Intrinsic value of CYS Investments - CYS

Previous Close

$7.57

  Intrinsic Value

$40.22

stock screener

  Rating & Target

str. buy

+431%

Previous close

$7.57

 
Intrinsic value

$40.22

 
Up/down potential

+431%

 
Rating

str. buy

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

We calculate the intrinsic value of CYS 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
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, %
  -10.88
  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
  295
  326
  504
  754
  1,094
  1,544
  2,122
  2,849
  3,741
  4,813
  6,080
  7,550
  9,230
  11,126
  13,237
  15,565
  18,105
  20,856
  23,812
  26,968
  30,320
  33,864
  37,595
  41,511
  45,610
  49,891
  54,356
  59,005
  63,842
  68,872
  74,100
Variable operating expenses, $m
 
  107
  88
  61
  24
  -25
  -88
  -167
  -265
  -382
  -520
  -823
  -1,006
  -1,212
  -1,443
  -1,696
  -1,973
  -2,273
  -2,595
  -2,939
  -3,304
  -3,690
  -4,097
  -4,524
  -4,971
  -5,437
  -5,924
  -6,430
  -6,958
  -7,506
  -8,075
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
  94
  107
  88
  61
  24
  -25
  -88
  -167
  -265
  -382
  -520
  -823
  -1,006
  -1,212
  -1,443
  -1,696
  -1,973
  -2,273
  -2,595
  -2,939
  -3,304
  -3,690
  -4,097
  -4,524
  -4,971
  -5,437
  -5,924
  -6,430
  -6,958
  -7,506
  -8,075
Operating income, $m
  201
  219
  416
  693
  1,071
  1,569
  2,211
  3,016
  4,005
  5,195
  6,599
  8,373
  10,236
  12,338
  14,680
  17,261
  20,079
  23,129
  26,407
  29,907
  33,624
  37,554
  41,692
  46,034
  50,580
  55,328
  60,279
  65,435
  70,800
  76,378
  82,175
EBITDA, $m
  201
  2,743
  4,237
  6,337
  9,194
  12,972
  17,834
  23,938
  31,432
  40,445
  51,086
  63,437
  77,557
  93,483
  111,226
  130,782
  152,131
  175,242
  200,078
  226,599
  254,764
  284,538
  315,888
  348,792
  383,234
  419,209
  456,721
  495,788
  536,433
  578,696
  622,622
Interest expense (income), $m
  117
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
  691
Earnings before tax, $m
  16
  -472
  -275
  2
  379
  878
  1,519
  2,325
  3,314
  4,504
  5,908
  7,681
  9,545
  11,647
  13,988
  16,570
  19,387
  22,437
  25,715
  29,216
  32,933
  36,863
  41,000
  45,343
  49,889
  54,637
  59,588
  64,744
  70,108
  75,686
  81,484
Tax expense, $m
  0
  0
  0
  1
  102
  237
  410
  628
  895
  1,216
  1,595
  2,074
  2,577
  3,145
  3,777
  4,474
  5,235
  6,058
  6,943
  7,888
  8,892
  9,953
  11,070
  12,243
  13,470
  14,752
  16,089
  17,481
  18,929
  20,435
  22,001
Net income, $m
  16
  -472
  -275
  1
  277
  641
  1,109
  1,697
  2,419
  3,288
  4,313
  5,607
  6,968
  8,502
  10,212
  12,096
  14,153
  16,379
  18,772
  21,327
  24,041
  26,910
  29,930
  33,100
  36,419
  39,885
  43,499
  47,263
  51,179
  55,251
  59,483

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
  0
  0
Total assets, $m
  13,245
  -1,070
  -1,653
  -2,473
  -3,588
  -5,062
  -6,959
  -9,341
  -12,265
  -15,782
  -19,934
  -24,753
  -30,263
  -36,477
  -43,401
  -51,032
  -59,362
  -68,380
  -78,071
  -88,420
  -99,410
  -111,028
  -123,261
  -136,100
  -149,540
  -163,577
  -178,215
  -193,459
  -209,319
  -225,810
  -242,950
Adjusted assets (=assets-cash), $m
  13,244
  -1,070
  -1,653
  -2,473
  -3,588
  -5,062
  -6,959
  -9,341
  -12,265
  -15,782
  -19,934
  -24,753
  -30,263
  -36,477
  -43,401
  -51,032
  -59,362
  -68,380
  -78,071
  -88,420
  -99,410
  -111,028
  -123,261
  -136,100
  -149,540
  -163,577
  -178,215
  -193,459
  -209,319
  -225,810
  -242,950
Revenue / Adjusted assets
  0.022
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
  -0.305
Average production assets, $m
  0
  23,806
  36,780
  55,005
  79,809
  112,599
  154,798
  207,784
  272,834
  351,071
  443,431
  550,641
  673,212
  811,446
  965,461
  1,135,211
  1,320,523
  1,521,131
  1,736,713
  1,966,918
  2,211,399
  2,469,839
  2,741,967
  3,027,577
  3,326,539
  3,638,806
  3,964,422
  4,303,523
  4,656,336
  5,023,181
  5,404,469
Working capital, $m
  0
  -18,491
  -28,568
  -42,724
  -61,990
  -87,460
  -120,237
  -161,393
  -211,919
  -272,688
  -344,428
  -427,701
  -522,905
  -630,277
  -749,905
  -881,755
  -1,025,693
  -1,181,512
  -1,348,962
  -1,527,769
  -1,717,666
  -1,918,405
  -2,129,776
  -2,351,618
  -2,583,831
  -2,826,380
  -3,079,296
  -3,342,687
  -3,616,728
  -3,901,669
  -4,197,828
Total debt, $m
  9,692
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
  12,804
Total liabilities, $m
  11,710
  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 equity, $m
  1,536
  -1,070
  -1,653
  -2,473
  -3,588
  -5,062
  -6,959
  -9,341
  -12,265
  -15,782
  -19,934
  -24,753
  -30,263
  -36,477
  -43,401
  -51,032
  -59,362
  -68,380
  -78,071
  -88,420
  -99,410
  -111,028
  -123,261
  -136,100
  -149,540
  -163,577
  -178,215
  -193,459
  -209,319
  -225,810
  -242,950
Total liabilities and equity, $m
  13,246
  -1,070
  -1,653
  -2,473
  -3,588
  -5,062
  -6,959
  -9,341
  -12,265
  -15,782
  -19,934
  -24,753
  -30,263
  -36,477
  -43,401
  -51,032
  -59,362
  -68,380
  -78,071
  -88,420
  -99,410
  -111,028
  -123,261
  -136,100
  -149,540
  -163,577
  -178,215
  -193,459
  -209,319
  -225,810
  -242,950
Debt-to-equity ratio
  6.310
  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
  0.116
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16
  -472
  -275
  1
  277
  641
  1,109
  1,697
  2,419
  3,288
  4,313
  5,607
  6,968
  8,502
  10,212
  12,096
  14,153
  16,379
  18,772
  21,327
  24,041
  26,910
  29,930
  33,100
  36,419
  39,885
  43,499
  47,263
  51,179
  55,251
  59,483
Depreciation, amort., depletion, $m
  0
  2,524
  3,821
  5,643
  8,124
  11,403
  15,623
  20,921
  27,426
  35,250
  44,486
  55,064
  67,321
  81,145
  96,546
  113,521
  132,052
  152,113
  173,671
  196,692
  221,140
  246,984
  274,197
  302,758
  332,654
  363,881
  396,442
  430,352
  465,634
  502,318
  540,447
Funds from operations, $m
  167
  2,051
  3,546
  5,645
  8,401
  12,044
  16,732
  22,619
  29,846
  38,538
  48,799
  60,671
  74,289
  89,647
  106,758
  125,617
  146,205
  168,492
  192,444
  218,019
  245,181
  273,894
  304,127
  335,858
  369,073
  403,765
  439,941
  477,615
  516,813
  557,569
  599,930
Change in working capital, $m
  -1
  -6,934
  -10,078
  -14,156
  -19,266
  -25,469
  -32,777
  -41,156
  -50,526
  -60,769
  -71,739
  -83,273
  -95,204
  -107,371
  -119,628
  -131,850
  -143,938
  -155,819
  -167,449
  -178,808
  -189,897
  -200,739
  -211,371
  -221,843
  -232,213
  -242,548
  -252,917
  -263,391
  -274,041
  -284,941
  -296,159
Cash from operations, $m
  168
  8,985
  13,623
  19,801
  27,667
  37,513
  49,509
  63,775
  80,372
  99,307
  120,538
  143,945
  169,493
  197,018
  226,386
  257,467
  290,143
  324,312
  359,893
  396,827
  435,078
  474,632
  515,498
  557,701
  601,286
  646,314
  692,858
  741,006
  790,854
  842,510
  896,089
Maintenance CAPEX, $m
  0
  -1,490
  -2,381
  -3,678
  -5,500
  -7,981
  -11,260
  -15,480
  -20,778
  -27,283
  -35,107
  -44,343
  -55,064
  -67,321
  -81,145
  -96,546
  -113,521
  -132,052
  -152,113
  -173,671
  -196,692
  -221,140
  -246,984
  -274,197
  -302,758
  -332,654
  -363,881
  -396,442
  -430,352
  -465,634
  -502,318
New CAPEX, $m
  0
  -8,909
  -12,974
  -18,225
  -24,804
  -32,790
  -42,199
  -52,986
  -65,050
  -78,237
  -92,360
  -107,210
  -122,570
  -138,235
  -154,015
  -169,750
  -185,312
  -200,609
  -215,582
  -230,205
  -244,482
  -258,440
  -272,128
  -285,610
  -298,962
  -312,267
  -325,616
  -339,101
  -352,813
  -366,845
  -381,288
Cash from investing activities, $m
  1,399
  -10,399
  -15,355
  -21,903
  -30,304
  -40,771
  -53,459
  -68,466
  -85,828
  -105,520
  -127,467
  -151,553
  -177,634
  -205,556
  -235,160
  -266,296
  -298,833
  -332,661
  -367,695
  -403,876
  -441,174
  -479,580
  -519,112
  -559,807
  -601,720
  -644,921
  -689,497
  -735,543
  -783,165
  -832,479
  -883,606
Free cash flow, $m
  1,567
  -1,413
  -1,731
  -2,102
  -2,638
  -3,258
  -3,950
  -4,691
  -5,456
  -6,213
  -6,929
  -7,608
  -8,141
  -8,538
  -8,773
  -8,829
  -8,690
  -8,349
  -7,802
  -7,049
  -6,095
  -4,947
  -3,614
  -2,106
  -433
  1,393
  3,361
  5,463
  7,689
  10,031
  12,483
Issuance/(repayment) of debt, $m
  -1,396
  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
Issuance/(repurchase) of shares, $m
  -6
  -401
  -583
  -819
  -1,115
  -1,474
  -1,897
  -2,382
  -2,924
  -3,517
  -4,152
  -4,819
  -5,510
  -6,214
  -6,924
  -7,631
  -8,330
  -9,018
  -9,691
  -10,349
  -10,990
  -11,618
  -12,233
  -12,839
  -13,439
  -14,038
  -14,638
  -15,244
  -15,860
  -16,491
  -17,140
Cash from financing (excl. dividends), $m  
  -1,402
  -401
  -583
  -819
  -1,115
  -1,474
  -1,897
  -2,382
  -2,924
  -3,517
  -4,152
  -4,819
  -5,510
  -6,214
  -6,924
  -7,631
  -8,330
  -9,018
  -9,691
  -10,349
  -10,990
  -11,618
  -12,233
  -12,839
  -13,439
  -14,038
  -14,638
  -15,244
  -15,860
  -16,491
  -17,140
Total cash flow (excl. dividends), $m
  165
  -1,814
  -2,315
  -2,921
  -3,753
  -4,732
  -5,847
  -7,073
  -8,380
  -9,730
  -11,081
  -12,428
  -13,651
  -14,752
  -15,697
  -16,460
  -17,021
  -17,367
  -17,493
  -17,398
  -17,086
  -16,565
  -15,847
  -14,945
  -13,873
  -12,645
  -11,276
  -9,781
  -8,171
  -6,460
  -4,657
Retained Cash Flow (-), $m
  159
  -72
  308
  819
  1,115
  1,474
  1,897
  2,382
  2,924
  3,517
  4,152
  4,819
  5,510
  6,214
  6,924
  7,631
  8,330
  9,018
  9,691
  10,349
  10,990
  11,618
  12,233
  12,839
  13,439
  14,038
  14,638
  15,244
  15,860
  16,491
  17,140
Prev. year cash balance distribution, $m
 
  670
  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
 
  -72
  308
  819
  1,115
  1,474
  1,897
  2,382
  2,924
  3,517
  4,152
  4,819
  5,510
  6,214
  6,924
  7,631
  8,330
  9,018
  9,691
  10,349
  10,990
  11,618
  12,233
  12,839
  13,439
  14,038
  14,638
  15,244
  15,860
  16,491
  17,140
Discount rate, %
 
  15.70
  16.49
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.20
  24.36
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.66
  43.74
  45.93
  48.22
  50.63
  53.17
  55.82
  58.62
  61.55
  64.62
PV of cash for distribution, $m
 
  -62
  227
  507
  572
  616
  634
  626
  592
  538
  469
  394
  317
  246
  183
  132
  91
  60
  38
  23
  14
  8
  4
  2
  1
  1
  0
  0
  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

CYS Investments, Inc. is a specialty finance company. The Company's objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

FINANCIAL RATIOS  of  CYS Investments (CYS)

Valuation Ratios
P/E Ratio 71.7
Price to Sales 3.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 6.8
Growth Rates
Sales Growth Rate -10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 631%
Interest Coverage 1
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. 7.8%
Asset Turnover 0
Profitability Ratios
Gross Margin 75.9%
Gross Margin - 3 Yr. Avg. 84.1%
EBITDA Margin 45.1%
EBITDA Margin - 3 Yr. Avg. 82.4%
Operating Margin 68.1%
Oper. Margin - 3 Yr. Avg. 76.9%
Pre-Tax Margin 5.4%
Pre-Tax Margin - 3 Yr. Avg. 46.1%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 46.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 1087.5%

CYS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CYS stock intrinsic value calculation we used $204 million for the last fiscal year's total revenue generated by CYS Investments. The default revenue input number comes from 2016 income statement of CYS Investments. 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 CYS 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 15.7%, whose default value for CYS is calculated based on our internal credit rating of CYS Investments, 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 CYS Investments.
    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 CYS stock the variable cost ratio is equal to 59.2%.

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 CYS 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 5.4% for CYS Investments.

Corporate tax rate of 27% is the nominal tax rate for CYS Investments. 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 CYS stock is equal to 2%.

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 CYS are equal to 7293.5%.

Life of production assets of 10 years is the average useful life of capital assets used in CYS Investments 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 CYS is equal to -5665.1%. 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 CYS Investments - 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 155 million for CYS Investments 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 CYS Investments at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
NYMT New York Mortg 6.14 4.92  hold
ARI Apollo Commerc 18.84 2.24  str.sell

COMPANY NEWS

▶ Here's Why CYS Investments Stock Is Up 10% Today   [Apr-26-18 04:01PM  Motley Fool]
▶ CYS: 1Q Earnings Snapshot   [Apr-25-18 06:14PM  Associated Press]
▶ CYS Investments, Inc. to Host Earnings Call   [Feb-15-18 07:00AM  ACCESSWIRE]
▶ CYS posts 4Q profit   [Feb-14-18 06:46PM  Associated Press]
▶ CYS Investments, Inc. to Host 2018 Analyst and Investor Day   [Jan-04-18 04:20PM  Business Wire]
▶ CYS Investments, Inc. to Host Earnings Call   [Oct-26-17 07:00AM  ACCESSWIRE]
▶ CYS posts 3Q profit   [Oct-25-17 06:15PM  Associated Press]
▶ CYS posts 2Q profit   [Jul-26-17 11:32PM  Associated Press]
▶ 12% Yielder CYS Climbs After Q1 Earnings Beat   [Apr-20-17 01:11PM  Barrons.com]
▶ CYS beats 1Q profit forecasts   [Apr-19-17 05:58PM  Associated Press]
▶ CYS reports 4Q loss   [Feb-15-17 06:37PM  Associated Press]
Financial statements of CYS
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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