,303
  12,868
  13,465
  14,094
  14,757
  15,455
  16,191
  16,966
  17,781
  18,639
  19,542
  20,491
Total equity, $m
  2,494
  2,540
  2,598
  2,665
  2,740
  2,823
  2,914
  3,013
  3,121
  3,237
  3,361
  3,494
  3,635
  3,786
  3,947
  4,117
  4,298
  4,489
  4,691
  4,904
  5,129
  5,367
  5,618
  5,882
  6,161
  6,454
  6,763
  7,088
  7,430
  7,789
  8,168
Total liabilities and equity, $m
  8,813
  8,912
  9,116
  9,351
  9,614
  9,905
  10,225
  10,573
  10,950
  11,357
  11,792
  12,259
  12,756
  13,285
  13,849
  14,446
  15,080
  15,750
  16,458
  17,207
  17,997
  18,832
  19,712
  20,639
  21,616
  22,645
  23,729
  24,869
  26,069
  27,331
  28,659
Debt-to-equity ratio
  2.498
  2.470
  2.470
  2.480
  2.480
  2.480
  2.480
  2.480
  2.480
  2.480
  2.480
  2.480
  2.480
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.490
  2.500
  2.500
  2.500
  2.500
  2.500
  2.500
Adjusted equity ratio
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  238
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
Depreciation, amort., depletion, $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
Funds from operations, $m
  233
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
Change in working capital, $m
  -4
  5
  6
  7
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
Cash from operations, $m
  237
  30
  30
  31
  31
  32
  33
  33
  34
  35
  37
  38
  39
  40
  42
  44
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $m
  444
  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
Free cash flow, $m
  681
  30
  30
  31
  31
  32
  33
  33
  34
  35
  37
  38
  39
  40
  42
  44
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  72
  76
  79
  83
Issuance/(repayment) of debt, $m
  -430
  129
  147
  168
  188
  208
  229
  249
  270
  290
  312
  333
  356
  379
  403
  427
  453
  479
  507
  535
  565
  596
  629
  663
  699
  736
  775
  815
  858
  903
  949
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  
  -467
  129
  147
  168
  188
  208
  229
  249
  270
  290
  312
  333
  356
  379
  403
  427
  453
  479
  507
  535
  565
  596
  629
  663
  699
  736
  775
  815
  858
  903
  949
Total cash flow (excl. dividends), $m
  212
  159
  177
  198
  219
  240
  261
  282
  304
  326
  348
  371
  395
  419
  445
  471
  498
  526
  556
  587
  619
  652
  687
  724
  762
  802
  844
  888
  934
  982
  1,032
Retained Cash Flow (-), $m
  -1
  -46
  -58
  -67
  -75
  -83
  -91
  -99
  -107
  -116
  -124
  -133
  -142
  -151
  -160
  -170
  -180
  -191
  -202
  -213
  -225
  -238
  -251
  -264
  -278
  -293
  -309
  -325
  -342
  -360
  -378
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
 
  113
  118
  131
  144
  157
  170
  183
  196
  210
  224
  238
  253
  268
  284
  300
  318
  335
  354
  373
  393
  414
  436
  459
  483
  509
  535
  563
  592
  622
  654
Discount rate, %
 
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
 
  101
  94
  92
  87
  81
  74
  67
  59
  51
  43
  35
  29
  23
  18
  14
  10
  7
  5
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  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

Blackstone Mortgage Trust, Inc., a real estate finance company, originates and purchases senior loans collateralized by properties in North America and Europe. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to U.S. federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Capital Trust, Inc. and changed its name to Blackstone Mortgage Trust, Inc. in May 2013. Blackstone Mortgage Trust, Inc. was founded in 1966 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Blackstone Mortgage Trust Cl A (BXMT)

Valuation Ratios
P/E Ratio 12.2
Price to Sales 5.8
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 12.2
Growth Rates
Sales Growth Rate 21.2%
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 0
Current Ratio NaN
LT Debt to Equity 20.6%
Total Debt to Equity 249.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity 9.5%
Return On Equity - 3 Yr. Avg. 9.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 63.1%
Gross Margin - 3 Yr. Avg. 62.8%
EBITDA Margin 82.7%
EBITDA Margin - 3 Yr. Avg. 83.2%
Operating Margin 49.6%
Oper. Margin - 3 Yr. Avg. 52%
Pre-Tax Margin 49.6%
Pre-Tax Margin - 3 Yr. Avg. 51.9%
Net Profit Margin 47.8%
Net Profit Margin - 3 Yr. Avg. 48.1%
Effective Tax Rate 0.4%
Eff/ Tax Rate - 3 Yr. Avg. 0.5%
Payout Ratio 97.9%

BXMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BXMT stock intrinsic value calculation we used $498 million for the last fiscal year's total revenue generated by Blackstone Mortgage Trust Cl A. The default revenue input number comes from 2016 income statement of Blackstone Mortgage Trust Cl A. 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 BXMT 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 11.6%, whose default value for BXMT is calculated based on our internal credit rating of Blackstone Mortgage Trust Cl A, 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 Blackstone Mortgage Trust Cl A.
    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 BXMT stock the variable cost ratio is equal to 48.2%.

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 BXMT 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 Blackstone Mortgage Trust Cl A.

Corporate tax rate of 27% is the nominal tax rate for Blackstone Mortgage Trust Cl A. 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 BXMT 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 BXMT are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Blackstone Mortgage Trust Cl A 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 BXMT is equal to 50%. 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 - $2494 million for Blackstone Mortgage Trust Cl A - 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 94.961 million for Blackstone Mortgage Trust Cl A 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 Blackstone Mortgage Trust Cl A at the current share price and the inputted number of shares is $2.9 billion.


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COMPANY NEWS

▶ Blackstone Mortgage misses 1Q profit forecasts   [Apr-25-17 05:06PM  Associated Press]
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▶ Six 6% Yields (With 60% Upside, Too)   [08:47AM  at Forbes]
▶ When There's Smoke, There's Usually Fire   [Dec-29-16 03:12PM  at Forbes]
▶ A REIT Yielding 8.8% That Benefits When Rates Rise   [Oct-10-16 07:00AM  at Forbes]
Stock chart of BXMT Financial statements of BXMT Annual reports of BXMT
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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