Intrinsic value of CatchMark Timber Trust - CTT

Previous Close

$12.71

  Intrinsic Value

$10.83

stock screener

  Rating & Target

hold

-15%

Previous close

$12.71

 
Intrinsic value

$10.83

 
Up/down potential

-15%

 
Rating

hold

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

We calculate the intrinsic value of CTT 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2013(a)
   2014
   2015
   2016
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -27.27
  11.50
  10.85
  10.27
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.20
  6.08
  5.98
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
Revenue, $m
  32
  101
  112
  124
  136
  149
  162
  176
  190
  205
  220
  236
  253
  270
  288
  306
  326
  346
  367
  389
  412
  436
  461
  487
  514
  542
  572
  603
  635
  669
  705
Variable operating expenses, $m
 
  92
  102
  113
  123
  135
  147
  159
  172
  185
  199
  213
  228
  244
  260
  277
  294
  313
  332
  351
  372
  394
  416
  440
  464
  490
  517
  545
  574
  605
  637
Fixed operating expenses, $m
 
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  41
  103
  113
  125
  135
  147
  160
  172
  185
  198
  213
  227
  242
  259
  275
  292
  310
  329
  348
  368
  389
  411
  434
  458
  483
  509
  536
  565
  594
  626
  658
Operating income, $m
  -9
  -2
  -1
  0
  1
  2
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  44
  47
EBITDA, $m
  0
  80
  89
  99
  110
  121
  132
  144
  157
  170
  183
  197
  212
  227
  243
  259
  276
  294
  312
  332
  352
  373
  395
  418
  442
  467
  493
  520
  549
  579
  610
Interest expense (income), $m
  1
  18
  17
  17
  16
  16
  15
  14
  14
  13
  12
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  1
  0
  -2
  -3
  -4
  -6
  -7
  -9
  -11
Earnings before tax, $m
  -13
  -20
  -18
  -17
  -16
  -14
  -12
  -11
  -9
  -7
  -5
  -3
  -1
  2
  4
  6
  9
  11
  14
  17
  20
  23
  26
  29
  33
  36
  40
  44
  48
  53
  58
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  2
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
Net income, $m
  -13
  -20
  -18
  -17
  -16
  -14
  -12
  -11
  -9
  -7
  -5
  -3
  -1
  1
  3
  5
  6
  8
  10
  12
  14
  17
  19
  21
  24
  27
  29
  32
  35
  39
  42

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  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
  339
  -291
  -322
  -355
  -390
  -426
  -464
  -503
  -544
  -586
  -630
  -676
  -724
  -773
  -824
  -878
  -934
  -992
  -1,052
  -1,115
  -1,180
  -1,249
  -1,320
  -1,394
  -1,472
  -1,553
  -1,638
  -1,727
  -1,820
  -1,917
  -2,019
Adjusted assets (=assets-cash), $m
  330
  -291
  -322
  -355
  -390
  -426
  -464
  -503
  -544
  -586
  -630
  -676
  -724
  -773
  -824
  -878
  -934
  -992
  -1,052
  -1,115
  -1,180
  -1,249
  -1,320
  -1,394
  -1,472
  -1,553
  -1,638
  -1,727
  -1,820
  -1,917
  -2,019
Revenue / Adjusted assets
  0.097
  -0.347
  -0.348
  -0.349
  -0.349
  -0.350
  -0.349
  -0.350
  -0.349
  -0.350
  -0.349
  -0.349
  -0.349
  -0.349
  -0.350
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
  -0.349
Average production assets, $m
  0
  811
  899
  991
  1,088
  1,188
  1,293
  1,403
  1,516
  1,635
  1,758
  1,885
  2,018
  2,156
  2,299
  2,449
  2,604
  2,765
  2,934
  3,109
  3,292
  3,482
  3,681
  3,889
  4,105
  4,332
  4,569
  4,816
  5,075
  5,347
  5,630
Working capital, $m
  0
  -375
  -416
  -459
  -504
  -550
  -599
  -649
  -702
  -757
  -814
  -873
  -934
  -998
  -1,065
  -1,134
  -1,206
  -1,280
  -1,358
  -1,439
  -1,524
  -1,612
  -1,704
  -1,801
  -1,901
  -2,006
  -2,115
  -2,230
  -2,350
  -2,476
  -2,607
Total debt, $m
  52
  9
  9
  8
  8
  8
  8
  7
  7
  6
  6
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  0
  0
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -6
Total liabilities, $m
  59
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
Total equity, $m
  280
  -288
  -319
  -352
  -386
  -422
  -460
  -498
  -539
  -581
  -625
  -670
  -717
  -766
  -817
  -870
  -925
  -983
  -1,042
  -1,105
  -1,170
  -1,237
  -1,308
  -1,382
  -1,459
  -1,539
  -1,623
  -1,711
  -1,804
  -1,900
  -2,001
Total liabilities and equity, $m
  339
  -291
  -322
  -355
  -390
  -426
  -464
  -503
  -544
  -586
  -631
  -676
  -724
  -773
  -824
  -878
  -933
  -992
  -1,051
  -1,115
  -1,181
  -1,248
  -1,320
  -1,395
  -1,472
  -1,553
  -1,638
  -1,727
  -1,820
  -1,917
  -2,019
Debt-to-equity ratio
  0.186
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.821
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991
  0.991

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -20
  -18
  -17
  -16
  -14
  -12
  -11
  -9
  -7
  -5
  -3
  -1
  1
  3
  5
  6
  8
  10
  12
  14
  17
  19
  21
  24
  27
  29
  32
  35
  39
  42
Depreciation, amort., depletion, $m
  9
  82
  90
  100
  109
  119
  130
  141
  152
  164
  176
  189
  202
  216
  230
  245
  260
  277
  293
  311
  329
  348
  368
  389
  411
  433
  457
  482
  508
  535
  563
Funds from operations, $m
  -2
  62
  72
  83
  94
  105
  117
  130
  143
  157
  171
  186
  201
  217
  233
  249
  267
  285
  303
  323
  343
  365
  387
  410
  434
  460
  486
  514
  543
  573
  605
Change in working capital, $m
  -1
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -125
  -131
Cash from operations, $m
  -1
  101
  113
  125
  138
  152
  166
  181
  196
  212
  228
  245
  263
  281
  299
  318
  339
  359
  381
  404
  428
  453
  479
  506
  535
  565
  596
  629
  663
  699
  736
Maintenance CAPEX, $m
  0
  -73
  -81
  -90
  -99
  -109
  -119
  -129
  -140
  -152
  -163
  -176
  -189
  -202
  -216
  -230
  -245
  -260
  -277
  -293
  -311
  -329
  -348
  -368
  -389
  -411
  -433
  -457
  -482
  -508
  -535
New CAPEX, $m
  -2
  -81
  -88
  -92
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
  -162
  -168
  -175
  -183
  -191
  -199
  -208
  -217
  -227
  -237
  -248
  -259
  -271
  -284
Cash from investing activities, $m
  0
  -154
  -169
  -182
  -196
  -210
  -224
  -238
  -254
  -270
  -286
  -304
  -322
  -340
  -359
  -379
  -400
  -422
  -445
  -468
  -494
  -520
  -547
  -576
  -606
  -638
  -670
  -705
  -741
  -779
  -819
Free cash flow, $m
  -1
  -54
  -56
  -57
  -57
  -58
  -58
  -58
  -58
  -58
  -58
  -59
  -59
  -59
  -60
  -61
  -62
  -62
  -63
  -64
  -66
  -67
  -68
  -69
  -71
  -72
  -74
  -76
  -78
  -80
  -82
Issuance/(repayment) of debt, $m
  -80
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Issuance/(repurchase) of shares, $m
  103
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -101
Cash from financing (excl. dividends), $m  
  11
  -29
  -31
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
  -102
Total cash flow (excl. dividends), $m
  9
  -82
  -88
  -90
  -92
  -94
  -95
  -97
  -99
  -101
  -102
  -104
  -106
  -109
  -111
  -114
  -117
  -120
  -124
  -127
  -131
  -135
  -139
  -144
  -149
  -154
  -159
  -165
  -171
  -177
  -184
Retained Cash Flow (-), $m
  -70
  9
  13
  16
  19
  22
  25
  28
  31
  35
  38
  43
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
Prev. year cash balance distribution, $m
 
  259
  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
 
  3
  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
 
  186
  13
  16
  19
  22
  25
  28
  31
  35
  38
  43
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
Discount rate, %
 
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
 
  176
  11
  13
  15
  16
  16
  17
  17
  17
  17
  16
  16
  14
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
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

CatchMark Timber Trust, Inc. is a self-administered and self-managed real estate company investing in timberlands. The Company is engaged in the ownership, management, acquisition and disposition of timberland properties located in the United States. The Company conducts all of its business through CatchMark Timber Operating Partnership, L.P. As of December 31, 2016, the Company owned interests in approximately 499,600 acres of timberlands in the United States. South, approximately 467,500 acres of which were held in fee-simple interests and approximately 32,100 acres were held in leasehold interests. As of December 31, 2016, its timberlands included approximately 74% pine stands and 26% hardwood stands. As of December 31, 2016, the Company's leased timberlands included approximately 28,700 acres under one long-term lease and approximately 3,400 acres under a single-rotation lease. _tck('aft');

FINANCIAL RATIOS  of  CatchMark Timber Trust (CTT)

Valuation Ratios
P/E Ratio -13.6
Price to Sales 5.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow -176.7
Price to Free Cash Flow -58.9
Growth Rates
Sales Growth Rate -27.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -91.3%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 18.6%
Total Debt to Equity 18.6%
Interest Coverage -12
Management Effectiveness
Return On Assets -3.5%
Ret/ On Assets - 3 Yr. Avg. -3.2%
Return On Total Capital -3.9%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -5.3%
Return On Equity - 3 Yr. Avg. -5.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 43.8%
Gross Margin - 3 Yr. Avg. 41.6%
EBITDA Margin -9.4%
EBITDA Margin - 3 Yr. Avg. -0.9%
Operating Margin -28.1%
Oper. Margin - 3 Yr. Avg. -17.4%
Pre-Tax Margin -40.6%
Pre-Tax Margin - 3 Yr. Avg. -30.4%
Net Profit Margin -40.6%
Net Profit Margin - 3 Yr. Avg. -30.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -92.3%

CTT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CTT stock intrinsic value calculation we used $91 million for the last fiscal year's total revenue generated by CatchMark Timber Trust. The default revenue input number comes from 2013 income statement of CatchMark Timber Trust. 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 CTT stock valuation model: a) initial revenue growth rate of 11.5% 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 5.6%, whose default value for CTT is calculated based on our internal credit rating of CatchMark Timber Trust, 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 CatchMark Timber Trust.
    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 CTT stock the variable cost ratio is equal to 90.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for CTT 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 191.6% for CatchMark Timber Trust.

Corporate tax rate of 27% is the nominal tax rate for CatchMark Timber Trust. 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 CTT stock is equal to 3.1%.

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 CTT are equal to 799.1%.

Life of production assets of 10 years is the average useful life of capital assets used in CatchMark Timber Trust 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 CTT is equal to -370%. 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 - $0 million for CatchMark Timber Trust - 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 40 million for CatchMark Timber Trust 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 CatchMark Timber Trust at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ CatchMark: 1Q Earnings Snapshot   [May-03-18 06:16PM  Associated Press]
▶ CatchMark reports 4Q loss   [Feb-15-18 05:23PM  Associated Press]
▶ CatchMark Expands Credit Facilities to $638 Million   [Dec-07-17 04:05PM  PR Newswire]
▶ Sallie Mae (SLM) Catches Eye: Stock Jumps 6.4%   [Nov-30-17 08:52AM  Zacks]
▶ CatchMark reports 3Q loss   [Nov-02-17 06:21PM  Associated Press]
▶ CatchMark reports 2Q loss   [02:49AM  Associated Press]
▶ 3 Top Dividend Stocks in Lumber   [Jun-08-17 10:00AM  Motley Fool]
▶ 5 Top Dividend Stocks in the Forestry Industry   [May-16-17 04:30PM  Motley Fool]
▶ CatchMark reports 1Q loss   [May-04-17 06:07PM  Associated Press]
▶ CatchMark reports 4Q loss   [Feb-16-17 05:26PM  Associated Press]
▶ Should You Buy Catchmark Timber Trust Inc (CTT)?   [Dec-14-16 03:40PM  at Insider Monkey]
Financial statements of CTT
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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