Intrinsic value of Cohen&Steers - CNS

Previous Close

$43.93

  Intrinsic Value

$50.41

stock screener

  Rating & Target

hold

+15%

  Value-price divergence*

-26%

Previous close

$43.93

 
Intrinsic value

$50.41

 
Up/down potential

+15%

 
Rating

hold

 
Value-price divergence*

-26%

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 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
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
Revenue, $m
  350
  378
  408
  438
  470
  503
  538
  573
  611
  649
  690
  732
  775
  821
  868
  918
  970
  1,024
  1,080
  1,139
  1,201
  1,266
  1,333
  1,404
  1,478
  1,555
  1,637
  1,722
  1,811
  1,904
  2,002
Variable operating expenses, $m
 
  231
  249
  267
  287
  307
  328
  349
  372
  395
  420
  443
  470
  497
  526
  556
  587
  620
  654
  690
  728
  767
  808
  850
  895
  942
  992
  1,043
  1,097
  1,154
  1,213
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
  231
  249
  267
  287
  307
  328
  349
  372
  395
  420
  443
  470
  497
  526
  556
  587
  620
  654
  690
  728
  767
  808
  850
  895
  942
  992
  1,043
  1,097
  1,154
  1,213
Operating income, $m
  136
  147
  159
  171
  184
  197
  210
  224
  239
  254
  270
  288
  306
  324
  342
  362
  382
  403
  426
  449
  473
  499
  525
  553
  582
  613
  645
  679
  714
  751
  789
EBITDA, $m
  144
  152
  164
  176
  189
  203
  216
  231
  246
  261
  277
  294
  312
  330
  349
  369
  390
  412
  435
  458
  483
  509
  536
  565
  595
  626
  658
  693
  729
  766
  806
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
Earnings before tax, $m
  143
  147
  159
  171
  183
  196
  209
  223
  237
  252
  268
  286
  303
  321
  339
  358
  378
  399
  421
  444
  468
  493
  519
  547
  575
  605
  637
  670
  704
  741
  779
Tax expense, $m
  50
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
  140
  148
  155
  163
  172
  181
  190
  200
  210
Net income, $m
  93
  108
  116
  125
  134
  143
  153
  163
  173
  184
  196
  209
  221
  234
  248
  262
  276
  291
  307
  324
  342
  360
  379
  399
  420
  442
  465
  489
  514
  541
  568

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
  163
  176
  189
  203
  217
  232
  247
  263
  280
  298
  316
  334
  354
  375
  396
  418
  442
  466
  491
  518
  546
  575
  606
  638
  671
  706
  743
  781
  822
  864
Adjusted assets (=assets-cash), $m
  151
  163
  176
  189
  203
  217
  232
  247
  263
  280
  298
  316
  334
  354
  375
  396
  418
  442
  466
  491
  518
  546
  575
  606
  638
  671
  706
  743
  781
  822
  864
Revenue / Adjusted assets
  2.318
  2.319
  2.318
  2.317
  2.315
  2.318
  2.319
  2.320
  2.323
  2.318
  2.315
  2.316
  2.320
  2.319
  2.315
  2.318
  2.321
  2.317
  2.318
  2.320
  2.319
  2.319
  2.318
  2.317
  2.317
  2.317
  2.319
  2.318
  2.319
  2.316
  2.317
Average production assets, $m
  15
  16
  17
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
Working capital, $m
  0
  -198
  -213
  -229
  -246
  -263
  -281
  -300
  -319
  -340
  -361
  -383
  -405
  -429
  -454
  -480
  -507
  -535
  -565
  -596
  -628
  -662
  -697
  -734
  -773
  -813
  -856
  -900
  -947
  -996
  -1,047
Total debt, $m
  0
  5
  11
  17
  23
  30
  36
  43
  51
  58
  66
  74
  83
  91
  101
  110
  120
  131
  142
  153
  165
  178
  191
  205
  219
  234
  250
  266
  284
  302
  321
Total liabilities, $m
  68
  73
  79
  85
  91
  98
  104
  111
  119
  126
  134
  142
  151
  159
  169
  178
  188
  199
  210
  221
  233
  246
  259
  273
  287
  302
  318
  334
  352
  370
  389
Total equity, $m
  266
  90
  97
  104
  112
  119
  128
  136
  145
  154
  164
  174
  184
  195
  206
  218
  230
  243
  256
  270
  285
  300
  316
  333
  351
  369
  388
  409
  430
  452
  475
Total liabilities and equity, $m
  334
  163
  176
  189
  203
  217
  232
  247
  264
  280
  298
  316
  335
  354
  375
  396
  418
  442
  466
  491
  518
  546
  575
  606
  638
  671
  706
  743
  782
  822
  864
Debt-to-equity ratio
  0.000
  0.060
  0.120
  0.160
  0.210
  0.250
  0.290
  0.320
  0.350
  0.380
  0.400
  0.430
  0.450
  0.470
  0.490
  0.510
  0.520
  0.540
  0.550
  0.570
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  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
  116
  125
  134
  143
  153
  163
  173
  184
  196
  209
  221
  234
  248
  262
  276
  291
  307
  324
  342
  360
  379
  399
  420
  442
  465
  489
  514
  541
  568
Depreciation, amort., depletion, $m
  8
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
Funds from operations, $m
  112
  112
  121
  130
  139
  149
  159
  169
  180
  191
  203
  215
  228
  241
  255
  269
  284
  300
  316
  333
  351
  370
  390
  411
  432
  455
  478
  503
  529
  556
  585
Change in working capital, $m
  -3
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -42
  -45
  -47
  -49
  -51
Cash from operations, $m
  115
  127
  136
  146
  156
  166
  177
  188
  200
  212
  224
  237
  250
  265
  279
  295
  311
  328
  346
  364
  384
  404
  425
  448
  471
  495
  521
  548
  576
  605
  636
Maintenance CAPEX, $m
  0
  -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
  -13
  -14
  -15
  -16
New CAPEX, $m
  -10
  -1
  -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
Cash from investing activities, $m
  3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -18
  -19
  -20
Free cash flow, $m
  118
  123
  132
  141
  151
  161
  171
  182
  193
  205
  217
  229
  243
  256
  271
  286
  302
  318
  335
  353
  372
  392
  412
  434
  456
  480
  505
  531
  558
  587
  616
Issuance/(repayment) of debt, $m
  0
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
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
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
Total cash flow (excl. dividends), $m
  112
  129
  138
  147
  157
  167
  178
  189
  201
  213
  225
  238
  251
  265
  280
  295
  312
  328
  346
  365
  384
  404
  425
  447
  471
  495
  521
  547
  575
  605
  635
Retained Cash Flow (-), $m
  -34
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
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
 
  305
  131
  140
  150
  160
  170
  181
  192
  203
  215
  228
  241
  254
  269
  284
  299
  316
  333
  351
  369
  389
  409
  431
  453
  477
  501
  527
  554
  582
  612
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
 
  292
  120
  122
  123
  124
  123
  122
  120
  117
  113
  108
  103
  97
  90
  83
  76
  69
  61
  54
  47
  40
  34
  28
  23
  19
  15
  11
  9
  6
  5
Current shareholders' claim on cash, %
  100
  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 21.7
Price to Sales 5.8
Price to Book 7.6
Price to Tangible Book
Price to Cash Flow 17.5
Price to Free Cash Flow 19.2
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 8.1% 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 46.871 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

▶ 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]
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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