Intrinsic value of Gaming&Leisure Properties - GLPI

Previous Close

$36.33

  Intrinsic Value

$55.06

stock screener

  Rating & Target

str. buy

+52%

Previous close

$36.33

 
Intrinsic value

$55.06

 
Up/down potential

+52%

 
Rating

str. buy

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

We calculate the intrinsic value of GLPI 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 7.7

 

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, %
  44.00
  44.00
  40.10
  36.59
  33.43
  30.59
  28.03
  25.73
  23.65
  21.79
  20.11
  18.60
  17.24
  16.01
  14.91
  13.92
  13.03
  12.23
  11.50
  10.85
  10.27
  9.74
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
Revenue, $m
  828
  1,192
  1,670
  2,282
  3,044
  3,976
  5,090
  6,399
  7,913
  9,637
  11,575
  13,728
  16,095
  18,672
  21,457
  24,444
  27,629
  31,007
  34,574
  38,327
  42,262
  46,379
  50,678
  55,158
  59,822
  64,674
  69,719
  74,962
  80,410
  86,071
  91,956
Variable operating expenses, $m
 
  137
  189
  256
  339
  440
  562
  704
  869
  1,056
  1,267
  1,494
  1,751
  2,032
  2,335
  2,660
  3,007
  3,374
  3,762
  4,171
  4,599
  5,047
  5,515
  6,002
  6,510
  7,038
  7,587
  8,157
  8,750
  9,366
  10,007
Fixed operating expenses, $m
 
  262
  269
  276
  283
  290
  297
  304
  312
  320
  328
  336
  344
  353
  362
  371
  380
  390
  399
  409
  419
  430
  441
  452
  463
  475
  486
  499
  511
  524
  537
Total operating expenses, $m
  348
  399
  458
  532
  622
  730
  859
  1,008
  1,181
  1,376
  1,595
  1,830
  2,095
  2,385
  2,697
  3,031
  3,387
  3,764
  4,161
  4,580
  5,018
  5,477
  5,956
  6,454
  6,973
  7,513
  8,073
  8,656
  9,261
  9,890
  10,544
Operating income, $m
  481
  793
  1,212
  1,750
  2,423
  3,246
  4,232
  5,391
  6,733
  8,261
  9,980
  11,898
  13,999
  16,287
  18,760
  21,413
  24,242
  27,243
  30,413
  33,747
  37,244
  40,902
  44,722
  48,704
  52,849
  57,162
  61,645
  66,305
  71,148
  76,181
  81,412
EBITDA, $m
  597
  963
  1,448
  2,070
  2,847
  3,798
  4,936
  6,275
  7,824
  9,588
  11,573
  13,778
  16,203
  18,844
  21,698
  24,760
  28,025
  31,489
  35,146
  38,994
  43,030
  47,252
  51,661
  56,256
  61,040
  66,017
  71,191
  76,569
  82,158
  87,966
  94,002
Interest expense (income), $m
  155
  201
  294
  416
  573
  768
  1,007
  1,292
  1,627
  2,015
  2,456
  2,953
  3,504
  4,110
  4,770
  5,483
  6,248
  7,064
  7,929
  8,843
  9,804
  10,812
  11,866
  12,967
  14,114
  15,309
  16,551
  17,843
  19,186
  20,581
  22,031
Earnings before tax, $m
  297
  592
  918
  1,334
  1,850
  2,478
  3,225
  4,099
  5,105
  6,246
  7,524
  8,946
  10,495
  12,177
  13,990
  15,930
  17,994
  20,179
  22,483
  24,904
  27,440
  30,091
  32,856
  35,737
  38,735
  41,853
  45,094
  48,462
  51,962
  55,600
  59,381
Tax expense, $m
  8
  160
  248
  360
  500
  669
  871
  1,107
  1,378
  1,687
  2,031
  2,415
  2,834
  3,288
  3,777
  4,301
  4,858
  5,448
  6,071
  6,724
  7,409
  8,124
  8,871
  9,649
  10,458
  11,300
  12,175
  13,085
  14,030
  15,012
  16,033
Net income, $m
  289
  432
  670
  974
  1,351
  1,809
  2,354
  2,992
  3,727
  4,560
  5,492
  6,530
  7,661
  8,889
  10,213
  11,629
  13,136
  14,731
  16,413
  18,180
  20,031
  21,966
  23,985
  26,088
  28,277
  30,553
  32,919
  35,377
  37,933
  40,588
  43,348

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  37
  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
  7,369
  10,552
  14,783
  20,192
  26,942
  35,183
  45,044
  56,632
  70,028
  85,286
  102,436
  121,488
  142,431
  165,241
  189,884
  216,319
  244,505
  274,400
  305,967
  339,176
  374,004
  410,437
  448,474
  488,122
  529,400
  572,339
  616,981
  663,376
  711,590
  761,693
  813,770
Adjusted assets (=assets-cash), $m
  7,332
  10,552
  14,783
  20,192
  26,942
  35,183
  45,044
  56,632
  70,028
  85,286
  102,436
  121,488
  142,431
  165,241
  189,884
  216,319
  244,505
  274,400
  305,967
  339,176
  374,004
  410,437
  448,474
  488,122
  529,400
  572,339
  616,981
  663,376
  711,590
  761,693
  813,770
Revenue / Adjusted assets
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
Average production assets, $m
  3,345
  4,816
  6,747
  9,216
  12,296
  16,058
  20,559
  25,847
  31,961
  38,925
  46,753
  55,448
  65,006
  75,417
  86,664
  98,730
  111,594
  125,238
  139,646
  154,802
  170,698
  187,327
  204,687
  222,782
  241,622
  261,220
  281,594
  302,770
  324,774
  347,642
  371,410
Working capital, $m
  0
  -54
  -75
  -103
  -137
  -179
  -229
  -288
  -356
  -434
  -521
  -618
  -724
  -840
  -966
  -1,100
  -1,243
  -1,395
  -1,556
  -1,725
  -1,902
  -2,087
  -2,280
  -2,482
  -2,692
  -2,910
  -3,137
  -3,373
  -3,618
  -3,873
  -4,138
Total debt, $m
  4,665
  6,831
  9,679
  13,319
  17,862
  23,408
  30,045
  37,844
  46,859
  57,127
  68,670
  81,491
  95,586
  110,937
  127,522
  145,313
  164,282
  184,401
  205,646
  227,996
  251,435
  275,954
  301,553
  328,236
  356,016
  384,914
  414,958
  446,182
  478,630
  512,349
  547,397
Total liabilities, $m
  4,935
  7,101
  9,949
  13,589
  18,132
  23,678
  30,315
  38,114
  47,129
  57,397
  68,940
  81,761
  95,856
  111,207
  127,792
  145,583
  164,552
  184,671
  205,916
  228,266
  251,705
  276,224
  301,823
  328,506
  356,286
  385,184
  415,228
  446,452
  478,900
  512,619
  547,667
Total equity, $m
  2,434
  3,450
  4,834
  6,603
  8,810
  11,505
  14,729
  18,519
  22,899
  27,889
  33,497
  39,727
  46,575
  54,034
  62,092
  70,736
  79,953
  89,729
  100,051
  110,911
  122,299
  134,213
  146,651
  159,616
  173,114
  187,155
  201,753
  216,924
  232,690
  249,074
  266,103
Total liabilities and equity, $m
  7,369
  10,551
  14,783
  20,192
  26,942
  35,183
  45,044
  56,633
  70,028
  85,286
  102,437
  121,488
  142,431
  165,241
  189,884
  216,319
  244,505
  274,400
  305,967
  339,177
  374,004
  410,437
  448,474
  488,122
  529,400
  572,339
  616,981
  663,376
  711,590
  761,693
  813,770
Debt-to-equity ratio
  1.917
  1.980
  2.000
  2.020
  2.030
  2.030
  2.040
  2.040
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
Adjusted equity ratio
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  289
  432
  670
  974
  1,351
  1,809
  2,354
  2,992
  3,727
  4,560
  5,492
  6,530
  7,661
  8,889
  10,213
  11,629
  13,136
  14,731
  16,413
  18,180
  20,031
  21,966
  23,985
  26,088
  28,277
  30,553
  32,919
  35,377
  37,933
  40,588
  43,348
Depreciation, amort., depletion, $m
  116
  171
  236
  320
  424
  552
  704
  884
  1,091
  1,327
  1,592
  1,880
  2,204
  2,557
  2,938
  3,347
  3,783
  4,245
  4,734
  5,248
  5,786
  6,350
  6,939
  7,552
  8,191
  8,855
  9,546
  10,263
  11,009
  11,784
  12,590
Funds from operations, $m
  533
  603
  907
  1,294
  1,775
  2,361
  3,059
  3,876
  4,818
  5,887
  7,085
  8,410
  9,865
  11,446
  13,150
  14,976
  16,918
  18,976
  21,147
  23,428
  25,818
  28,316
  30,923
  33,640
  36,467
  39,408
  42,464
  45,641
  48,942
  52,372
  55,938
Change in working capital, $m
  19
  -16
  -22
  -28
  -34
  -42
  -50
  -59
  -68
  -78
  -87
  -97
  -106
  -116
  -125
  -134
  -143
  -152
  -161
  -169
  -177
  -185
  -193
  -202
  -210
  -218
  -227
  -236
  -245
  -255
  -265
Cash from operations, $m
  514
  619
  928
  1,321
  1,809
  2,403
  3,109
  3,935
  4,886
  5,965
  7,172
  8,507
  9,971
  11,562
  13,276
  15,110
  17,062
  19,128
  21,307
  23,596
  25,995
  28,502
  31,117
  33,842
  36,677
  39,626
  42,691
  45,877
  49,187
  52,627
  56,203
Maintenance CAPEX, $m
  0
  -113
  -163
  -229
  -312
  -417
  -544
  -697
  -876
  -1,083
  -1,319
  -1,585
  -1,880
  -2,204
  -2,557
  -2,938
  -3,347
  -3,783
  -4,245
  -4,734
  -5,248
  -5,786
  -6,350
  -6,939
  -7,552
  -8,191
  -8,855
  -9,546
  -10,263
  -11,009
  -11,784
New CAPEX, $m
  -3,271
  -1,471
  -1,931
  -2,469
  -3,081
  -3,761
  -4,501
  -5,289
  -6,114
  -6,964
  -7,828
  -8,695
  -9,558
  -10,411
  -11,247
  -12,065
  -12,864
  -13,644
  -14,408
  -15,157
  -15,896
  -16,629
  -17,360
  -18,096
  -18,840
  -19,598
  -20,375
  -21,175
  -22,005
  -22,868
  -23,768
Cash from investing activities, $m
  -3,219
  -1,584
  -2,094
  -2,698
  -3,393
  -4,178
  -5,045
  -5,986
  -6,990
  -8,047
  -9,147
  -10,280
  -11,438
  -12,615
  -13,804
  -15,003
  -16,211
  -17,427
  -18,653
  -19,891
  -21,144
  -22,415
  -23,710
  -25,035
  -26,392
  -27,789
  -29,230
  -30,721
  -32,268
  -33,877
  -35,552
Free cash flow, $m
  -2,705
  -965
  -1,166
  -1,376
  -1,584
  -1,775
  -1,936
  -2,051
  -2,104
  -2,083
  -1,975
  -1,773
  -1,467
  -1,052
  -528
  107
  851
  1,701
  2,654
  3,706
  4,852
  6,087
  7,407
  8,807
  10,285
  11,838
  13,462
  15,156
  16,919
  18,750
  20,651
Issuance/(repayment) of debt, $m
  2,175
  2,166
  2,848
  3,640
  4,543
  5,546
  6,637
  7,799
  9,015
  10,269
  11,542
  12,822
  14,095
  15,351
  16,585
  17,791
  18,969
  20,119
  21,245
  22,349
  23,439
  24,520
  25,599
  26,683
  27,780
  28,898
  30,044
  31,224
  32,447
  33,720
  35,048
Issuance/(repurchase) of shares, $m
  984
  621
  713
  795
  857
  886
  870
  797
  654
  430
  116
  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  
  3,127
  2,787
  3,561
  4,435
  5,400
  6,432
  7,507
  8,596
  9,669
  10,699
  11,658
  12,822
  14,095
  15,351
  16,585
  17,791
  18,969
  20,119
  21,245
  22,349
  23,439
  24,520
  25,599
  26,683
  27,780
  28,898
  30,044
  31,224
  32,447
  33,720
  35,048
Total cash flow (excl. dividends), $m
  423
  1,822
  2,395
  3,059
  3,816
  4,657
  5,571
  6,545
  7,565
  8,615
  9,683
  11,048
  12,628
  14,299
  16,057
  17,898
  19,820
  21,821
  23,899
  26,055
  28,291
  30,606
  33,005
  35,490
  38,066
  40,736
  43,505
  46,380
  49,366
  52,470
  55,698
Retained Cash Flow (-), $m
  -2,688
  -1,053
  -1,384
  -1,769
  -2,207
  -2,695
  -3,225
  -3,789
  -4,380
  -4,989
  -5,608
  -6,230
  -6,848
  -7,459
  -8,058
  -8,644
  -9,217
  -9,776
  -10,322
  -10,859
  -11,389
  -11,914
  -12,438
  -12,965
  -13,498
  -14,041
  -14,598
  -15,171
  -15,766
  -16,384
  -17,029
Prev. year cash balance distribution, $m
 
  37
  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
 
  806
  1,011
  1,290
  1,608
  1,962
  2,346
  2,756
  3,184
  3,626
  4,075
  4,818
  5,779
  6,840
  7,998
  9,254
  10,603
  12,045
  13,577
  15,196
  16,902
  18,693
  20,567
  22,526
  24,568
  26,695
  28,908
  31,209
  33,601
  36,086
  38,669
Discount rate, %
 
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
 
  731
  823
  934
  1,025
  1,088
  1,118
  1,115
  1,078
  1,013
  925
  875
  825
  753
  667
  572
  476
  383
  299
  226
  165
  117
  80
  53
  34
  21
  12
  7
  4
  2
  1
Current shareholders' claim on cash, %
  100
  92.4
  86.8
  82.5
  79.3
  76.8
  75.0
  73.8
  73.0
  72.5
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4
  72.4

Gaming and Leisure Properties, Inc. (GLPI) is a self-administered and self-managed Pennsylvania real estate investment trust (REIT). The Company is engaged in the business of acquiring, financing and owning real estate property to be leased to gaming operators in triple net lease arrangements. Its segments include GLP Capital, L.P. (GLP Capital), through which the Company owns all of its real estate assets, and the TRS Properties, which consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. The GLP Capital segment consists of the leased real property. As of December 31, 2016, the Company had 34 rental properties, consisting of the real property associated with 18 gaming and related facilities operated by Penn National Gaming, Inc. (Penn), the real property associated with 15 gaming and related facilities operated by Pinnacle Entertainment, Inc. (Pinnacle), and the real property associated with the Casino Queen in East St. Louis, Illinois.

FINANCIAL RATIOS  of  Gaming&Leisure Properties (GLPI)

Valuation Ratios
P/E Ratio 26.1
Price to Sales 9.1
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 14.7
Price to Free Cash Flow -2.7
Growth Rates
Sales Growth Rate 44%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17115.8%
Cap. Spend. - 3 Yr. Gr. Rate 189.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 191.7%
Total Debt to Equity 191.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 9%
Ret/ On Assets - 3 Yr. Avg. 9.3%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. -283.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 90.1%
Gross Margin - 3 Yr. Avg. 86.5%
EBITDA Margin 68.6%
EBITDA Margin - 3 Yr. Avg. 63.8%
Operating Margin 58%
Oper. Margin - 3 Yr. Avg. 48.8%
Pre-Tax Margin 35.9%
Pre-Tax Margin - 3 Yr. Avg. 28%
Net Profit Margin 34.9%
Net Profit Margin - 3 Yr. Avg. 26.9%
Effective Tax Rate 2.7%
Eff/ Tax Rate - 3 Yr. Avg. 4%
Payout Ratio 148.1%

GLPI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GLPI stock intrinsic value calculation we used $828 million for the last fiscal year's total revenue generated by Gaming&Leisure Properties. The default revenue input number comes from 2016 income statement of Gaming&Leisure 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 GLPI stock valuation model: a) initial revenue growth rate of 44% 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 10.3%, whose default value for GLPI is calculated based on our internal credit rating of Gaming&Leisure 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 Gaming&Leisure 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 GLPI stock the variable cost ratio is equal to 11.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $256 million in the base year in the intrinsic value calculation for GLPI 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 4.3% for Gaming&Leisure Properties.

Corporate tax rate of 27% is the nominal tax rate for Gaming&Leisure 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 GLPI 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 GLPI are equal to 403.9%.

Life of production assets of 29.5 years is the average useful life of capital assets used in Gaming&Leisure 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 GLPI is equal to -4.5%. 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 - $2434 million for Gaming&Leisure 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 212.476 million for Gaming&Leisure 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 Gaming&Leisure Properties at the current share price and the inputted number of shares is $7.7 billion.

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DRH Diamondrock Ho 11.23 2.29  str.sell
SOHO Sotherly Hotel 6.84 4.87  hold
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COMPANY NEWS

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▶ Why Pinnacle Entertainment, Inc. Stock Jumped in March   [Apr-15-17 11:36AM  Motley Fool]
▶ Bally's and Resorts Tunica casinos to be sold for $44 million   [Mar-28-17 11:00AM  at bizjournals.com]
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▶ Penn National Showing Upside of Gaming REIT Model   [Mar-27-17 01:33PM  Motley Fool]
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▶ Is Gaming and Leisure Properties Inc (GLPI) a Good Stock To Buy?   [Nov-30-16 11:03AM  at Insider Monkey]
Financial statements of GLPI
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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