Intrinsic value of First Industrial Realty Trust - FR

Previous Close

$29.98

  Intrinsic Value

$2.66

stock screener

  Rating & Target

str. sell

-91%

  Value-price divergence*

+2%

Previous close

$29.98

 
Intrinsic value

$2.66

 
Up/down potential

-91%

 
Rating

str. sell

 
Value-price divergence*

+2%

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

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

We calculate the intrinsic value of FR 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 3.5

 

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, %
  3.28
  4.30
  4.37
  4.43
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.89
  4.91
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
Revenue, $m
  378
  394
  411
  430
  449
  469
  491
  514
  538
  563
  589
  618
  647
  678
  711
  745
  781
  819
  859
  902
  946
  992
  1,041
  1,092
  1,146
  1,203
  1,263
  1,325
  1,391
  1,460
  1,532
Variable operating expenses, $m
 
  55
  58
  60
  63
  66
  69
  72
  75
  79
  83
  86
  91
  95
  100
  104
  109
  115
  120
  126
  132
  139
  146
  153
  160
  168
  177
  186
  195
  204
  215
Fixed operating expenses, $m
 
  215
  221
  226
  232
  238
  244
  250
  256
  262
  269
  276
  282
  289
  297
  304
  312
  320
  328
  336
  344
  353
  362
  371
  380
  389
  399
  409
  419
  430
  440
Total operating expenses, $m
  257
  270
  279
  286
  295
  304
  313
  322
  331
  341
  352
  362
  373
  384
  397
  408
  421
  435
  448
  462
  476
  492
  508
  524
  540
  557
  576
  595
  614
  634
  655
Operating income, $m
  121
  124
  133
  143
  154
  166
  179
  192
  206
  222
  238
  256
  274
  294
  315
  337
  360
  385
  412
  440
  469
  501
  534
  569
  606
  645
  687
  731
  777
  826
  877
EBITDA, $m
  245
  253
  268
  284
  301
  320
  339
  360
  383
  406
  431
  458
  486
  516
  547
  581
  616
  654
  693
  735
  779
  826
  875
  927
  982
  1,039
  1,100
  1,165
  1,233
  1,304
  1,379
Interest expense (income), $m
  64
  62
  65
  68
  72
  75
  79
  83
  88
  92
  97
  102
  107
  113
  119
  125
  131
  138
  145
  153
  161
  169
  178
  187
  197
  207
  218
  229
  241
  253
  266
Earnings before tax, $m
  127
  62
  68
  75
  83
  91
  100
  109
  119
  130
  141
  154
  167
  181
  196
  212
  229
  247
  266
  287
  309
  332
  356
  382
  409
  438
  469
  502
  536
  573
  611
Tax expense, $m
  1
  17
  18
  20
  22
  25
  27
  29
  32
  35
  38
  42
  45
  49
  53
  57
  62
  67
  72
  77
  83
  90
  96
  103
  111
  118
  127
  135
  145
  155
  165
Net income, $m
  121
  45
  50
  55
  60
  66
  73
  79
  87
  95
  103
  112
  122
  132
  143
  155
  167
  180
  194
  209
  225
  242
  260
  279
  299
  320
  342
  366
  391
  418
  446

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  2,793
  2,899
  3,026
  3,160
  3,302
  3,452
  3,610
  3,777
  3,953
  4,139
  4,335
  4,541
  4,758
  4,986
  5,227
  5,480
  5,746
  6,026
  6,320
  6,629
  6,954
  7,296
  7,655
  8,033
  8,430
  8,846
  9,284
  9,744
  10,227
  10,735
  11,268
Adjusted assets (=assets-cash), $m
  2,783
  2,899
  3,026
  3,160
  3,302
  3,452
  3,610
  3,777
  3,953
  4,139
  4,335
  4,541
  4,758
  4,986
  5,227
  5,480
  5,746
  6,026
  6,320
  6,629
  6,954
  7,296
  7,655
  8,033
  8,430
  8,846
  9,284
  9,744
  10,227
  10,735
  11,268
Revenue / Adjusted assets
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
Average production assets, $m
  2,526
  2,635
  2,750
  2,872
  3,001
  3,137
  3,281
  3,433
  3,593
  3,762
  3,940
  4,127
  4,324
  4,532
  4,750
  4,980
  5,222
  5,477
  5,744
  6,025
  6,321
  6,631
  6,958
  7,301
  7,661
  8,040
  8,438
  8,856
  9,296
  9,757
  10,242
Working capital, $m
  0
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
Total debt, $m
  1,347
  1,413
  1,483
  1,558
  1,637
  1,721
  1,809
  1,903
  2,001
  2,104
  2,214
  2,329
  2,450
  2,577
  2,711
  2,853
  3,001
  3,157
  3,321
  3,494
  3,676
  3,866
  4,067
  4,277
  4,499
  4,731
  4,976
  5,232
  5,502
  5,785
  6,083
Total liabilities, $m
  1,552
  1,618
  1,688
  1,763
  1,842
  1,926
  2,014
  2,108
  2,206
  2,309
  2,419
  2,534
  2,655
  2,782
  2,916
  3,058
  3,206
  3,362
  3,526
  3,699
  3,881
  4,071
  4,272
  4,482
  4,704
  4,936
  5,181
  5,437
  5,707
  5,990
  6,288
Total equity, $m
  1,241
  1,281
  1,337
  1,397
  1,459
  1,526
  1,596
  1,669
  1,747
  1,829
  1,916
  2,007
  2,103
  2,204
  2,310
  2,422
  2,540
  2,663
  2,793
  2,930
  3,074
  3,225
  3,384
  3,551
  3,726
  3,910
  4,104
  4,307
  4,521
  4,745
  4,981
Total liabilities and equity, $m
  2,793
  2,899
  3,025
  3,160
  3,301
  3,452
  3,610
  3,777
  3,953
  4,138
  4,335
  4,541
  4,758
  4,986
  5,226
  5,480
  5,746
  6,025
  6,319
  6,629
  6,955
  7,296
  7,656
  8,033
  8,430
  8,846
  9,285
  9,744
  10,228
  10,735
  11,269
Debt-to-equity ratio
  1.085
  1.100
  1.110
  1.120
  1.120
  1.130
  1.130
  1.140
  1.150
  1.150
  1.160
  1.160
  1.160
  1.170
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  121
  45
  50
  55
  60
  66
  73
  79
  87
  95
  103
  112
  122
  132
  143
  155
  167
  180
  194
  209
  225
  242
  260
  279
  299
  320
  342
  366
  391
  418
  446
Depreciation, amort., depletion, $m
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  212
  222
  233
  244
  256
  268
  282
  295
  310
  325
  341
  358
  376
  394
  414
  434
  456
  478
  502
Funds from operations, $m
  161
  174
  185
  196
  207
  220
  233
  248
  263
  279
  296
  315
  334
  354
  376
  399
  423
  449
  476
  505
  535
  567
  601
  637
  674
  714
  756
  800
  847
  896
  948
Change in working capital, $m
  -12
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  173
  175
  185
  196
  208
  221
  234
  248
  264
  280
  297
  315
  335
  355
  377
  400
  424
  450
  477
  506
  536
  568
  602
  638
  676
  716
  758
  802
  849
  898
  950
Maintenance CAPEX, $m
  0
  -124
  -129
  -135
  -141
  -147
  -154
  -161
  -168
  -176
  -184
  -193
  -202
  -212
  -222
  -233
  -244
  -256
  -268
  -282
  -295
  -310
  -325
  -341
  -358
  -376
  -394
  -414
  -434
  -456
  -478
New CAPEX, $m
  -287
  -109
  -115
  -122
  -129
  -136
  -144
  -152
  -160
  -169
  -178
  -187
  -197
  -208
  -219
  -230
  -242
  -254
  -267
  -281
  -296
  -311
  -326
  -343
  -361
  -379
  -398
  -418
  -439
  -461
  -485
Cash from investing activities, $m
  -111
  -233
  -244
  -257
  -270
  -283
  -298
  -313
  -328
  -345
  -362
  -380
  -399
  -420
  -441
  -463
  -486
  -510
  -535
  -563
  -591
  -621
  -651
  -684
  -719
  -755
  -792
  -832
  -873
  -917
  -963
Free cash flow, $m
  62
  -58
  -59
  -61
  -62
  -63
  -64
  -64
  -65
  -65
  -65
  -65
  -65
  -65
  -64
  -63
  -62
  -60
  -59
  -57
  -55
  -52
  -49
  -46
  -43
  -39
  -34
  -30
  -25
  -19
  -13
Issuance/(repayment) of debt, $m
  -93
  66
  71
  75
  79
  84
  88
  93
  98
  104
  109
  115
  121
  127
  134
  141
  148
  156
  164
  173
  181
  191
  200
  211
  221
  233
  244
  257
  270
  283
  298
Issuance/(repurchase) of shares, $m
  120
  5
  6
  4
  2
  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  
  27
  71
  77
  79
  81
  84
  88
  93
  98
  104
  109
  115
  121
  127
  134
  141
  148
  156
  164
  173
  181
  191
  200
  211
  221
  233
  244
  257
  270
  283
  298
Total cash flow (excl. dividends), $m
  89
  13
  18
  19
  20
  21
  25
  29
  33
  38
  44
  50
  56
  63
  70
  78
  87
  96
  105
  116
  127
  139
  151
  164
  179
  194
  210
  227
  245
  264
  285
Retained Cash Flow (-), $m
  -168
  -50
  -56
  -59
  -63
  -66
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -151
  -159
  -167
  -175
  -184
  -194
  -203
  -214
  -224
  -236
Prev. year cash balance distribution, $m
 
  10
  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
 
  -27
  -38
  -41
  -43
  -45
  -45
  -45
  -44
  -44
  -43
  -41
  -40
  -38
  -36
  -34
  -31
  -28
  -25
  -21
  -17
  -13
  -8
  -2
  3
  10
  16
  24
  32
  40
  49
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  -25
  -32
  -31
  -29
  -27
  -24
  -21
  -18
  -15
  -12
  -10
  -8
  -6
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.9
  99.7
  99.6
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5

First Industrial Realty Trust Inc. is a real estate investment trust. The firm invests in the real estate markets of the United States. It makes investments in industrial properties. The firm owns, manages, acquires, sells, develops, and redevelops industrial real estate. First Industrial Realty Trust Inc. formed on August 10, 1993 and is domiciled in the United States.

FINANCIAL RATIOS  of  First Industrial Realty Trust (FR)

Valuation Ratios
P/E Ratio 29
Price to Sales 9.3
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow -30.8
Growth Rates
Sales Growth Rate 3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.7%
Cap. Spend. - 3 Yr. Gr. Rate 8.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 108.5%
Total Debt to Equity 108.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 71.2%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 83.3%
EBITDA Margin - 3 Yr. Avg. 72.6%
Operating Margin 32%
Oper. Margin - 3 Yr. Avg. 29.9%
Pre-Tax Margin 33.6%
Pre-Tax Margin - 3 Yr. Avg. 20.4%
Net Profit Margin 32%
Net Profit Margin - 3 Yr. Avg. 22.1%
Effective Tax Rate 0.8%
Eff/ Tax Rate - 3 Yr. Avg. 0.3%
Payout Ratio 68.6%

FR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FR stock intrinsic value calculation we used $378 million for the last fiscal year's total revenue generated by First Industrial Realty Trust. The default revenue input number comes from 2016 income statement of First Industrial 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 FR stock valuation model: a) initial revenue growth rate of 4.3% 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 8.7%, whose default value for FR is calculated based on our internal credit rating of First Industrial 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 First Industrial 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 FR stock the variable cost ratio is equal to 14%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $210 million in the base year in the intrinsic value calculation for FR 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 4.6% for First Industrial Realty Trust.

Corporate tax rate of 27% is the nominal tax rate for First Industrial 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 FR 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 FR are equal to 668.3%.

Life of production assets of 20.4 years is the average useful life of capital assets used in First Industrial 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 FR is equal to -2.6%. 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 - $1241 million for First Industrial 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 116.623 million for First Industrial 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 First Industrial Realty Trust at the current share price and the inputted number of shares is $3.5 billion.

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COMPANY NEWS

▶ First Industrial Realty Trust reports 2Q results   [12:33AM  Associated Press]
▶ First Industrial Realty Trust reports 1Q results   [Apr-25-17 06:01PM  Associated Press]
▶ First Industrial Realty Trust reports 4Q results   [Feb-22-17 07:54PM  Associated Press]
▶ Valeo Acquires A 50% Stake In CloudMade   [03:34PM  PR Newswire]
▶ Double Tops Giving Sell Signals (AMT, BND)   [Sep-22-16 09:25AM  at Investopedia]
Stock chart of FR Financial statements of FR
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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