Intrinsic value of Chimera Investment - CIM

Previous Close

$19.04

  Intrinsic Value

$115.03

stock screener

  Rating & Target

str. buy

+504%

  Value-price divergence*

0%

Previous close

$19.04

 
Intrinsic value

$115.03

 
Up/down potential

+504%

 
Rating

str. buy

 
Value-price divergence*

0%

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

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

We calculate the intrinsic value of CIM 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 3.6

 

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, %
  27.94
  53.00
  48.20
  43.88
  39.99
  36.49
  33.34
  30.51
  27.96
  25.66
  23.60
  21.74
  20.06
  18.56
  17.20
  15.98
  14.88
  13.89
  13.01
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
Revenue, $m
  1,012
  1,548
  2,295
  3,302
  4,622
  6,309
  8,412
  10,979
  14,048
  17,653
  21,819
  26,561
  31,890
  37,808
  44,311
  51,392
  59,041
  67,244
  75,990
  85,264
  95,056
  105,355
  116,157
  127,455
  139,250
  151,544
  164,343
  177,657
  191,499
  205,884
  220,833
Variable operating expenses, $m
 
  1,059
  1,570
  2,258
  3,161
  4,315
  5,754
  7,509
  9,609
  12,075
  14,924
  18,168
  21,813
  25,861
  30,309
  35,152
  40,384
  45,995
  51,977
  58,320
  65,018
  72,063
  79,451
  87,179
  95,247
  103,656
  112,411
  121,518
  130,985
  140,825
  151,050
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
  460
  1,059
  1,570
  2,258
  3,161
  4,315
  5,754
  7,509
  9,609
  12,075
  14,924
  18,168
  21,813
  25,861
  30,309
  35,152
  40,384
  45,995
  51,977
  58,320
  65,018
  72,063
  79,451
  87,179
  95,247
  103,656
  112,411
  121,518
  130,985
  140,825
  151,050
Operating income, $m
  552
  489
  725
  1,043
  1,461
  1,994
  2,658
  3,469
  4,439
  5,578
  6,895
  8,393
  10,077
  11,947
  14,002
  16,240
  18,657
  21,249
  24,013
  26,943
  30,038
  33,292
  36,705
  40,276
  44,003
  47,888
  51,932
  56,140
  60,514
  65,059
  69,783
EBITDA, $m
  552
  489
  725
  1,043
  1,461
  1,994
  2,658
  3,469
  4,439
  5,578
  6,895
  8,393
  10,077
  11,947
  14,002
  16,240
  18,657
  21,249
  24,013
  26,943
  30,038
  33,292
  36,705
  40,276
  44,003
  47,888
  51,932
  56,140
  60,514
  65,059
  69,783
Interest expense (income), $m
  335
  444
  697
  1,044
  1,512
  2,127
  2,912
  3,890
  5,085
  6,513
  8,190
  10,129
  12,336
  14,815
  17,569
  20,595
  23,890
  27,449
  31,267
  35,336
  39,652
  44,208
  49,001
  54,027
  59,284
  64,773
  70,494
  76,450
  82,645
  89,086
  95,780
Earnings before tax, $m
  552
  45
  29
  -1
  -52
  -133
  -253
  -421
  -645
  -935
  -1,296
  -1,735
  -2,258
  -2,868
  -3,567
  -4,355
  -5,233
  -6,200
  -7,254
  -8,393
  -9,614
  -10,916
  -12,295
  -13,751
  -15,281
  -16,885
  -18,561
  -20,310
  -22,131
  -24,026
  -25,996
Tax expense, $m
  0
  12
  8
  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
Net income, $m
  552
  33
  21
  -1
  -52
  -133
  -253
  -421
  -645
  -935
  -1,296
  -1,735
  -2,258
  -2,868
  -3,567
  -4,355
  -5,233
  -6,200
  -7,254
  -8,393
  -9,614
  -10,916
  -12,295
  -13,751
  -15,281
  -16,885
  -18,561
  -20,310
  -22,131
  -24,026
  -25,996

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  178
  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
  16,685
  25,383
  37,618
  54,124
  75,769
  103,420
  137,904
  179,977
  230,295
  289,395
  357,681
  435,428
  522,788
  619,799
  726,411
  842,497
  967,885
  1,102,367
  1,245,731
  1,397,766
  1,558,287
  1,727,138
  1,904,206
  2,089,426
  2,282,786
  2,484,329
  2,694,153
  2,912,415
  3,139,326
  3,375,155
  3,620,220
Adjusted assets (=assets-cash), $m
  16,507
  25,383
  37,618
  54,124
  75,769
  103,420
  137,904
  179,977
  230,295
  289,395
  357,681
  435,428
  522,788
  619,799
  726,411
  842,497
  967,885
  1,102,367
  1,245,731
  1,397,766
  1,558,287
  1,727,138
  1,904,206
  2,089,426
  2,282,786
  2,484,329
  2,694,153
  2,912,415
  3,139,326
  3,375,155
  3,620,220
Revenue / Adjusted assets
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
  0.061
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
  774
  1,147
  1,651
  2,311
  3,154
  4,206
  5,489
  7,024
  8,827
  10,909
  13,281
  15,945
  18,904
  22,156
  25,696
  29,520
  33,622
  37,995
  42,632
  47,528
  52,678
  58,078
  63,728
  69,625
  75,772
  82,172
  88,829
  95,749
  102,942
  110,417
Total debt, $m
  12,876
  19,901
  29,823
  43,210
  60,764
  83,188
  111,155
  145,276
  186,084
  234,014
  289,394
  352,447
  423,296
  501,972
  588,434
  682,580
  784,269
  893,335
  1,009,602
  1,132,903
  1,263,086
  1,400,024
  1,543,626
  1,693,840
  1,850,655
  2,014,105
  2,184,273
  2,361,283
  2,545,309
  2,736,565
  2,935,313
Total liabilities, $m
  13,561
  20,586
  30,508
  43,895
  61,449
  83,873
  111,840
  145,961
  186,769
  234,699
  290,079
  353,132
  423,981
  502,657
  589,119
  683,265
  784,954
  894,020
  1,010,287
  1,133,588
  1,263,771
  1,400,709
  1,544,311
  1,694,525
  1,851,340
  2,014,790
  2,184,958
  2,361,968
  2,545,994
  2,737,250
  2,935,998
Total equity, $m
  3,124
  4,797
  7,110
  10,229
  14,320
  19,546
  26,064
  34,016
  43,526
  54,696
  67,602
  82,296
  98,807
  117,142
  137,292
  159,232
  182,930
  208,347
  235,443
  264,178
  294,516
  326,429
  359,895
  394,902
  431,447
  469,538
  509,195
  550,446
  593,333
  637,904
  684,222
Total liabilities and equity, $m
  16,685
  25,383
  37,618
  54,124
  75,769
  103,419
  137,904
  179,977
  230,295
  289,395
  357,681
  435,428
  522,788
  619,799
  726,411
  842,497
  967,884
  1,102,367
  1,245,730
  1,397,766
  1,558,287
  1,727,138
  1,904,206
  2,089,427
  2,282,787
  2,484,328
  2,694,153
  2,912,414
  3,139,327
  3,375,154
  3,620,220
Debt-to-equity ratio
  4.122
  4.150
  4.190
  4.220
  4.240
  4.260
  4.260
  4.270
  4.280
  4.280
  4.280
  4.280
  4.280
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
  4.290
Adjusted equity ratio
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189
  0.189

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  552
  33
  21
  -1
  -52
  -133
  -253
  -421
  -645
  -935
  -1,296
  -1,735
  -2,258
  -2,868
  -3,567
  -4,355
  -5,233
  -6,200
  -7,254
  -8,393
  -9,614
  -10,916
  -12,295
  -13,751
  -15,281
  -16,885
  -18,561
  -20,310
  -22,131
  -24,026
  -25,996
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
  560
  33
  21
  -1
  -52
  -133
  -253
  -421
  -645
  -935
  -1,296
  -1,735
  -2,258
  -2,868
  -3,567
  -4,355
  -5,233
  -6,200
  -7,254
  -8,393
  -9,614
  -10,916
  -12,295
  -13,751
  -15,281
  -16,885
  -18,561
  -20,310
  -22,131
  -24,026
  -25,996
Change in working capital, $m
  7
  268
  373
  503
  660
  843
  1,052
  1,283
  1,535
  1,803
  2,083
  2,371
  2,664
  2,959
  3,252
  3,541
  3,824
  4,102
  4,373
  4,637
  4,896
  5,150
  5,401
  5,649
  5,897
  6,147
  6,400
  6,657
  6,921
  7,193
  7,474
Cash from operations, $m
  553
  -235
  -352
  -504
  -712
  -977
  -1,305
  -1,704
  -2,180
  -2,737
  -3,379
  -4,107
  -4,923
  -5,827
  -6,818
  -7,896
  -9,058
  -10,302
  -11,627
  -13,030
  -14,510
  -16,066
  -17,696
  -19,400
  -21,179
  -23,032
  -24,961
  -26,967
  -29,052
  -31,219
  -33,471
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
  -1,271
  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
  -718
  -235
  -352
  -504
  -712
  -977
  -1,305
  -1,704
  -2,180
  -2,737
  -3,379
  -4,107
  -4,923
  -5,827
  -6,818
  -7,896
  -9,058
  -10,302
  -11,627
  -13,030
  -14,510
  -16,066
  -17,696
  -19,400
  -21,179
  -23,032
  -24,961
  -26,967
  -29,052
  -31,219
  -33,471
Issuance/(repayment) of debt, $m
  1,096
  7,203
  9,922
  13,387
  17,554
  22,424
  27,966
  34,121
  40,808
  47,930
  55,380
  63,053
  70,849
  78,676
  86,462
  94,146
  101,689
  109,065
  116,268
  123,301
  130,182
  136,938
  143,602
  150,214
  156,815
  163,451
  170,167
  177,010
  184,025
  191,257
  198,748
Issuance/(repurchase) of shares, $m
  140
  1,641
  2,291
  3,120
  4,143
  5,359
  6,771
  8,373
  10,156
  12,104
  14,202
  16,430
  18,769
  21,203
  23,716
  26,296
  28,932
  31,617
  34,350
  37,127
  39,952
  42,829
  45,761
  48,758
  51,826
  54,977
  58,218
  61,561
  65,018
  68,598
  72,314
Cash from financing (excl. dividends), $m  
  1,235
  8,844
  12,213
  16,507
  21,697
  27,783
  34,737
  42,494
  50,964
  60,034
  69,582
  79,483
  89,618
  99,879
  110,178
  120,442
  130,621
  140,682
  150,618
  160,428
  170,134
  179,767
  189,363
  198,972
  208,641
  218,428
  228,385
  238,571
  249,043
  259,855
  271,062
Total cash flow (excl. dividends), $m
  518
  8,608
  11,861
  16,003
  20,985
  26,807
  33,432
  40,790
  48,784
  57,297
  66,203
  75,376
  84,695
  94,053
  103,360
  112,546
  121,563
  130,381
  138,991
  147,399
  155,625
  163,701
  171,668
  179,571
  187,462
  195,395
  203,425
  211,605
  219,991
  228,636
  237,591
Retained Cash Flow (-), $m
  -178
  -1,673
  -2,312
  -3,120
  -4,143
  -5,359
  -6,771
  -8,373
  -10,156
  -12,104
  -14,202
  -16,430
  -18,769
  -21,203
  -23,716
  -26,296
  -28,932
  -31,617
  -34,350
  -37,127
  -39,952
  -42,829
  -45,761
  -48,758
  -51,826
  -54,977
  -58,218
  -61,561
  -65,018
  -68,598
  -72,314
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
 
  6,934
  9,549
  12,883
  16,842
  21,448
  26,661
  32,417
  38,628
  45,192
  52,001
  58,946
  65,926
  72,850
  79,643
  86,250
  92,631
  98,764
  104,641
  110,271
  115,672
  120,873
  125,906
  130,813
  135,636
  140,419
  145,207
  150,044
  154,973
  160,038
  165,277
Discount rate, %
 
  12.70
  13.34
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.69
  21.72
  22.81
  23.95
  25.15
  26.40
  27.72
  29.11
  30.56
  32.09
  33.70
  35.38
  37.15
  39.01
  40.96
  43.01
  45.16
  47.41
  49.79
  52.27
PV of cash for distribution, $m
 
  6,153
  7,434
  8,695
  9,730
  10,463
  10,825
  10,789
  10,367
  9,614
  8,610
  7,451
  6,232
  5,041
  3,943
  2,982
  2,181
  1,542
  1,053
  695
  442
  272
  161
  91
  50
  26
  13
  6
  3
  1
  1
Current shareholders' claim on cash, %
  100
  68.6
  48.4
  35.0
  25.9
  19.5
  15.0
  11.7
  9.3
  7.5
  6.1
  5.0
  4.2
  3.5
  3.0
  2.6
  2.2
  1.9
  1.7
  1.5
  1.3
  1.2
  1.0
  0.9
  0.8
  0.7
  0.7
  0.6
  0.6
  0.5
  0.5

Chimera Investment Corporation operates as a real estate investment trust in the United States. The company, through its subsidiaries, invests in residential mortgage-backed securities (RMBS), residential mortgage loans, commercial mortgage loans, real estate-related securities, and various other asset classes. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. Chimera Investment Corporation was founded in 2007 and is based in New York, New York.

FINANCIAL RATIOS  of  Chimera Investment (CIM)

Valuation Ratios
P/E Ratio 6.5
Price to Sales 3.5
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 6.5
Price to Free Cash Flow 6.5
Growth Rates
Sales Growth Rate 27.9%
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 232.9%
Total Debt to Equity 412.2%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.5%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 3.6%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 18.2%
Return On Equity - 3 Yr. Avg. 14.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 62.5%
Gross Margin - 3 Yr. Avg. 68.3%
EBITDA Margin 87.6%
EBITDA Margin - 3 Yr. Avg. 73.7%
Operating Margin 54.5%
Oper. Margin - 3 Yr. Avg. 48.9%
Pre-Tax Margin 54.5%
Pre-Tax Margin - 3 Yr. Avg. 48.9%
Net Profit Margin 54.5%
Net Profit Margin - 3 Yr. Avg. 48.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 82.2%

CIM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CIM stock intrinsic value calculation we used $1012 million for the last fiscal year's total revenue generated by Chimera Investment. The default revenue input number comes from 2016 income statement of Chimera Investment. 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 CIM stock valuation model: a) initial revenue growth rate of 53% 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 12.7%, whose default value for CIM is calculated based on our internal credit rating of Chimera Investment, 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 Chimera Investment.
    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 CIM stock the variable cost ratio is equal to 68.4%.

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 CIM 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 Chimera Investment.

Corporate tax rate of 27% is the nominal tax rate for Chimera Investment. 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 CIM 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 CIM are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Chimera Investment 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 CIM 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 - $3124 million for Chimera Investment - 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 188.083 million for Chimera Investment 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 Chimera Investment at the current share price and the inputted number of shares is $3.6 billion.

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COMPANY NEWS

▶ Chimera posts 2Q profit   [Aug-02-17 10:56PM  Associated Press]
▶ Chimera posts 1Q profit   [May-01-17 04:46PM  Associated Press]
▶ These REITS Continue to Perform Strongly   [01:00PM  Investopedia]
▶ Chimera posts 4Q profit   [Feb-14-17 06:09PM  Associated Press]
▶ Mortgage REITs Vulnerable to Fed Balance Sheet Shrinkage   [Feb-09-17 04:20PM  at Barrons.com]
▶ Billionaire Leon Coopermans Top Dividend Stock Picks   [Dec-16-16 01:54PM  at Insider Monkey]
Stock chart of CIM Financial statements of CIM
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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