Intrinsic value of Cohen&Steers - CNS

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$38.92

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$38.92

 
Intrinsic value

$51.97

 
Up/down potential

+34%

 
Rating

buy

 
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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
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  350
  380
  411
  443
  476
  511
  547
  585
  624
  664
  707
  751
  796
  844
  894
  946
  1,000
  1,056
  1,115
  1,177
  1,241
  1,308
  1,379
  1,452
  1,530
  1,610
  1,695
  1,784
  1,876
  1,974
  2,076
Variable operating expenses, $m
 
  232
  251
  270
  290
  311
  333
  356
  380
  404
  430
  455
  482
  511
  541
  573
  606
  640
  676
  713
  752
  793
  835
  880
  927
  976
  1,027
  1,081
  1,137
  1,196
  1,257
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
  232
  251
  270
  290
  311
  333
  356
  380
  404
  430
  455
  482
  511
  541
  573
  606
  640
  676
  713
  752
  793
  835
  880
  927
  976
  1,027
  1,081
  1,137
  1,196
  1,257
Operating income, $m
  136
  148
  160
  173
  186
  200
  214
  229
  244
  260
  277
  296
  314
  333
  352
  373
  394
  416
  439
  464
  489
  516
  543
  572
  603
  635
  668
  703
  740
  778
  818
EBITDA, $m
  144
  153
  165
  178
  192
  206
  220
  235
  251
  267
  284
  302
  320
  340
  360
  380
  402
  425
  449
  473
  499
  526
  555
  584
  615
  648
  682
  718
  755
  794
  835
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  9
  9
  10
  10
  11
Earnings before tax, $m
  143
  148
  160
  172
  185
  199
  213
  227
  242
  258
  275
  293
  311
  330
  349
  369
  390
  412
  435
  459
  484
  510
  537
  566
  595
  627
  659
  694
  730
  768
  807
Tax expense, $m
  50
  40
  43
  47
  50
  54
  57
  61
  65
  70
  74
  79
  84
  89
  94
  100
  105
  111
  117
  124
  131
  138
  145
  153
  161
  169
  178
  187
  197
  207
  218
Net income, $m
  93
  108
  117
  126
  135
  145
  155
  166
  177
  188
  200
  214
  227
  241
  255
  269
  285
  301
  317
  335
  353
  372
  392
  413
  435
  457
  481
  506
  533
  560
  589

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
  164
  177
  191
  205
  220
  236
  252
  269
  287
  305
  324
  344
  364
  386
  408
  431
  456
  481
  508
  535
  564
  595
  627
  660
  695
  731
  769
  809
  851
  895
Adjusted assets (=assets-cash), $m
  151
  164
  177
  191
  205
  220
  236
  252
  269
  287
  305
  324
  344
  364
  386
  408
  431
  456
  481
  508
  535
  564
  595
  627
  660
  695
  731
  769
  809
  851
  895
Revenue / Adjusted assets
  2.318
  2.317
  2.322
  2.319
  2.322
  2.323
  2.318
  2.321
  2.320
  2.314
  2.318
  2.318
  2.314
  2.319
  2.316
  2.319
  2.320
  2.316
  2.318
  2.317
  2.320
  2.319
  2.318
  2.316
  2.318
  2.317
  2.319
  2.320
  2.319
  2.320
  2.320
Average production assets, $m
  15
  16
  17
  18
  20
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  69
  73
  77
  81
  85
Working capital, $m
  0
  -199
  -215
  -232
  -249
  -267
  -286
  -306
  -326
  -347
  -370
  -393
  -416
  -441
  -467
  -495
  -523
  -552
  -583
  -615
  -649
  -684
  -721
  -760
  -800
  -842
  -886
  -933
  -981
  -1,032
  -1,085
Total debt, $m
  0
  6
  12
  18
  24
  31
  38
  46
  53
  61
  69
  78
  87
  96
  105
  116
  126
  137
  148
  160
  173
  186
  200
  214
  229
  245
  261
  278
  296
  315
  335
Total liabilities, $m
  68
  74
  80
  86
  92
  99
  106
  114
  121
  129
  137
  146
  155
  164
  173
  184
  194
  205
  216
  228
  241
  254
  268
  282
  297
  313
  329
  346
  364
  383
  403
Total equity, $m
  266
  90
  97
  105
  113
  121
  130
  139
  148
  158
  168
  178
  189
  200
  212
  224
  237
  251
  265
  279
  294
  310
  327
  345
  363
  382
  402
  423
  445
  468
  492
Total liabilities and equity, $m
  334
  164
  177
  191
  205
  220
  236
  253
  269
  287
  305
  324
  344
  364
  385
  408
  431
  456
  481
  507
  535
  564
  595
  627
  660
  695
  731
  769
  809
  851
  895
Debt-to-equity ratio
  0.000
  0.060
  0.120
  0.170
  0.220
  0.260
  0.290
  0.330
  0.360
  0.390
  0.410
  0.440
  0.460
  0.480
  0.500
  0.520
  0.530
  0.550
  0.560
  0.570
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
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
  108
  117
  126
  135
  145
  155
  166
  177
  188
  200
  214
  227
  241
  255
  269
  285
  301
  317
  335
  353
  372
  392
  413
  435
  457
  481
  506
  533
  560
  589
Depreciation, amort., depletion, $m
  8
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
Funds from operations, $m
  112
  113
  122
  131
  141
  151
  162
  173
  184
  196
  208
  220
  234
  248
  262
  277
  293
  309
  326
  344
  363
  383
  403
  425
  447
  471
  495
  521
  548
  576
  606
Change in working capital, $m
  -3
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -49
  -51
  -53
Cash from operations, $m
  115
  131
  138
  148
  158
  169
  181
  192
  204
  217
  230
  243
  258
  272
  288
  304
  321
  339
  357
  377
  397
  418
  440
  463
  488
  513
  540
  567
  597
  627
  659
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
New CAPEX, $m
  -10
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
Cash from investing activities, $m
  3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -18
  -19
  -19
  -20
Free cash flow, $m
  118
  127
  134
  143
  153
  164
  175
  186
  198
  210
  223
  236
  250
  264
  279
  295
  311
  328
  346
  365
  385
  405
  426
  449
  472
  497
  523
  550
  578
  608
  639
Issuance/(repayment) of debt, $m
  0
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
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
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Total cash flow (excl. dividends), $m
  112
  133
  140
  150
  160
  171
  182
  193
  205
  218
  231
  244
  258
  273
  289
  305
  322
  339
  358
  377
  397
  418
  440
  463
  487
  513
  539
  567
  596
  627
  659
Retained Cash Flow (-), $m
  -34
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
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
 
  309
  132
  142
  152
  162
  173
  185
  196
  208
  221
  234
  248
  262
  277
  293
  309
  326
  344
  362
  382
  402
  423
  446
  469
  494
  519
  546
  574
  604
  635
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
 
  296
  121
  124
  125
  126
  126
  125
  123
  120
  116
  111
  106
  100
  93
  86
  78
  71
  63
  56
  49
  42
  35
  29
  24
  19
  15
  12
  9
  7
  5
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 19.2
Price to Sales 5.1
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 15.5
Price to Free Cash Flow 17
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 8.5% 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 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 46.535 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

▶ 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]
▶ [$$] Retail investors pile into European property funds   [Apr-02-17 12:13AM  Financial Times]
▶ Cohen & Steers, Inc. Board Declares Quarterly Dividend   [Feb-23-17 04:29PM  PR Newswire]
▶ Cohen & Steers Funds Quarterly Data Now Available   [Jan-27-17 05:00PM  PR Newswire]
▶ [$$] Health-Care REITs Rock   [Dec-17-16 12:01AM  at Barrons.com]
▶ Should You Buy Cohen & Steers, Inc. (CNS)?   [08:49AM  at Insider Monkey]
▶ Cohen & Steers Celebrates 30 Years   [Oct-26-16 05:22PM  PR Newswire]
▶ Cohen & Steers Funds Quarterly Data Now Available   [Oct-24-16 06:03PM  PR Newswire]
▶ Fixed Income, ETFs Dominated September Fund Flows   [Oct-13-16 10:17AM  at Barrons.com]
Stock chart of CNS Financial statements of CNS Annual reports 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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