Intrinsic value of New Residential Investment - NRZ

Previous Close

$16.60

  Intrinsic Value

$134.17

stock screener

  Rating & Target

str. buy

+708%

  Value-price divergence*

0%

Previous close

$16.60

 
Intrinsic value

$134.17

 
Up/down potential

+708%

 
Rating

str. buy

 
Value-price divergence*

0%

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

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

We calculate the intrinsic value of NRZ 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 5.1

 

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, %
  82.97
  48.20
  43.88
  39.99
  36.49
  33.34
  30.51
  27.96
  25.66
  23.60
  21.74
  20.06
  18.56
  17.20
  15.98
  14.88
  13.89
  13.01
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.03
Revenue, $m
  1,257
  1,863
  2,680
  3,752
  5,121
  6,829
  8,913
  11,405
  14,331
  17,713
  21,563
  25,889
  30,693
  35,973
  41,722
  47,931
  54,591
  61,690
  69,219
  77,169
  85,530
  94,299
  103,471
  113,047
  123,028
  133,418
  144,227
  155,464
  167,142
  179,278
  191,890
Variable operating expenses, $m
 
  719
  1,035
  1,448
  1,977
  2,636
  3,440
  4,402
  5,532
  6,837
  8,323
  9,993
  11,848
  13,886
  16,105
  18,501
  21,072
  23,812
  26,719
  29,787
  33,015
  36,399
  39,940
  43,636
  47,489
  51,499
  55,672
  60,009
  64,517
  69,201
  74,070
Fixed operating expenses, $m
 
  159
  163
  167
  171
  175
  180
  184
  189
  194
  198
  203
  208
  214
  219
  224
  230
  236
  242
  248
  254
  260
  267
  274
  280
  287
  295
  302
  309
  317
  325
Total operating expenses, $m
  636
  878
  1,198
  1,615
  2,148
  2,811
  3,620
  4,586
  5,721
  7,031
  8,521
  10,196
  12,056
  14,100
  16,324
  18,725
  21,302
  24,048
  26,961
  30,035
  33,269
  36,659
  40,207
  43,910
  47,769
  51,786
  55,967
  60,311
  64,826
  69,518
  74,395
Operating income, $m
  622
  985
  1,483
  2,137
  2,974
  4,018
  5,293
  6,818
  8,611
  10,682
  13,041
  15,693
  18,637
  21,874
  25,398
  29,205
  33,289
  37,642
  42,259
  47,134
  52,262
  57,639
  63,265
  69,137
  75,259
  81,631
  88,261
  95,153
  102,316
  109,760
  117,496
EBITDA, $m
  622
  985
  1,483
  2,137
  2,974
  4,018
  5,293
  6,818
  8,611
  10,682
  13,041
  15,693
  18,637
  21,874
  25,398
  29,205
  33,289
  37,642
  42,259
  47,134
  52,262
  57,639
  63,265
  69,137
  75,259
  81,631
  88,261
  95,153
  102,316
  109,760
  117,496
Interest expense (income), $m
  350
  451
  696
  1,032
  1,471
  2,032
  2,733
  3,587
  4,609
  5,808
  7,195
  8,773
  10,547
  12,517
  14,682
  17,039
  19,584
  22,315
  25,226
  28,313
  31,572
  35,000
  38,595
  42,356
  46,282
  50,374
  54,634
  59,066
  63,673
  68,461
  73,437
Earnings before tax, $m
  622
  534
  786
  1,105
  1,502
  1,985
  2,560
  3,231
  4,002
  4,874
  5,846
  6,919
  8,090
  9,357
  10,717
  12,167
  13,704
  15,327
  17,033
  18,821
  20,690
  22,639
  24,669
  26,781
  28,977
  31,258
  33,627
  36,087
  38,643
  41,299
  44,059
Tax expense, $m
  39
  144
  212
  298
  406
  536
  691
  872
  1,081
  1,316
  1,579
  1,868
  2,184
  2,526
  2,893
  3,285
  3,700
  4,138
  4,599
  5,082
  5,586
  6,113
  6,661
  7,231
  7,824
  8,440
  9,079
  9,744
  10,434
  11,151
  11,896
Net income, $m
  504
  390
  574
  807
  1,097
  1,449
  1,869
  2,359
  2,921
  3,558
  4,268
  5,051
  5,906
  6,830
  7,823
  8,882
  10,004
  11,189
  12,434
  13,739
  15,104
  16,527
  18,009
  19,550
  21,153
  22,818
  24,547
  26,344
  28,210
  30,148
  32,163

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  291
  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
  18,365
  26,612
  38,290
  53,603
  73,164
  97,560
  127,324
  162,922
  204,732
  253,041
  308,043
  369,846
  438,476
  513,899
  596,024
  684,729
  779,869
  881,291
  988,848
  1,102,409
  1,221,862
  1,347,129
  1,478,163
  1,614,955
  1,757,536
  1,905,976
  2,060,385
  2,220,913
  2,387,750
  2,561,121
  2,741,290
Adjusted assets (=assets-cash), $m
  18,074
  26,612
  38,290
  53,603
  73,164
  97,560
  127,324
  162,922
  204,732
  253,041
  308,043
  369,846
  438,476
  513,899
  596,024
  684,729
  779,869
  881,291
  988,848
  1,102,409
  1,221,862
  1,347,129
  1,478,163
  1,614,955
  1,757,536
  1,905,976
  2,060,385
  2,220,913
  2,387,750
  2,561,121
  2,741,290
Revenue / Adjusted assets
  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
  0.070
  0.070
Average production assets, $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
  0
Working capital, $m
  0
  931
  1,340
  1,876
  2,561
  3,415
  4,456
  5,702
  7,166
  8,856
  10,782
  12,945
  15,347
  17,986
  20,861
  23,966
  27,295
  30,845
  34,610
  38,584
  42,765
  47,150
  51,736
  56,523
  61,514
  66,709
  72,113
  77,732
  83,571
  89,639
  95,945
Total debt, $m
  13,181
  19,898
  29,474
  42,030
  58,071
  78,075
  102,482
  131,672
  165,956
  205,569
  250,671
  301,349
  357,627
  419,473
  486,816
  559,554
  637,568
  720,734
  808,932
  902,051
  1,000,003
  1,102,722
  1,210,169
  1,322,339
  1,439,255
  1,560,976
  1,687,592
  1,819,225
  1,956,031
  2,098,195
  2,245,934
Total liabilities, $m
  15,105
  21,822
  31,398
  43,954
  59,995
  79,999
  104,406
  133,596
  167,880
  207,493
  252,595
  303,273
  359,551
  421,397
  488,740
  561,478
  639,492
  722,658
  810,856
  903,975
  1,001,927
  1,104,646
  1,212,093
  1,324,263
  1,441,179
  1,562,900
  1,689,516
  1,821,149
  1,957,955
  2,100,119
  2,247,858
Total equity, $m
  3,260
  4,790
  6,892
  9,649
  13,170
  17,561
  22,918
  29,326
  36,852
  45,547
  55,448
  66,572
  78,926
  92,502
  107,284
  123,251
  140,376
  158,632
  177,993
  198,434
  219,935
  242,483
  266,069
  290,692
  316,356
  343,076
  370,869
  399,764
  429,795
  461,002
  493,432
Total liabilities and equity, $m
  18,365
  26,612
  38,290
  53,603
  73,165
  97,560
  127,324
  162,922
  204,732
  253,040
  308,043
  369,845
  438,477
  513,899
  596,024
  684,729
  779,868
  881,290
  988,849
  1,102,409
  1,221,862
  1,347,129
  1,478,162
  1,614,955
  1,757,535
  1,905,976
  2,060,385
  2,220,913
  2,387,750
  2,561,121
  2,741,290
Debt-to-equity ratio
  4.043
  4.150
  4.280
  4.360
  4.410
  4.450
  4.470
  4.490
  4.500
  4.510
  4.520
  4.530
  4.530
  4.530
  4.540
  4.540
  4.540
  4.540
  4.540
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
  4.550
Adjusted equity ratio
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  504
  390
  574
  807
  1,097
  1,449
  1,869
  2,359
  2,921
  3,558
  4,268
  5,051
  5,906
  6,830
  7,823
  8,882
  10,004
  11,189
  12,434
  13,739
  15,104
  16,527
  18,009
  19,550
  21,153
  22,818
  24,547
  26,344
  28,210
  30,148
  32,163
Depreciation, amort., depletion, $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
  0
Funds from operations, $m
  1,282
  390
  574
  807
  1,097
  1,449
  1,869
  2,359
  2,921
  3,558
  4,268
  5,051
  5,906
  6,830
  7,823
  8,882
  10,004
  11,189
  12,434
  13,739
  15,104
  16,527
  18,009
  19,550
  21,153
  22,818
  24,547
  26,344
  28,210
  30,148
  32,163
Change in working capital, $m
  721
  303
  409
  536
  685
  854
  1,042
  1,246
  1,463
  1,691
  1,925
  2,163
  2,402
  2,640
  2,874
  3,105
  3,330
  3,550
  3,765
  3,975
  4,181
  4,384
  4,586
  4,788
  4,990
  5,195
  5,404
  5,618
  5,839
  6,068
  6,306
Cash from operations, $m
  561
  87
  165
  271
  412
  595
  827
  1,113
  1,458
  1,867
  2,343
  2,888
  3,504
  4,191
  4,949
  5,777
  6,674
  7,639
  8,670
  9,765
  10,923
  12,142
  13,422
  14,763
  16,163
  17,623
  19,143
  20,725
  22,370
  24,080
  25,857
Maintenance CAPEX, $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
  0
New CAPEX, $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
  0
Cash from investing activities, $m
  -183
  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
Free cash flow, $m
  378
  87
  165
  271
  412
  595
  827
  1,113
  1,458
  1,867
  2,343
  2,888
  3,504
  4,191
  4,949
  5,777
  6,674
  7,639
  8,670
  9,765
  10,923
  12,142
  13,422
  14,763
  16,163
  17,623
  19,143
  20,725
  22,370
  24,080
  25,857
Issuance/(repayment) of debt, $m
  25
  7,008
  9,576
  12,557
  16,040
  20,004
  24,407
  29,190
  34,284
  39,613
  45,102
  50,678
  56,277
  61,846
  67,343
  72,738
  78,015
  83,166
  88,197
  93,119
  97,952
  102,719
  107,448
  112,170
  116,916
  121,721
  126,616
  131,633
  136,806
  142,164
  147,739
Issuance/(repurchase) of shares, $m
  280
  1,141
  1,528
  1,949
  2,424
  2,942
  3,489
  4,049
  4,604
  5,138
  5,633
  6,073
  6,448
  6,746
  6,959
  7,085
  7,121
  7,067
  6,926
  6,701
  6,398
  6,021
  5,577
  5,072
  4,512
  3,901
  3,246
  2,551
  1,821
  1,059
  268
Cash from financing (excl. dividends), $m  
  164
  8,149
  11,104
  14,506
  18,464
  22,946
  27,896
  33,239
  38,888
  44,751
  50,735
  56,751
  62,725
  68,592
  74,302
  79,823
  85,136
  90,233
  95,123
  99,820
  104,350
  108,740
  113,025
  117,242
  121,428
  125,622
  129,862
  134,184
  138,627
  143,223
  148,007
Total cash flow (excl. dividends), $m
  542
  8,236
  11,269
  14,777
  18,877
  23,542
  28,723
  34,352
  40,346
  46,618
  53,077
  59,639
  66,229
  72,782
  79,251
  85,600
  91,810
  97,872
  103,793
  109,586
  115,273
  120,882
  126,448
  132,005
  137,591
  143,244
  149,005
  154,910
  160,997
  167,303
  173,863
Retained Cash Flow (-), $m
  -464
  -1,530
  -2,102
  -2,756
  -3,521
  -4,391
  -5,358
  -6,408
  -7,526
  -8,696
  -9,900
  -11,124
  -12,354
  -13,576
  -14,783
  -15,967
  -17,125
  -18,256
  -19,360
  -20,441
  -21,502
  -22,548
  -23,586
  -24,623
  -25,665
  -26,719
  -27,794
  -28,895
  -30,031
  -31,207
  -32,430
Prev. year cash balance distribution, $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 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
 
  6,705
  9,167
  12,021
  15,356
  19,150
  23,365
  27,944
  32,821
  37,922
  43,177
  48,515
  53,875
  59,206
  64,468
  69,633
  74,685
  79,616
  84,433
  89,145
  93,771
  98,334
  102,862
  107,382
  111,926
  116,525
  121,211
  126,015
  130,967
  136,096
  141,433
Discount rate, %
 
  13.10
  13.76
  14.44
  15.16
  15.92
  16.72
  17.56
  18.43
  19.35
  20.32
  21.34
  22.41
  23.53
  24.70
  25.94
  27.23
  28.60
  30.03
  31.53
  33.10
  34.76
  36.50
  38.32
  40.24
  42.25
  44.36
  46.58
  48.91
  51.35
  53.92
PV of cash for distribution, $m
 
  5,929
  7,084
  8,020
  8,729
  9,148
  9,241
  9,007
  8,479
  7,715
  6,789
  5,779
  4,762
  3,798
  2,932
  2,190
  1,583
  1,107
  748
  488
  308
  187
  110
  62
  33
  17
  9
  4
  2
  1
  0
Current shareholders' claim on cash, %
  100
  81.8
  68.0
  57.7
  49.7
  43.6
  38.7
  34.8
  31.6
  29.1
  26.9
  25.2
  23.7
  22.5
  21.5
  20.6
  19.9
  19.3
  18.7
  18.3
  17.9
  17.6
  17.4
  17.2
  17.0
  16.9
  16.8
  16.7
  16.7
  16.6
  16.6

New Residential Investment Corp., a real estate investment trust, focuses on investing in and managing residential mortgage related assets in the United States. It operates through Servicing Related Assets, Residential Securities and Loans, and Other Investments segments. The company invests in excess mortgage servicing rights (MSRs) on residential mortgage loans; and in servicer advances, including the basic fee component of the related MSRs. It also invests in non-agency and agency residential mortgage backed securities; and residential mortgage loans comprising loans held-for-investment, loans held-for-sale, and real estate owned loans. In addition, the company has an interest in a portfolio of consumer loans, including unsecured and homeowner loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2011 and is based in New York, New York.

FINANCIAL RATIOS  of  New Residential Investment (NRZ)

Valuation Ratios
P/E Ratio 8.3
Price to Sales 3.3
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 7.4
Growth Rates
Sales Growth Rate 83%
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 245.1%
Total Debt to Equity 404.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 3.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.7%
Return On Equity 16.6%
Return On Equity - 3 Yr. Avg. 17.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 59.5%
Gross Margin - 3 Yr. Avg. 60.4%
EBITDA Margin 77.3%
EBITDA Margin - 3 Yr. Avg. 78.1%
Operating Margin 49.4%
Oper. Margin - 3 Yr. Avg. 51.1%
Pre-Tax Margin 49.5%
Pre-Tax Margin - 3 Yr. Avg. 51.1%
Net Profit Margin 40.1%
Net Profit Margin - 3 Yr. Avg. 42.7%
Effective Tax Rate 6.3%
Eff/ Tax Rate - 3 Yr. Avg. 2.4%
Payout Ratio 85.9%

NRZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NRZ stock intrinsic value calculation we used $1257 million for the last fiscal year's total revenue generated by New Residential Investment. The default revenue input number comes from 2016 income statement of New Residential Investment. 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 NRZ stock valuation model: a) initial revenue growth rate of 48.2% 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 13.1%, whose default value for NRZ is calculated based on our internal credit rating of New Residential Investment, 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 New Residential Investment.
    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 NRZ stock the variable cost ratio is equal to 38.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $155 million in the base year in the intrinsic value calculation for NRZ 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 New Residential Investment.

Corporate tax rate of 27% is the nominal tax rate for New Residential Investment. 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 NRZ 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 NRZ are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in New Residential Investment 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 NRZ is equal to 50%. 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 - $3260 million for New Residential Investment - 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 309.242 million for New Residential Investment 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 New Residential Investment at the current share price and the inputted number of shares is $5.1 billion.

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COMPANY NEWS

▶ Ocwen Keeps Clawing Its Way Back   [Aug-02-17 01:30PM  Motley Fool]
▶ New Residential Investment posts 2Q profit   [Jul-31-17 10:06PM  Associated Press]
▶ New Residential Falls as Mortgage Rates Head Lower   [Jun-20-17 11:04AM  Barrons.com]
▶ New Residential Investment posts 1Q profit   [May-01-17 07:26AM  Associated Press]
▶ Here's Why Ocwen Financial Corp. Plunged Today   [Apr-20-17 05:35PM  Motley Fool]
▶ Income-REIT New Residential Investment Looks Worth It   [Apr-12-17 04:43PM  TheStreet.com]
▶ Top Ranked Income Stocks to Buy for March 10th   [Mar-10-17 09:01AM  Zacks]
▶ Top Ranked Income Stocks to Buy for March 2nd   [Mar-02-17 10:02AM  Zacks]
▶ New Residential Investment posts 4Q profit   [01:51PM  Associated Press]
▶ Weekly CEO Buys Highlights   [Feb-13-17 12:55PM  GuruFocus.com]
▶ [$$] Citigroup Exiting Business of Servicing Mortgages   [Jan-31-17 12:34AM  at The Wall Street Journal]
▶ [$$] Citigroup Exiting Business of Servicing Mortgages   [06:55AM  at The Wall Street Journal]
▶ New Residential Announces Tax Treatment of 2016 Dividends   [Jan-27-17 07:05PM  Business Wire]
▶ KBW: Wary of Mortgage Finance Stocks, Especially STC   [Jan-09-17 02:41PM  at Barrons.com]
▶ Why Silver Wheaton, Endologix, and PHH Corp. Jumped Today   [Dec-29-16 05:14PM  at Motley Fool]
▶ Do Hedge Funds Love Spirit Airlines Incorporated (SAVE)?   [Nov-26-16 06:35AM  at Insider Monkey]
▶ 4 High-Yield Stocks Worth the Risk   [Aug-20-16 09:46AM  at Kiplinger]
▶ New Residential Announces Public Offering of Common Stock   [Aug-10-16 04:19PM  Business Wire]
▶ Walter Investment Management taps mortgage veteran to lead company   [Aug-09-16 01:10PM  at bizjournals.com]
▶ Ocwen Financial's Second Quarter Pleases Wall Street   [Jul-28-16 12:32PM  at Motley Fool]
▶ [$$] Four Picks in Mortgage REITs Amid Low Rates   [Jul-05-16 12:01AM  at Barrons.com]
Stock chart of NRZ Financial statements of NRZ
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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