Intrinsic value of Cohen&Steers - CNS

Previous Close

$39.09

  Intrinsic Value

$58.57

stock screener

  Rating & Target

buy

+50%

  Value-price divergence*

+56%

Previous close

$39.09

 
Intrinsic value

$58.57

 
Up/down potential

+50%

 
Rating

buy

 
Value-price divergence*

+56%

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

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

We calculate the intrinsic value of CNS 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 1.8

 

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, %
  6.38
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  350
  394
  440
  489
  540
  593
  649
  708
  769
  832
  898
  966
  1,037
  1,111
  1,187
  1,267
  1,350
  1,436
  1,526
  1,620
  1,717
  1,819
  1,924
  2,035
  2,150
  2,271
  2,396
  2,528
  2,665
  2,809
  2,959
Variable operating expenses, $m
 
  240
  268
  298
  329
  361
  395
  431
  467
  506
  546
  585
  628
  673
  719
  768
  818
  870
  925
  981
  1,040
  1,102
  1,166
  1,233
  1,303
  1,376
  1,452
  1,531
  1,615
  1,702
  1,793
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
  214
  240
  268
  298
  329
  361
  395
  431
  467
  506
  546
  585
  628
  673
  719
  768
  818
  870
  925
  981
  1,040
  1,102
  1,166
  1,233
  1,303
  1,376
  1,452
  1,531
  1,615
  1,702
  1,793
Operating income, $m
  136
  153
  172
  191
  211
  232
  254
  277
  301
  326
  352
  381
  409
  438
  468
  499
  532
  566
  602
  638
  677
  717
  759
  802
  847
  895
  944
  996
  1,050
  1,107
  1,166
EBITDA, $m
  144
  157
  175
  195
  215
  236
  259
  282
  306
  331
  357
  385
  413
  442
  473
  505
  538
  572
  608
  645
  684
  724
  766
  810
  856
  904
  954
  1,007
  1,061
  1,119
  1,178
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
Earnings before tax, $m
  143
  153
  171
  190
  210
  231
  253
  275
  299
  323
  349
  377
  405
  433
  463
  494
  526
  559
  594
  630
  668
  707
  749
  791
  836
  883
  931
  982
  1,036
  1,091
  1,150
Tax expense, $m
  50
  41
  46
  51
  57
  62
  68
  74
  81
  87
  94
  102
  109
  117
  125
  133
  142
  151
  160
  170
  180
  191
  202
  214
  226
  238
  251
  265
  280
  295
  310
Net income, $m
  93
  112
  125
  139
  153
  169
  184
  201
  218
  236
  255
  275
  295
  316
  338
  360
  384
  408
  434
  460
  488
  516
  546
  578
  610
  644
  680
  717
  756
  797
  839

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  183
  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
  334
  170
  190
  211
  233
  256
  280
  305
  332
  359
  387
  417
  447
  479
  512
  547
  582
  620
  658
  699
  741
  785
  830
  878
  928
  980
  1,034
  1,090
  1,150
  1,212
  1,277
Adjusted assets (=assets-cash), $m
  151
  170
  190
  211
  233
  256
  280
  305
  332
  359
  387
  417
  447
  479
  512
  547
  582
  620
  658
  699
  741
  785
  830
  878
  928
  980
  1,034
  1,090
  1,150
  1,212
  1,277
Revenue / Adjusted assets
  2.318
  2.318
  2.316
  2.318
  2.318
  2.316
  2.318
  2.321
  2.316
  2.318
  2.320
  2.317
  2.320
  2.319
  2.318
  2.316
  2.320
  2.316
  2.319
  2.318
  2.317
  2.317
  2.318
  2.318
  2.317
  2.317
  2.317
  2.319
  2.317
  2.318
  2.317
Average production assets, $m
  15
  16
  18
  20
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  52
  55
  59
  63
  66
  70
  75
  79
  83
  88
  93
  98
  104
  109
  115
  121
Working capital, $m
  0
  -39
  -44
  -49
  -54
  -59
  -65
  -71
  -77
  -83
  -90
  -97
  -104
  -111
  -119
  -127
  -135
  -144
  -153
  -162
  -172
  -182
  -192
  -203
  -215
  -227
  -240
  -253
  -267
  -281
  -296
Total debt, $m
  0
  8
  17
  27
  37
  47
  58
  69
  81
  93
  106
  120
  133
  148
  163
  178
  194
  211
  228
  246
  265
  285
  306
  327
  349
  373
  397
  423
  449
  477
  506
Total liabilities, $m
  68
  76
  85
  95
  105
  115
  126
  137
  149
  161
  174
  188
  201
  216
  231
  246
  262
  279
  296
  314
  333
  353
  374
  395
  417
  441
  465
  491
  517
  545
  574
Total equity, $m
  266
  93
  104
  116
  128
  141
  154
  168
  182
  197
  213
  229
  246
  264
  282
  301
  320
  341
  362
  384
  407
  432
  457
  483
  510
  539
  569
  600
  632
  666
  702
Total liabilities and equity, $m
  334
  169
  189
  211
  233
  256
  280
  305
  331
  358
  387
  417
  447
  480
  513
  547
  582
  620
  658
  698
  740
  785
  831
  878
  927
  980
  1,034
  1,091
  1,149
  1,211
  1,276
Debt-to-equity ratio
  0.000
  0.090
  0.170
  0.230
  0.290
  0.340
  0.380
  0.410
  0.450
  0.470
  0.500
  0.520
  0.540
  0.560
  0.580
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.680
  0.690
  0.700
  0.700
  0.710
  0.720
  0.720
Adjusted equity ratio
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  93
  112
  125
  139
  153
  169
  184
  201
  218
  236
  255
  275
  295
  316
  338
  360
  384
  408
  434
  460
  488
  516
  546
  578
  610
  644
  680
  717
  756
  797
  839
Depreciation, amort., depletion, $m
  8
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
Funds from operations, $m
  112
  115
  129
  143
  157
  173
  189
  206
  223
  241
  260
  279
  300
  321
  343
  366
  389
  414
  440
  467
  495
  524
  554
  586
  619
  654
  690
  727
  767
  808
  851
Change in working capital, $m
  -3
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
Cash from operations, $m
  115
  120
  133
  148
  162
  178
  194
  211
  229
  247
  267
  286
  307
  328
  350
  374
  398
  423
  449
  476
  505
  534
  565
  597
  631
  666
  702
  741
  781
  823
  866
Maintenance CAPEX, $m
  0
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
New CAPEX, $m
  -10
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -10
  -10
  -10
  -11
  -11
  -11
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -18
Free cash flow, $m
  118
  117
  130
  144
  158
  174
  190
  206
  224
  242
  260
  280
  300
  321
  343
  365
  389
  414
  439
  466
  494
  523
  553
  585
  618
  652
  688
  725
  765
  806
  849
Issuance/(repayment) of debt, $m
  0
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
  26
  27
  28
  29
Issuance/(repurchase) of shares, $m
  -7
  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  
  -4
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
  26
  27
  28
  29
Total cash flow (excl. dividends), $m
  112
  125
  139
  153
  168
  184
  201
  218
  235
  254
  273
  293
  314
  335
  358
  381
  405
  431
  457
  484
  513
  543
  574
  606
  640
  675
  712
  751
  791
  834
  878
Retained Cash Flow (-), $m
  -34
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
Prev. year cash balance distribution, $m
 
  183
  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
 
  298
  128
  142
  156
  171
  187
  204
  221
  239
  258
  277
  297
  318
  339
  362
  386
  410
  436
  462
  490
  519
  549
  580
  613
  647
  682
  720
  759
  800
  842
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  285
  117
  123
  129
  133
  136
  138
  138
  137
  135
  131
  127
  121
  114
  106
  98
  89
  80
  71
  62
  54
  46
  38
  31
  25
  20
  15
  12
  9
  6
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

Cohen & Steers, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to institutional investors, including pension funds, endowments, and foundations. It manages separate client-focused equity, fixed income, multi-asset, and commodity portfolios through its subsidiaries. The firm launches and manages equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. Through its subsidiaries, it also launches and manages hedge funds. The firm invests in public equity, fixed income, and commodity markets across the globe through its subsidiaries. Through its subsidiaries, it invests in companies operating in the real estate sector, including real estate investment trusts, infrastructure sector, and natural energy resources sector for its equity and fixed income investments. The firm also invests in preferred securities for its fixed income investments through its subsidiaries. Cohen & Steers, Inc. was founded in 1986 and is based in New York, with additional offices in London, United Kingdom; Central, Hong Kong; Tokyo, Japan; and Seattle, Washington.

FINANCIAL RATIOS  of  Cohen&Steers (CNS)

Valuation Ratios
P/E Ratio 19.3
Price to Sales 5.1
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 17.1
Growth Rates
Sales Growth Rate 6.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 400%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 29.1%
Ret/ On Assets - 3 Yr. Avg. 26.2%
Return On Total Capital 37.3%
Ret/ On T. Cap. - 3 Yr. Avg. 33.1%
Return On Equity 37.3%
Return On Equity - 3 Yr. Avg. 33.1%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 88.6%
Gross Margin - 3 Yr. Avg. 88.6%
EBITDA Margin 43.1%
EBITDA Margin - 3 Yr. Avg. 39.9%
Operating Margin 38.9%
Oper. Margin - 3 Yr. Avg. 38.9%
Pre-Tax Margin 40.9%
Pre-Tax Margin - 3 Yr. Avg. 38%
Net Profit Margin 26.6%
Net Profit Margin - 3 Yr. Avg. 23.5%
Effective Tax Rate 35%
Eff/ Tax Rate - 3 Yr. Avg. 38.7%
Payout Ratio 76.3%

CNS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNS stock intrinsic value calculation we used $350 million for the last fiscal year's total revenue generated by Cohen&Steers. The default revenue input number comes from 2016 income statement of Cohen&Steers. 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 CNS stock valuation model: a) initial revenue growth rate of 12.5% 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 4.3%, whose default value for CNS is calculated based on our internal credit rating of Cohen&Steers, 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 Cohen&Steers.
    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 CNS stock the variable cost ratio is equal to 61.1%.

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 CNS 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 Cohen&Steers.

Corporate tax rate of 27% is the nominal tax rate for Cohen&Steers. 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 CNS 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 CNS are equal to 4.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Cohen&Steers 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 CNS is equal to -10%. 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 - $266 million for Cohen&Steers - 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 46.778 million for Cohen&Steers 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 Cohen&Steers at the current share price and the inputted number of shares is $1.8 billion.

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COMPANY NEWS

▶ Cohen & Steers, Inc. Board Declares Quarterly Dividend   [Aug-03-17 04:29PM  PR Newswire]
▶ /C O R R E C T I O N -- Cohen & Steers/   [Aug-01-17 04:23PM  PR Newswire]
▶ New Strong Buy Stocks for May 15th   [May-15-17 10:12AM  Zacks]
▶ Cohen & Steers, Inc. Board Declares Quarterly Dividend   [May-04-17 04:44PM  PR Newswire]
▶ [$$] Retail investors pile into European property funds   [Apr-02-17 12:13AM  Financial Times]
▶ Cohen & Steers, Inc. Board Declares Quarterly Dividend   [Feb-23-17 04:29PM  PR Newswire]
▶ Cohen & Steers Funds Quarterly Data Now Available   [Jan-27-17 05:00PM  PR Newswire]
Stock chart of CNS Financial statements of CNS
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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