Intrinsic value of Landmark Infrastructure Partners - LMRK

Previous Close

$17.40

  Intrinsic Value

$2.67

stock screener

  Rating & Target

str. sell

-85%

Previous close

$17.40

 
Intrinsic value

$2.67

 
Up/down potential

-85%

 
Rating

str. sell

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

We calculate the intrinsic value of LMRK 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 0.4

 

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, %
  23.53
  30.00
  27.50
  25.25
  23.23
  21.40
  19.76
  18.29
  16.96
  15.76
  14.69
  13.72
  12.85
  12.06
  11.35
  10.72
  10.15
  9.63
  9.17
  8.75
  8.38
  8.04
  7.74
  7.46
  7.22
  6.99
  6.79
  6.62
  6.45
  6.31
  6.18
Revenue, $m
  42
  55
  70
  87
  107
  130
  156
  185
  216
  250
  287
  326
  368
  413
  459
  509
  560
  614
  671
  729
  790
  854
  920
  989
  1,060
  1,134
  1,211
  1,291
  1,375
  1,461
  1,552
Variable operating expenses, $m
 
  35
  45
  56
  69
  84
  100
  119
  139
  161
  184
  210
  237
  265
  295
  327
  360
  395
  431
  469
  508
  549
  592
  636
  682
  729
  779
  830
  884
  940
  998
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
  21
  35
  45
  56
  69
  84
  100
  119
  139
  161
  184
  210
  237
  265
  295
  327
  360
  395
  431
  469
  508
  549
  592
  636
  682
  729
  779
  830
  884
  940
  998
Operating income, $m
  21
  19
  25
  31
  38
  47
  56
  66
  77
  89
  102
  116
  131
  147
  164
  182
  200
  219
  239
  260
  282
  305
  328
  353
  378
  405
  432
  461
  491
  522
  554
EBITDA, $m
  32
  42
  53
  67
  82
  100
  120
  142
  166
  192
  220
  250
  282
  316
  352
  390
  429
  471
  514
  559
  606
  655
  705
  758
  813
  869
  928
  990
  1,054
  1,120
  1,189
Interest expense (income), $m
  12
  12
  16
  21
  27
  33
  40
  49
  58
  67
  78
  90
  102
  116
  130
  144
  160
  176
  193
  211
  230
  249
  269
  290
  312
  334
  358
  382
  407
  434
  461
Earnings before tax, $m
  10
  7
  8
  10
  12
  13
  15
  17
  20
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  52
  56
  59
  63
  67
  71
  75
  79
  83
  88
  93
Tax expense, $m
  0
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
Net income, $m
  10
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  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
  603
  780
  995
  1,246
  1,535
  1,863
  2,232
  2,640
  3,087
  3,574
  4,099
  4,661
  5,260
  5,894
  6,563
  7,267
  8,004
  8,775
  9,580
  10,419
  11,291
  12,199
  13,143
  14,124
  15,143
  16,202
  17,303
  18,447
  19,638
  20,877
  22,166
Adjusted assets (=assets-cash), $m
  600
  780
  995
  1,246
  1,535
  1,863
  2,232
  2,640
  3,087
  3,574
  4,099
  4,661
  5,260
  5,894
  6,563
  7,267
  8,004
  8,775
  9,580
  10,419
  11,291
  12,199
  13,143
  14,124
  15,143
  16,202
  17,303
  18,447
  19,638
  20,877
  22,166
Revenue / Adjusted assets
  0.070
  0.071
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
Average production assets, $m
  516
  671
  855
  1,071
  1,320
  1,603
  1,919
  2,270
  2,655
  3,074
  3,525
  4,009
  4,524
  5,069
  5,645
  6,250
  6,884
  7,547
  8,239
  8,960
  9,711
  10,492
  11,303
  12,147
  13,023
  13,934
  14,881
  15,865
  16,889
  17,954
  19,063
Working capital, $m
  0
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -29
  -33
  -36
  -40
  -44
  -48
  -52
  -56
  -61
  -65
  -70
  -75
  -81
  -86
  -92
  -98
  -104
  -110
Total debt, $m
  337
  444
  573
  723
  896
  1,092
  1,313
  1,557
  1,824
  2,115
  2,429
  2,765
  3,123
  3,503
  3,903
  4,324
  4,765
  5,226
  5,707
  6,208
  6,730
  7,273
  7,837
  8,424
  9,033
  9,667
  10,325
  11,009
  11,721
  12,462
  13,233
Total liabilities, $m
  359
  466
  595
  745
  918
  1,114
  1,335
  1,579
  1,846
  2,137
  2,451
  2,787
  3,145
  3,525
  3,925
  4,346
  4,787
  5,248
  5,729
  6,230
  6,752
  7,295
  7,859
  8,446
  9,055
  9,689
  10,347
  11,031
  11,743
  12,484
  13,255
Total equity, $m
  244
  314
  400
  501
  617
  749
  897
  1,061
  1,241
  1,437
  1,648
  1,874
  2,114
  2,369
  2,639
  2,921
  3,218
  3,528
  3,851
  4,188
  4,539
  4,904
  5,283
  5,678
  6,087
  6,513
  6,956
  7,416
  7,894
  8,392
  8,911
Total liabilities and equity, $m
  603
  780
  995
  1,246
  1,535
  1,863
  2,232
  2,640
  3,087
  3,574
  4,099
  4,661
  5,259
  5,894
  6,564
  7,267
  8,005
  8,776
  9,580
  10,418
  11,291
  12,199
  13,142
  14,124
  15,142
  16,202
  17,303
  18,447
  19,637
  20,876
  22,166
Debt-to-equity ratio
  1.381
  1.420
  1.430
  1.440
  1.450
  1.460
  1.460
  1.470
  1.470
  1.470
  1.470
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.480
  1.490
Adjusted equity ratio
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  64
  68
Depreciation, amort., depletion, $m
  11
  22
  29
  36
  44
  53
  64
  76
  89
  102
  118
  134
  151
  169
  188
  208
  229
  252
  275
  299
  324
  350
  377
  405
  434
  464
  496
  529
  563
  598
  635
Funds from operations, $m
  20
  27
  35
  43
  52
  63
  75
  88
  103
  118
  135
  153
  172
  192
  213
  235
  259
  283
  308
  335
  362
  390
  420
  451
  483
  516
  551
  586
  624
  663
  703
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
Cash from operations, $m
  21
  28
  36
  44
  54
  65
  77
  90
  105
  121
  138
  156
  175
  195
  217
  239
  262
  287
  312
  339
  366
  395
  425
  456
  488
  521
  556
  592
  630
  669
  710
Maintenance CAPEX, $m
  0
  -17
  -22
  -29
  -36
  -44
  -53
  -64
  -76
  -89
  -102
  -118
  -134
  -151
  -169
  -188
  -208
  -229
  -252
  -275
  -299
  -324
  -350
  -377
  -405
  -434
  -464
  -496
  -529
  -563
  -598
New CAPEX, $m
  -149
  -155
  -184
  -216
  -249
  -283
  -317
  -351
  -385
  -419
  -451
  -484
  -515
  -546
  -576
  -605
  -634
  -663
  -692
  -721
  -751
  -781
  -812
  -843
  -876
  -911
  -947
  -984
  -1,024
  -1,065
  -1,109
Cash from investing activities, $m
  -156
  -172
  -206
  -245
  -285
  -327
  -370
  -415
  -461
  -508
  -553
  -602
  -649
  -697
  -745
  -793
  -842
  -892
  -944
  -996
  -1,050
  -1,105
  -1,162
  -1,220
  -1,281
  -1,345
  -1,411
  -1,480
  -1,553
  -1,628
  -1,707
Free cash flow, $m
  -135
  -144
  -171
  -200
  -231
  -262
  -293
  -325
  -356
  -386
  -416
  -445
  -474
  -501
  -528
  -554
  -580
  -606
  -631
  -657
  -683
  -709
  -737
  -764
  -793
  -824
  -855
  -888
  -923
  -959
  -998
Issuance/(repayment) of debt, $m
  31
  107
  128
  150
  173
  196
  220
  244
  268
  291
  314
  336
  358
  379
  400
  421
  441
  461
  481
  501
  522
  543
  564
  586
  609
  633
  658
  684
  712
  741
  771
Issuance/(repurchase) of shares, $m
  124
  67
  80
  94
  108
  122
  137
  151
  166
  180
  193
  207
  219
  232
  244
  256
  267
  279
  290
  301
  313
  324
  336
  348
  361
  374
  388
  402
  418
  434
  451
Cash from financing (excl. dividends), $m  
  160
  174
  208
  244
  281
  318
  357
  395
  434
  471
  507
  543
  577
  611
  644
  677
  708
  740
  771
  802
  835
  867
  900
  934
  970
  1,007
  1,046
  1,086
  1,130
  1,175
  1,222
Total cash flow (excl. dividends), $m
  25
  31
  37
  44
  50
  57
  64
  71
  78
  84
  91
  98
  104
  110
  116
  122
  128
  134
  140
  146
  152
  158
  164
  170
  177
  184
  191
  199
  207
  215
  224
Retained Cash Flow (-), $m
  -87
  -73
  -86
  -101
  -116
  -132
  -148
  -164
  -180
  -196
  -211
  -226
  -241
  -255
  -269
  -283
  -296
  -310
  -323
  -337
  -351
  -365
  -379
  -394
  -410
  -426
  -443
  -460
  -479
  -498
  -518
Prev. year cash balance distribution, $m
 
  3
  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
 
  -38
  -49
  -57
  -66
  -75
  -84
  -93
  -102
  -111
  -120
  -128
  -137
  -145
  -153
  -161
  -168
  -176
  -184
  -191
  -199
  -207
  -216
  -224
  -233
  -242
  -251
  -261
  -272
  -283
  -295
Discount rate, %
 
  9.90
  10.40
  10.91
  11.46
  12.03
  12.64
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.83
  25.02
  26.27
  27.58
  28.96
  30.41
  31.93
  33.52
  35.20
  36.96
  38.81
  40.75
PV of cash for distribution, $m
 
  -35
  -40
  -42
  -43
  -43
  -41
  -39
  -36
  -33
  -29
  -25
  -21
  -17
  -14
  -11
  -8
  -6
  -5
  -3
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  85.4
  73.8
  64.5
  57.0
  50.8
  45.7
  41.4
  37.8
  34.7
  32.1
  29.8
  27.8
  26.1
  24.5
  23.1
  21.9
  20.8
  19.8
  18.9
  18.1
  17.3
  16.6
  16.0
  15.4
  14.8
  14.3
  13.8
  13.3
  12.9
  12.5

Landmark Infrastructure Partners LP is a master limited partnership formed to acquire, own and manage a portfolio of real property interests that it leases to companies in the wireless communication, outdoor advertising and renewable power generation industries. The Company operates through three segments. The Wireless Communication segment consists of leasing real property interests and financing to companies in the wireless communication industry in the United States. The Outdoor Advertising segment consists of leasing real property interests to companies in the outdoor advertising industry in the United States. The Renewable Power Generation segment consists of leasing real property interests and financing to companies in the renewable power industry in the United States. The Company's real property interests consist of a portfolio of long term and perpetual easements, tenant lease assignments and fee simple properties located primarily in the United States.

FINANCIAL RATIOS  of  Landmark Infrastructure Partners (LMRK)

Valuation Ratios
P/E Ratio 39.3
Price to Sales 9.4
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 18.7
Price to Free Cash Flow -3.1
Growth Rates
Sales Growth Rate 23.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.4%
Cap. Spend. - 3 Yr. Gr. Rate 38.7%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 138.1%
Total Debt to Equity 138.1%
Interest Coverage 2
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. 1.2%
Return On Equity 5%
Return On Equity - 3 Yr. Avg. 2.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 100%
Gross Margin - 3 Yr. Avg. 98.7%
EBITDA Margin 78.6%
EBITDA Margin - 3 Yr. Avg. 66.2%
Operating Margin 50%
Oper. Margin - 3 Yr. Avg. 44.4%
Pre-Tax Margin 23.8%
Pre-Tax Margin - 3 Yr. Avg. 12.9%
Net Profit Margin 23.8%
Net Profit Margin - 3 Yr. Avg. 12.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 240%

LMRK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMRK stock intrinsic value calculation we used $42 million for the last fiscal year's total revenue generated by Landmark Infrastructure Partners. The default revenue input number comes from 2016 income statement of Landmark Infrastructure Partners. 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 LMRK stock valuation model: a) initial revenue growth rate of 30% 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 9.9%, whose default value for LMRK is calculated based on our internal credit rating of Landmark Infrastructure Partners, 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 Landmark Infrastructure Partners.
    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 LMRK stock the variable cost ratio is equal to 64.3%.

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 LMRK 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 3.7% for Landmark Infrastructure Partners.

Corporate tax rate of 27% is the nominal tax rate for Landmark Infrastructure Partners. 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 LMRK 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 LMRK are equal to 1228.6%.

Life of production assets of 46.9 years is the average useful life of capital assets used in Landmark Infrastructure Partners 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 LMRK is equal to -7.1%. 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 - $244 million for Landmark Infrastructure Partners - 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 22.884 million for Landmark Infrastructure Partners 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 Landmark Infrastructure Partners at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Should You Buy Landmark Infrastructure Partners LP (LMRK)?   [Sep-15-17 09:19PM  Simply Wall St.]
▶ Landmark Infrastructure posts 2Q profit   [Aug-04-17 12:32AM  Associated Press]
▶ Landmark Infrastructure posts 1Q profit   [May-04-17 08:58AM  Associated Press]
▶ A Real Estate MLP Tries a New Structure   [Apr-21-17 03:17PM  Barrons.com]
▶ Landmark Infrastructure posts 4Q profit   [10:23AM  Associated Press]
Financial statements of LMRK
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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