Intrinsic value of Physicians Realty Trust - DOC

Previous Close

$18.02

  Intrinsic Value

$2.42

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

+84%

Previous close

$18.02

 
Intrinsic value

$2.42

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

+84%

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

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

We calculate the intrinsic value of DOC 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 3.2

 

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, %
  86.82
  45.30
  41.27
  37.64
  34.38
  31.44
  28.80
  26.42
  24.28
  22.35
  20.61
  19.05
  17.65
  16.38
  15.24
  14.22
  13.30
  12.47
  11.72
  11.05
  10.44
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
Revenue, $m
  241
  350
  495
  681
  915
  1,203
  1,549
  1,958
  2,434
  2,977
  3,591
  4,275
  5,030
  5,854
  6,746
  7,705
  8,730
  9,818
  10,969
  12,181
  13,453
  14,785
  16,176
  17,627
  19,138
  20,710
  22,345
  24,044
  25,810
  27,644
  29,551
Variable operating expenses, $m
 
  291
  411
  565
  759
  998
  1,286
  1,625
  2,020
  2,471
  2,981
  3,549
  4,175
  4,859
  5,599
  6,395
  7,246
  8,149
  9,104
  10,110
  11,166
  12,272
  13,426
  14,631
  15,885
  17,189
  18,546
  19,956
  21,422
  22,945
  24,528
Fixed operating expenses, $m
 
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
  16
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
Total operating expenses, $m
  210
  301
  422
  576
  770
  1,009
  1,298
  1,637
  2,032
  2,483
  2,994
  3,562
  4,188
  4,873
  5,613
  6,409
  7,261
  8,164
  9,120
  10,126
  11,182
  12,289
  13,443
  14,649
  15,903
  17,208
  18,565
  19,975
  21,442
  22,965
  24,549
Operating income, $m
  31
  49
  74
  105
  145
  193
  252
  321
  402
  494
  598
  714
  842
  981
  1,133
  1,295
  1,469
  1,654
  1,849
  2,055
  2,271
  2,497
  2,733
  2,979
  3,235
  3,502
  3,780
  4,068
  4,368
  4,679
  5,003
EBITDA, $m
  122
  182
  261
  362
  491
  648
  838
  1,062
  1,322
  1,620
  1,956
  2,330
  2,744
  3,195
  3,684
  4,209
  4,771
  5,367
  5,997
  6,661
  7,358
  8,088
  8,850
  9,645
  10,473
  11,334
  12,230
  13,161
  14,128
  15,133
  16,178
Interest expense (income), $m
  17
  35
  53
  77
  108
  147
  195
  253
  321
  400
  491
  593
  707
  833
  970
  1,119
  1,279
  1,449
  1,631
  1,823
  2,025
  2,237
  2,459
  2,690
  2,932
  3,184
  3,446
  3,719
  4,002
  4,296
  4,602
Earnings before tax, $m
  32
  15
  21
  28
  37
  46
  57
  68
  81
  94
  107
  121
  135
  149
  163
  177
  191
  204
  218
  232
  246
  260
  274
  288
  303
  318
  333
  349
  366
  383
  401
Tax expense, $m
  0
  4
  6
  8
  10
  12
  15
  18
  22
  25
  29
  33
  36
  40
  44
  48
  51
  55
  59
  63
  66
  70
  74
  78
  82
  86
  90
  94
  99
  103
  108
Net income, $m
  30
  11
  15
  21
  27
  34
  42
  50
  59
  68
  78
  88
  98
  108
  119
  129
  139
  149
  159
  169
  180
  190
  200
  211
  221
  232
  243
  255
  267
  280
  293

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  15
  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
  2,888
  4,169
  5,889
  8,106
  10,893
  14,318
  18,441
  23,312
  28,971
  35,445
  42,752
  50,897
  59,878
  69,688
  80,310
  91,730
  103,928
  116,885
  130,585
  145,013
  160,158
  176,013
  192,575
  209,847
  227,834
  246,550
  266,011
  286,238
  307,257
  329,100
  351,802
Adjusted assets (=assets-cash), $m
  2,873
  4,169
  5,889
  8,106
  10,893
  14,318
  18,441
  23,312
  28,971
  35,445
  42,752
  50,897
  59,878
  69,688
  80,310
  91,730
  103,928
  116,885
  130,585
  145,013
  160,158
  176,013
  192,575
  209,847
  227,834
  246,550
  266,011
  286,238
  307,257
  329,100
  351,802
Revenue / Adjusted assets
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
  0.084
Average production assets, $m
  2,133
  3,099
  4,378
  6,025
  8,097
  10,642
  13,707
  17,328
  21,535
  26,347
  31,778
  37,832
  44,508
  51,800
  59,696
  68,184
  77,251
  86,883
  97,066
  107,791
  119,048
  130,834
  143,144
  155,983
  169,353
  183,265
  197,730
  212,765
  228,389
  244,626
  261,500
Working capital, $m
  0
  -22
  -31
  -42
  -57
  -75
  -96
  -121
  -151
  -185
  -223
  -265
  -312
  -363
  -418
  -478
  -541
  -609
  -680
  -755
  -834
  -917
  -1,003
  -1,093
  -1,187
  -1,284
  -1,385
  -1,491
  -1,600
  -1,714
  -1,832
Total debt, $m
  991
  1,508
  2,197
  3,083
  4,198
  5,568
  7,217
  9,166
  11,429
  14,019
  16,942
  20,200
  23,792
  27,716
  31,965
  36,533
  41,412
  46,595
  52,075
  57,846
  63,904
  70,246
  76,871
  83,780
  90,975
  98,461
  106,245
  114,336
  122,744
  131,481
  140,562
Total liabilities, $m
  1,150
  1,667
  2,356
  3,242
  4,357
  5,727
  7,376
  9,325
  11,588
  14,178
  17,101
  20,359
  23,951
  27,875
  32,124
  36,692
  41,571
  46,754
  52,234
  58,005
  64,063
  70,405
  77,030
  83,939
  91,134
  98,620
  106,404
  114,495
  122,903
  131,640
  140,721
Total equity, $m
  1,738
  2,501
  3,533
  4,864
  6,536
  8,591
  11,064
  13,987
  17,383
  21,267
  25,651
  30,538
  35,927
  41,813
  48,186
  55,038
  62,357
  70,131
  78,351
  87,008
  96,095
  105,608
  115,545
  125,908
  136,701
  147,930
  159,606
  171,743
  184,354
  197,460
  211,081
Total liabilities and equity, $m
  2,888
  4,168
  5,889
  8,106
  10,893
  14,318
  18,440
  23,312
  28,971
  35,445
  42,752
  50,897
  59,878
  69,688
  80,310
  91,730
  103,928
  116,885
  130,585
  145,013
  160,158
  176,013
  192,575
  209,847
  227,835
  246,550
  266,010
  286,238
  307,257
  329,100
  351,802
Debt-to-equity ratio
  0.570
  0.600
  0.620
  0.630
  0.640
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
Adjusted equity ratio
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  30
  11
  15
  21
  27
  34
  42
  50
  59
  68
  78
  88
  98
  108
  119
  129
  139
  149
  159
  169
  180
  190
  200
  211
  221
  232
  243
  255
  267
  280
  293
Depreciation, amort., depletion, $m
  91
  132
  187
  257
  346
  455
  586
  741
  920
  1,126
  1,358
  1,617
  1,902
  2,214
  2,551
  2,914
  3,301
  3,713
  4,148
  4,606
  5,088
  5,591
  6,117
  6,666
  7,237
  7,832
  8,450
  9,093
  9,760
  10,454
  11,175
Funds from operations, $m
  136
  143
  202
  278
  373
  489
  627
  790
  979
  1,194
  1,436
  1,705
  2,000
  2,322
  2,670
  3,043
  3,440
  3,862
  4,308
  4,776
  5,267
  5,781
  6,317
  6,877
  7,459
  8,064
  8,693
  9,348
  10,027
  10,734
  11,468
Change in working capital, $m
  11
  -7
  -9
  -12
  -15
  -18
  -21
  -25
  -29
  -34
  -38
  -42
  -47
  -51
  -55
  -59
  -64
  -67
  -71
  -75
  -79
  -83
  -86
  -90
  -94
  -97
  -101
  -105
  -109
  -114
  -118
Cash from operations, $m
  125
  150
  211
  290
  387
  506
  649
  816
  1,009
  1,228
  1,474
  1,747
  2,047
  2,373
  2,725
  3,102
  3,504
  3,930
  4,379
  4,851
  5,346
  5,864
  6,404
  6,966
  7,552
  8,161
  8,795
  9,453
  10,137
  10,847
  11,586
Maintenance CAPEX, $m
  0
  -91
  -132
  -187
  -257
  -346
  -455
  -586
  -741
  -920
  -1,126
  -1,358
  -1,617
  -1,902
  -2,214
  -2,551
  -2,914
  -3,301
  -3,713
  -4,148
  -4,606
  -5,088
  -5,591
  -6,117
  -6,666
  -7,237
  -7,832
  -8,450
  -9,093
  -9,760
  -10,454
New CAPEX, $m
  -1,256
  -966
  -1,279
  -1,648
  -2,071
  -2,546
  -3,065
  -3,621
  -4,206
  -4,813
  -5,431
  -6,054
  -6,676
  -7,291
  -7,896
  -8,488
  -9,067
  -9,631
  -10,183
  -10,725
  -11,258
  -11,785
  -12,311
  -12,838
  -13,370
  -13,912
  -14,465
  -15,035
  -15,624
  -16,236
  -16,875
Cash from investing activities, $m
  -1,261
  -1,057
  -1,411
  -1,835
  -2,328
  -2,892
  -3,520
  -4,207
  -4,947
  -5,733
  -6,557
  -7,412
  -8,293
  -9,193
  -10,110
  -11,039
  -11,981
  -12,932
  -13,896
  -14,873
  -15,864
  -16,873
  -17,902
  -18,955
  -20,036
  -21,149
  -22,297
  -23,485
  -24,717
  -25,996
  -27,329
Free cash flow, $m
  -1,136
  -907
  -1,200
  -1,545
  -1,942
  -2,385
  -2,871
  -3,391
  -3,938
  -4,505
  -5,083
  -5,665
  -6,246
  -6,820
  -7,385
  -7,937
  -8,477
  -9,003
  -9,518
  -10,022
  -10,518
  -11,009
  -11,498
  -11,989
  -12,484
  -12,987
  -13,502
  -14,032
  -14,580
  -15,149
  -15,743
Issuance/(repayment) of debt, $m
  510
  517
  688
  887
  1,115
  1,370
  1,649
  1,949
  2,264
  2,590
  2,923
  3,258
  3,593
  3,924
  4,249
  4,568
  4,879
  5,183
  5,480
  5,771
  6,058
  6,342
  6,625
  6,909
  7,195
  7,486
  7,784
  8,091
  8,408
  8,737
  9,081
Issuance/(repurchase) of shares, $m
  753
  768
  1,017
  1,310
  1,645
  2,021
  2,432
  2,873
  3,337
  3,816
  4,306
  4,799
  5,291
  5,777
  6,255
  6,723
  7,180
  7,625
  8,061
  8,487
  8,907
  9,323
  9,737
  10,152
  10,571
  10,997
  11,433
  11,881
  12,345
  12,826
  13,328
Cash from financing (excl. dividends), $m  
  1,255
  1,285
  1,705
  2,197
  2,760
  3,391
  4,081
  4,822
  5,601
  6,406
  7,229
  8,057
  8,884
  9,701
  10,504
  11,291
  12,059
  12,808
  13,541
  14,258
  14,965
  15,665
  16,362
  17,061
  17,766
  18,483
  19,217
  19,972
  20,753
  21,563
  22,409
Total cash flow (excl. dividends), $m
  118
  378
  505
  651
  818
  1,006
  1,211
  1,431
  1,662
  1,901
  2,146
  2,392
  2,637
  2,881
  3,120
  3,353
  3,582
  3,805
  4,023
  4,237
  4,447
  4,656
  4,864
  5,072
  5,282
  5,496
  5,715
  5,940
  6,173
  6,414
  6,667
Retained Cash Flow (-), $m
  -717
  -778
  -1,032
  -1,330
  -1,672
  -2,055
  -2,474
  -2,923
  -3,395
  -3,885
  -4,384
  -4,887
  -5,389
  -5,886
  -6,374
  -6,852
  -7,319
  -7,774
  -8,220
  -8,657
  -9,087
  -9,513
  -9,937
  -10,363
  -10,793
  -11,229
  -11,676
  -12,136
  -12,612
  -13,106
  -13,621
Prev. year cash balance distribution, $m
 
  15
  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
 
  -386
  -527
  -679
  -854
  -1,049
  -1,263
  -1,492
  -1,734
  -1,983
  -2,238
  -2,495
  -2,751
  -3,005
  -3,254
  -3,498
  -3,737
  -3,969
  -4,197
  -4,420
  -4,640
  -4,857
  -5,074
  -5,291
  -5,510
  -5,733
  -5,962
  -6,196
  -6,439
  -6,691
  -6,955
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  -359
  -453
  -535
  -612
  -678
  -730
  -763
  -777
  -770
  -745
  -702
  -647
  -581
  -511
  -438
  -368
  -302
  -241
  -189
  -144
  -107
  -78
  -55
  -38
  -25
  -17
  -10
  -6
  -4
  -2
Current shareholders' claim on cash, %
  100
  80.7
  66.2
  55.2
  46.7
  40.0
  34.7
  30.5
  27.0
  24.2
  21.8
  19.8
  18.1
  16.7
  15.4
  14.3
  13.4
  12.6
  11.8
  11.2
  10.6
  10.1
  9.6
  9.2
  8.8
  8.4
  8.1
  7.8
  7.5
  7.2
  7.0

Physicians Realty Trust (the Trust) is a real estate investment trust. Physicians Realty L.P. is the operating partnership of the Trust. The Trust and its operating partnership are engaged in acquiring, developing, owning and managing healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. As of December 31, 2016, the Company's portfolio consisted of 246 properties located in 29 states with approximately 10,883,601 net leasable square feet. The Company invests in real estate that is integral to providing healthcare services. The Company focuses its investment activity on various types of healthcare properties, such as medical office buildings; outpatient treatment and diagnostic facilities; physician group practice clinics; ambulatory surgery centers, and specialty hospitals and treatment centers. Its properties include Arrowhead Commons, Aurora Medical Office Building, Decatur Medical Office Building and El Paso Medical Office Building.

FINANCIAL RATIOS  of  Physicians Realty Trust (DOC)

Valuation Ratios
P/E Ratio 81.7
Price to Sales 10.2
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 19.6
Price to Free Cash Flow -2.2
Growth Rates
Sales Growth Rate 86.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 65.7%
Cap. Spend. - 3 Yr. Gr. Rate 58.4%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 57%
Total Debt to Equity 57%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 1.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.6%
Return On Equity 2.2%
Return On Equity - 3 Yr. Avg. 0.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 72.6%
Gross Margin - 3 Yr. Avg. 76.6%
EBITDA Margin 58.1%
EBITDA Margin - 3 Yr. Avg. 49.7%
Operating Margin 12.9%
Oper. Margin - 3 Yr. Avg. 4.2%
Pre-Tax Margin 13.3%
Pre-Tax Margin - 3 Yr. Avg. 5.3%
Net Profit Margin 12.4%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 353.3%

DOC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DOC stock intrinsic value calculation we used $241 million for the last fiscal year's total revenue generated by Physicians Realty Trust. The default revenue input number comes from 2016 income statement of Physicians Realty 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 DOC stock valuation model: a) initial revenue growth rate of 45.3% 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 7.5%, whose default value for DOC is calculated based on our internal credit rating of Physicians Realty 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 Physicians Realty 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 DOC stock the variable cost ratio is equal to 83%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 million in the base year in the intrinsic value calculation for DOC 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 Physicians Realty Trust.

Corporate tax rate of 27% is the nominal tax rate for Physicians Realty 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 DOC 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 DOC are equal to 884.9%.

Life of production assets of 23.4 years is the average useful life of capital assets used in Physicians Realty 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 DOC is equal to -6.2%. 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 - $1738 million for Physicians Realty 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 179.25 million for Physicians Realty 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 Physicians Realty Trust at the current share price and the inputted number of shares is $3.2 billion.

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COMPANY NEWS

▶ [$$] Physicians Realty Gets Boost From Deals   [Sep-27-17 04:23PM  Barrons.com]
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▶ Physicians Realty Trust reports 2Q results   [Aug-04-17 03:11AM  Associated Press]
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▶ Physicians Realty Trust reports 1Q results   [May-03-17 08:14AM  Associated Press]
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▶ 4 Bargain REITs With 5.0% Yields And Big Upside   [Feb-05-17 08:08AM  at Forbes]
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▶ EdR Appoints John T. Thomas to Board of Directors   [Oct-03-16 04:30PM  PR Newswire]
Financial statements of DOC
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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