Intrinsic value of Cohen&Steers - CNS

Previous Close

$45.51

  Intrinsic Value

$36.57

stock screener

  Rating & Target

hold

-20%

Previous close

$45.51

 
Intrinsic value

$36.57

 
Up/down potential

-20%

 
Rating

hold

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

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 2.1

 

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
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  350
  357
  366
  376
  386
  398
  411
  426
  441
  458
  475
  494
  515
  536
  559
  583
  609
  636
  665
  695
  727
  761
  797
  834
  874
  915
  959
  1,005
  1,054
  1,105
  1,159
Variable operating expenses, $m
 
  218
  223
  229
  236
  243
  251
  260
  269
  279
  290
  300
  312
  325
  339
  353
  369
  385
  403
  421
  441
  461
  483
  505
  529
  555
  581
  609
  639
  669
  702
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
  218
  223
  229
  236
  243
  251
  260
  269
  279
  290
  300
  312
  325
  339
  353
  369
  385
  403
  421
  441
  461
  483
  505
  529
  555
  581
  609
  639
  669
  702
Operating income, $m
  136
  139
  142
  146
  151
  155
  160
  166
  172
  179
  186
  195
  203
  211
  220
  230
  240
  251
  262
  274
  287
  300
  314
  329
  344
  361
  378
  396
  415
  436
  457
EBITDA, $m
  144
  144
  147
  151
  155
  160
  166
  171
  177
  184
  191
  199
  207
  216
  225
  235
  245
  256
  267
  280
  293
  306
  320
  336
  352
  368
  386
  405
  424
  445
  466
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
Earnings before tax, $m
  143
  139
  142
  146
  150
  155
  160
  166
  172
  178
  185
  194
  202
  210
  219
  228
  238
  249
  260
  272
  284
  297
  311
  326
  341
  357
  374
  392
  411
  431
  452
Tax expense, $m
  50
  38
  38
  39
  41
  42
  43
  45
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
Net income, $m
  93
  102
  104
  107
  110
  113
  117
  121
  125
  130
  135
  142
  147
  153
  160
  167
  174
  182
  190
  198
  208
  217
  227
  238
  249
  261
  273
  286
  300
  314
  330

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
  154
  158
  162
  167
  172
  178
  184
  190
  197
  205
  213
  222
  231
  241
  252
  263
  274
  287
  300
  314
  328
  344
  360
  377
  395
  414
  434
  455
  477
  500
Adjusted assets (=assets-cash), $m
  151
  154
  158
  162
  167
  172
  178
  184
  190
  197
  205
  213
  222
  231
  241
  252
  263
  274
  287
  300
  314
  328
  344
  360
  377
  395
  414
  434
  455
  477
  500
Revenue / Adjusted assets
  2.318
  2.318
  2.316
  2.321
  2.311
  2.314
  2.309
  2.315
  2.321
  2.325
  2.317
  2.319
  2.320
  2.320
  2.320
  2.313
  2.316
  2.321
  2.317
  2.317
  2.315
  2.320
  2.317
  2.317
  2.318
  2.316
  2.316
  2.316
  2.316
  2.317
  2.318
Average production assets, $m
  15
  15
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
Working capital, $m
  0
  -187
  -191
  -196
  -202
  -208
  -215
  -223
  -231
  -239
  -249
  -259
  -269
  -280
  -292
  -305
  -318
  -333
  -348
  -364
  -380
  -398
  -417
  -436
  -457
  -479
  -502
  -526
  -551
  -578
  -606
Total debt, $m
  0
  1
  3
  5
  7
  9
  12
  15
  18
  21
  24
  28
  32
  36
  41
  45
  50
  55
  61
  67
  73
  80
  87
  94
  102
  110
  118
  127
  137
  147
  157
Total liabilities, $m
  68
  69
  71
  73
  75
  77
  80
  83
  86
  89
  92
  96
  100
  104
  109
  113
  118
  123
  129
  135
  141
  148
  155
  162
  170
  178
  186
  195
  205
  215
  225
Total equity, $m
  266
  85
  87
  89
  92
  95
  98
  101
  105
  109
  113
  117
  122
  127
  133
  138
  144
  151
  158
  165
  173
  181
  189
  198
  207
  217
  228
  239
  250
  262
  275
Total liabilities and equity, $m
  334
  154
  158
  162
  167
  172
  178
  184
  191
  198
  205
  213
  222
  231
  242
  251
  262
  274
  287
  300
  314
  329
  344
  360
  377
  395
  414
  434
  455
  477
  500
Debt-to-equity ratio
  0.000
  0.020
  0.030
  0.060
  0.080
  0.100
  0.120
  0.150
  0.170
  0.190
  0.220
  0.240
  0.260
  0.280
  0.310
  0.330
  0.350
  0.370
  0.390
  0.410
  0.420
  0.440
  0.460
  0.470
  0.490
  0.510
  0.520
  0.530
  0.550
  0.560
  0.570
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
  102
  104
  107
  110
  113
  117
  121
  125
  130
  135
  142
  147
  153
  160
  167
  174
  182
  190
  198
  208
  217
  227
  238
  249
  261
  273
  286
  300
  314
  330
Depreciation, amort., depletion, $m
  8
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
Funds from operations, $m
  112
  106
  109
  112
  115
  118
  122
  126
  131
  135
  141
  146
  152
  158
  164
  172
  179
  187
  195
  204
  213
  223
  234
  245
  256
  268
  281
  294
  309
  324
  339
Change in working capital, $m
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Cash from operations, $m
  115
  110
  113
  117
  120
  124
  129
  134
  139
  144
  150
  156
  162
  169
  176
  184
  192
  201
  210
  220
  230
  241
  252
  264
  277
  290
  304
  319
  334
  350
  367
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
New CAPEX, $m
  -10
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
Free cash flow, $m
  118
  107
  110
  113
  117
  121
  125
  130
  135
  140
  145
  151
  157
  164
  171
  179
  187
  195
  204
  213
  223
  234
  245
  256
  268
  281
  295
  309
  324
  340
  356
Issuance/(repayment) of debt, $m
  0
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
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
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  112
  108
  112
  115
  119
  123
  128
  132
  138
  143
  149
  155
  161
  168
  176
  183
  192
  200
  210
  219
  229
  240
  252
  263
  276
  289
  303
  318
  333
  349
  366
Retained Cash Flow (-), $m
  -34
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
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
 
  290
  110
  113
  116
  120
  125
  129
  134
  139
  145
  150
  156
  163
  170
  178
  186
  194
  203
  212
  222
  232
  243
  255
  267
  279
  293
  307
  322
  337
  354
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
 
  278
  100
  98
  96
  93
  90
  87
  84
  80
  76
  71
  67
  62
  57
  52
  47
  42
  37
  33
  28
  24
  20
  17
  14
  11
  9
  7
  5
  4
  3
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
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Cohen & Steers, Inc. (CNS) is a holding company. The Company is an investment manager with a focus on liquid real assets, including real estate securities, listed infrastructure, commodities and natural resource equities, as well as preferred securities and other income solutions. The Company serves institutional and individual investors. The Company manages three types of investment vehicles: institutional accounts, open-end funds and closed-end funds. The Company also provides services in connection with model-based strategies (MBS) accounts. In addition, the Company provides several services in connection with assets held by unit investment trusts (UITs). As a portfolio consultant to a number of UITs, the Company constructs a portfolio of securities that suit the investment objective of the UIT. The Company also provides ongoing portfolio monitoring services and provides a license to certain firms to use its name in connection with certain of their investment products.

FINANCIAL RATIOS  of  Cohen&Steers (CNS)

Valuation Ratios
P/E Ratio 22.5
Price to Sales 6
Price to Book 7.9
Price to Tangible Book
Price to Cash Flow 18.2
Price to Free Cash Flow 19.9
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 2.1% 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 4.1 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 -52.3%. 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 46.385 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 $2.1 billion.

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COMPANY NEWS

▶ What You Must Know About Cohen & Steers Incs (CNS) ROE   [Dec-11-17 05:28PM  Simply Wall St.]
▶ At $43.7, Is Cohen & Steers Inc (CNS) A Sell?   [Nov-06-17 06:12PM  Simply Wall St.]
▶ Cohen & Steers Funds Quarterly Data Now Available   [Oct-23-17 05:35PM  PR Newswire]
▶ 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]
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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