Intrinsic value of Cousins Properties - CUZ

Previous Close

$9.19

  Intrinsic Value

$1.47

stock screener

  Rating & Target

str. sell

-84%

  Value-price divergence*

-8%

Previous close

$9.19

 
Intrinsic value

$1.47

 
Up/down potential

-84%

 
Rating

str. sell

 
Value-price divergence*

-8%

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

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

We calculate the intrinsic value of CUZ 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 3.8

 

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, %
  26.96
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  259
  414
  640
  957
  1,389
  1,960
  2,695
  3,617
  4,749
  6,111
  7,719
  9,585
  11,719
  14,125
  16,806
  19,761
  22,987
  26,479
  30,232
  34,239
  38,495
  42,993
  47,730
  52,702
  57,906
  63,342
  69,010
  74,913
  81,055
  87,440
  94,078
Variable operating expenses, $m
 
  357
  551
  824
  1,195
  1,686
  2,318
  3,112
  4,086
  5,257
  6,640
  8,245
  10,081
  12,151
  14,457
  16,999
  19,774
  22,778
  26,006
  29,453
  33,114
  36,984
  41,059
  45,336
  49,813
  54,489
  59,365
  64,442
  69,725
  75,219
  80,928
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
  259
  357
  551
  824
  1,195
  1,686
  2,318
  3,112
  4,086
  5,257
  6,640
  8,245
  10,081
  12,151
  14,457
  16,999
  19,774
  22,778
  26,006
  29,453
  33,114
  36,984
  41,059
  45,336
  49,813
  54,489
  59,365
  64,442
  69,725
  75,219
  80,928
Operating income, $m
  0
  58
  89
  134
  194
  274
  376
  505
  664
  854
  1,079
  1,340
  1,638
  1,974
  2,349
  2,762
  3,213
  3,701
  4,226
  4,786
  5,380
  6,009
  6,671
  7,366
  8,094
  8,853
  9,646
  10,471
  11,329
  12,222
  13,149
EBITDA, $m
  145
  290
  447
  669
  971
  1,369
  1,883
  2,527
  3,318
  4,269
  5,393
  6,696
  8,187
  9,868
  11,741
  13,805
  16,059
  18,499
  21,120
  23,920
  26,893
  30,036
  33,345
  36,819
  40,454
  44,252
  48,212
  52,336
  56,626
  61,088
  65,724
Interest expense (income), $m
  32
  48
  84
  136
  209
  309
  440
  610
  822
  1,083
  1,397
  1,768
  2,198
  2,690
  3,245
  3,863
  4,544
  5,288
  6,093
  6,958
  7,882
  8,863
  9,901
  10,993
  12,139
  13,339
  14,592
  15,899
  17,260
  18,676
  20,148
Earnings before tax, $m
  50
  9
  5
  -2
  -15
  -35
  -64
  -104
  -159
  -229
  -319
  -428
  -560
  -716
  -896
  -1,101
  -1,331
  -1,587
  -1,868
  -2,173
  -2,502
  -2,854
  -3,229
  -3,627
  -4,045
  -4,485
  -4,946
  -5,428
  -5,931
  -6,454
  -6,999
Tax expense, $m
  0
  3
  1
  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
Net income, $m
  79
  7
  4
  -2
  -15
  -35
  -64
  -104
  -159
  -229
  -319
  -428
  -560
  -716
  -896
  -1,101
  -1,331
  -1,587
  -1,868
  -2,173
  -2,502
  -2,854
  -3,229
  -3,627
  -4,045
  -4,485
  -4,946
  -5,428
  -5,931
  -6,454
  -6,999

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  36
  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
  4,172
  6,578
  10,163
  15,198
  22,052
  31,112
  42,772
  57,412
  75,386
  97,004
  122,524
  152,146
  186,014
  224,209
  266,764
  313,667
  364,871
  420,300
  479,867
  543,475
  611,027
  682,436
  757,627
  836,543
  919,148
  1,005,430
  1,095,401
  1,189,097
  1,286,582
  1,387,944
  1,493,297
Adjusted assets (=assets-cash), $m
  4,136
  6,578
  10,163
  15,198
  22,052
  31,112
  42,772
  57,412
  75,386
  97,004
  122,524
  152,146
  186,014
  224,209
  266,764
  313,667
  364,871
  420,300
  479,867
  543,475
  611,027
  682,436
  757,627
  836,543
  919,148
  1,005,430
  1,095,401
  1,189,097
  1,286,582
  1,387,944
  1,493,297
Revenue / Adjusted assets
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
  0.063
Average production assets, $m
  3,011
  4,817
  7,442
  11,130
  16,149
  22,784
  31,322
  42,044
  55,206
  71,037
  89,725
  111,419
  136,220
  164,191
  195,355
  229,702
  267,199
  307,791
  351,412
  397,993
  447,462
  499,756
  554,819
  612,610
  673,103
  736,289
  802,175
  870,790
  942,179
  1,016,408
  1,093,559
Working capital, $m
  0
  -41
  -64
  -96
  -139
  -196
  -269
  -362
  -475
  -611
  -772
  -959
  -1,172
  -1,413
  -1,681
  -1,976
  -2,299
  -2,648
  -3,023
  -3,424
  -3,849
  -4,299
  -4,773
  -5,270
  -5,791
  -6,334
  -6,901
  -7,491
  -8,105
  -8,744
  -9,408
Total debt, $m
  1,381
  2,395
  3,883
  5,972
  8,817
  12,577
  17,415
  23,491
  30,950
  39,922
  50,512
  62,806
  76,861
  92,712
  110,372
  129,837
  151,086
  174,090
  198,810
  225,207
  253,241
  282,876
  314,080
  346,830
  381,112
  416,919
  454,256
  493,140
  533,596
  575,662
  619,383
Total liabilities, $m
  1,716
  2,730
  4,218
  6,307
  9,152
  12,912
  17,750
  23,826
  31,285
  40,257
  50,847
  63,141
  77,196
  93,047
  110,707
  130,172
  151,421
  174,425
  199,145
  225,542
  253,576
  283,211
  314,415
  347,165
  381,447
  417,254
  454,591
  493,475
  533,931
  575,997
  619,718
Total equity, $m
  2,456
  3,848
  5,945
  8,891
  12,900
  18,201
  25,022
  33,586
  44,101
  56,747
  71,676
  89,006
  108,818
  131,162
  156,057
  183,495
  213,449
  245,876
  280,722
  317,933
  357,451
  399,225
  443,212
  489,378
  537,702
  588,177
  640,809
  695,622
  752,650
  811,947
  873,579
Total liabilities and equity, $m
  4,172
  6,578
  10,163
  15,198
  22,052
  31,113
  42,772
  57,412
  75,386
  97,004
  122,523
  152,147
  186,014
  224,209
  266,764
  313,667
  364,870
  420,301
  479,867
  543,475
  611,027
  682,436
  757,627
  836,543
  919,149
  1,005,431
  1,095,400
  1,189,097
  1,286,581
  1,387,944
  1,493,297
Debt-to-equity ratio
  0.562
  0.620
  0.650
  0.670
  0.680
  0.690
  0.700
  0.700
  0.700
  0.700
  0.700
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
Adjusted equity ratio
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  79
  7
  4
  -2
  -15
  -35
  -64
  -104
  -159
  -229
  -319
  -428
  -560
  -716
  -896
  -1,101
  -1,331
  -1,587
  -1,868
  -2,173
  -2,502
  -2,854
  -3,229
  -3,627
  -4,045
  -4,485
  -4,946
  -5,428
  -5,931
  -6,454
  -6,999
Depreciation, amort., depletion, $m
  145
  232
  358
  535
  777
  1,096
  1,506
  2,022
  2,654
  3,415
  4,314
  5,357
  6,549
  7,894
  9,392
  11,043
  12,846
  14,798
  16,895
  19,134
  21,513
  24,027
  26,674
  29,452
  32,361
  35,398
  38,566
  41,865
  45,297
  48,866
  52,575
Funds from operations, $m
  100
  239
  362
  533
  762
  1,061
  1,442
  1,917
  2,496
  3,186
  3,995
  4,928
  5,989
  7,178
  8,496
  9,942
  11,515
  13,211
  15,027
  16,962
  19,011
  21,173
  23,445
  25,826
  28,315
  30,913
  33,620
  36,437
  39,366
  42,412
  45,576
Change in working capital, $m
  -11
  -16
  -23
  -32
  -43
  -57
  -73
  -92
  -113
  -136
  -161
  -187
  -213
  -241
  -268
  -295
  -323
  -349
  -375
  -401
  -426
  -450
  -474
  -497
  -520
  -544
  -567
  -590
  -614
  -639
  -664
Cash from operations, $m
  111
  254
  385
  565
  805
  1,118
  1,516
  2,010
  2,609
  3,322
  4,156
  5,115
  6,202
  7,419
  8,764
  10,238
  11,837
  13,560
  15,403
  17,362
  19,436
  21,622
  23,918
  26,323
  28,836
  31,457
  34,186
  37,027
  39,981
  43,050
  46,240
Maintenance CAPEX, $m
  0
  -145
  -232
  -358
  -535
  -776
  -1,095
  -1,506
  -2,021
  -2,654
  -3,415
  -4,314
  -5,357
  -6,549
  -7,894
  -9,392
  -11,043
  -12,846
  -14,798
  -16,895
  -19,134
  -21,513
  -24,027
  -26,674
  -29,452
  -32,361
  -35,398
  -38,566
  -41,865
  -45,297
  -48,866
New CAPEX, $m
  -194
  -1,806
  -2,625
  -3,688
  -5,019
  -6,635
  -8,539
  -10,721
  -13,162
  -15,831
  -18,688
  -21,693
  -24,801
  -27,971
  -31,164
  -34,348
  -37,497
  -40,592
  -43,622
  -46,580
  -49,469
  -52,294
  -55,063
  -57,791
  -60,493
  -63,185
  -65,886
  -68,615
  -71,389
  -74,229
  -77,151
Cash from investing activities, $m
  461
  -1,951
  -2,857
  -4,046
  -5,554
  -7,411
  -9,634
  -12,227
  -15,183
  -18,485
  -22,103
  -26,007
  -30,158
  -34,520
  -39,058
  -43,740
  -48,540
  -53,438
  -58,420
  -63,475
  -68,603
  -73,807
  -79,090
  -84,465
  -89,945
  -95,546
  -101,284
  -107,181
  -113,254
  -119,526
  -126,017
Free cash flow, $m
  572
  -1,697
  -2,472
  -3,481
  -4,749
  -6,293
  -8,118
  -10,218
  -12,575
  -15,163
  -17,948
  -20,892
  -23,956
  -27,101
  -30,293
  -33,502
  -36,703
  -39,878
  -43,017
  -46,113
  -49,167
  -52,184
  -55,172
  -58,142
  -61,110
  -64,089
  -67,098
  -70,154
  -73,274
  -76,476
  -79,777
Issuance/(repayment) of debt, $m
  5
  1,014
  1,488
  2,090
  2,844
  3,760
  4,839
  6,076
  7,459
  8,971
  10,591
  12,294
  14,055
  15,851
  17,661
  19,465
  21,249
  23,003
  24,720
  26,397
  28,034
  29,635
  31,204
  32,750
  34,281
  35,807
  37,338
  38,884
  40,456
  42,065
  43,721
Issuance/(repurchase) of shares, $m
  -14
  1,421
  2,093
  2,948
  4,024
  5,335
  6,885
  8,669
  10,673
  12,876
  15,248
  17,758
  20,373
  23,060
  25,791
  28,539
  31,285
  34,013
  36,714
  39,383
  42,020
  44,628
  47,216
  49,792
  52,370
  54,960
  57,579
  60,240
  62,959
  65,751
  68,630
Cash from financing (excl. dividends), $m  
  -488
  2,435
  3,581
  5,038
  6,868
  9,095
  11,724
  14,745
  18,132
  21,847
  25,839
  30,052
  34,428
  38,911
  43,452
  48,004
  52,534
  57,016
  61,434
  65,780
  70,054
  74,263
  78,420
  82,542
  86,651
  90,767
  94,917
  99,124
  103,415
  107,816
  112,351
Total cash flow (excl. dividends), $m
  85
  738
  1,109
  1,557
  2,119
  2,802
  3,605
  4,527
  5,558
  6,684
  7,891
  9,159
  10,472
  11,810
  13,158
  14,502
  15,832
  17,139
  18,418
  19,667
  20,887
  22,079
  23,249
  24,401
  25,541
  26,678
  27,818
  28,970
  30,142
  31,341
  32,575
Retained Cash Flow (-), $m
  -773
  -1,428
  -2,097
  -2,948
  -4,024
  -5,335
  -6,885
  -8,669
  -10,673
  -12,876
  -15,248
  -17,758
  -20,373
  -23,060
  -25,791
  -28,539
  -31,285
  -34,013
  -36,714
  -39,383
  -42,020
  -44,628
  -47,216
  -49,792
  -52,370
  -54,960
  -57,579
  -60,240
  -62,959
  -65,751
  -68,630
Prev. year cash balance distribution, $m
 
  36
  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
 
  -654
  -989
  -1,391
  -1,905
  -2,533
  -3,279
  -4,142
  -5,116
  -6,191
  -7,357
  -8,598
  -9,901
  -11,250
  -12,633
  -14,037
  -15,453
  -16,875
  -18,296
  -19,716
  -21,133
  -22,549
  -23,967
  -25,392
  -26,828
  -28,282
  -29,761
  -31,270
  -32,818
  -34,410
  -36,056
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  -607
  -846
  -1,089
  -1,354
  -1,620
  -1,869
  -2,083
  -2,246
  -2,348
  -2,380
  -2,344
  -2,243
  -2,089
  -1,893
  -1,671
  -1,436
  -1,203
  -981
  -780
  -604
  -455
  -333
  -237
  -164
  -110
  -72
  -45
  -28
  -16
  -9
Current shareholders' claim on cash, %
  100
  72.7
  53.9
  40.9
  31.7
  25.1
  20.2
  16.5
  13.7
  11.6
  9.9
  8.5
  7.4
  6.5
  5.8
  5.2
  4.7
  4.3
  3.9
  3.6
  3.3
  3.0
  2.8
  2.6
  2.5
  2.3
  2.2
  2.1
  1.9
  1.8
  1.7

Cousins Properties Incorporated, a real estate investment trust (REIT), owns, develops, and manages real estate portfolio, as well as performs certain real estate-related services in the United States. The company operates through four divisions: Office/Multi-Family, Retail, Industrial, and Land. The Office/Multi-Family division develops and manages office projects primarily in Austin, Dallas, Charlotte, Birmingham, and Atlanta; develops and sells multi-family projects in urban locations in the southeastern United States; and manages and leases office properties owned by third parties. It also develops mixed use projects that contain multiple product types in communities where individuals live, work, and seek entertainment. As of December 31, 2006, this division owned interests in 20 operating office properties; and had 5 office or multi-family projects under development or redevelopment. The Retail division develops and manages retail shopping centers principally in Georgia, Tennessee, North Carolina, Texas, and Florida. As of the above date, this division owned 10 operating retail properties; and had 3 projects and 1 expansion under development. The Industrial division develops institutional warehouse and distribution properties in the metropolitan Atlanta area and the Dallas market. As of December 31, 2006, this division owned one operating industrial property and three projects under development. The Land division engages in the acquisition and entitlement of land, the development and sale of residential lots, and the acquisition and sale of certain undeveloped tracts of land to third parties. As of the above date, this division had 24 residential communities under development. The company qualifies as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal corporate income taxes, if it distributes at least 90% of its taxable income to its stockholders. Cousins Properties was founded in 1958 and is based in Atlanta, Georgia.

FINANCIAL RATIOS  of  Cousins Properties (CUZ)

Valuation Ratios
P/E Ratio 45.8
Price to Sales 14
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 32.6
Price to Free Cash Flow -43.6
Growth Rates
Sales Growth Rate 27%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.9%
Cap. Spend. - 3 Yr. Gr. Rate -33.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 56.2%
Total Debt to Equity 56.2%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 2.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 3.8%
Return On Equity - 3 Yr. Avg. 4.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 60.2%
Gross Margin - 3 Yr. Avg. 58%
EBITDA Margin 87.6%
EBITDA Margin - 3 Yr. Avg. 102.3%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 6.4%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 20.9%
Net Profit Margin 30.5%
Net Profit Margin - 3 Yr. Avg. 40.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 64.6%

CUZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CUZ stock intrinsic value calculation we used $259 million for the last fiscal year's total revenue generated by Cousins Properties. The default revenue input number comes from 2016 income statement of Cousins Properties. 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 CUZ stock valuation model: a) initial revenue growth rate of 60% 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 7.7%, whose default value for CUZ is calculated based on our internal credit rating of Cousins Properties, 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 Cousins Properties.
    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 CUZ stock the variable cost ratio is equal to 86.1%.

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 CUZ 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 Cousins Properties.

Corporate tax rate of 27% is the nominal tax rate for Cousins Properties. 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 CUZ 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 CUZ are equal to 1162.4%.

Life of production assets of 20.8 years is the average useful life of capital assets used in Cousins Properties 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 CUZ 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 - $2456 million for Cousins Properties - 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 417.351 million for Cousins Properties 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 Cousins Properties at the current share price and the inputted number of shares is $3.8 billion.

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COMPANY NEWS

▶ Hines And Cousins Announce 8000 Avalon 93% Leased   [Aug-18-17 08:30AM  PR Newswire]
▶ Cousins Properties confirms major Amazon expansion in Atlanta (Video)   [Aug-02-17 11:32AM  American City Business Journals]
▶ Cousins Properties reports 2Q results   [12:12AM  Associated Press]
▶ Cousins Properties Releases Second Quarter 2017 Results   [Jul-27-17 04:17PM  PR Newswire]
▶ Parkway Inc. to be acquired in $1.2B deal   [Jul-01-17 08:50PM  American City Business Journals]
▶ Houston REIT with Orlando roots to sell in $1.2B deal   [Jun-30-17 11:25AM  American City Business Journals]
▶ Cousins Announces Closing Of Emory Point Disposition   [May-03-17 04:15PM  PR Newswire]
▶ Cousins Properties reports 1Q results   [Apr-27-17 07:20PM  Associated Press]
▶ Tim Hendricks, a builder of Austin icons, to be honored   [Apr-10-17 04:10PM  American City Business Journals]
▶ Parkway Reports Fourth Quarter 2016 Results   [Feb-23-17 04:34PM  PR Newswire]
▶ 3 Top Stocks Under $10   [Feb-03-17 09:46AM  at Motley Fool]
▶ Exclusive: Bank of America Center may get $8M in renovations   [Dec-27-16 03:45PM  at bizjournals.com]
▶ Is BancorpSouth, Inc. (BXS) A Good Stock To Buy?   [Dec-08-16 04:27PM  at Insider Monkey]
▶ HB Fuller Co (FUL): Are Hedge Funds Right About This Stock?   [Dec-06-16 10:09AM  at Insider Monkey]
Financial statements of CUZ
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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