Intrinsic value of Empire State Realty OP Un Series 60 - OGCP

Previous Close

$20.76

  Intrinsic Value

$35.16

stock screener

  Rating & Target

str. buy

+69%

  Value-price divergence*

-73%

Previous close

$20.76

 
Intrinsic value

$35.16

 
Up/down potential

+69%

 
Rating

str. buy

 
Value-price divergence*

-73%

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

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

We calculate the intrinsic value of OGCP 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 1.1

 

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, %
  3.04
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  678
  713
  749
  787
  827
  869
  913
  959
  1,007
  1,058
  1,111
  1,167
  1,226
  1,288
  1,352
  1,420
  1,492
  1,566
  1,645
  1,727
  1,814
  1,905
  2,000
  2,101
  2,206
  2,316
  2,432
  2,554
  2,682
  2,816
  2,957
Variable operating expenses, $m
 
  545
  570
  596
  624
  653
  684
  716
  750
  785
  822
  812
  853
  896
  941
  988
  1,037
  1,090
  1,144
  1,202
  1,262
  1,325
  1,391
  1,461
  1,534
  1,611
  1,692
  1,777
  1,866
  1,959
  2,057
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
  493
  545
  570
  596
  624
  653
  684
  716
  750
  785
  822
  812
  853
  896
  941
  988
  1,037
  1,090
  1,144
  1,202
  1,262
  1,325
  1,391
  1,461
  1,534
  1,611
  1,692
  1,777
  1,866
  1,959
  2,057
Operating income, $m
  185
  168
  179
  190
  203
  215
  229
  243
  257
  273
  289
  355
  373
  392
  412
  432
  454
  477
  501
  526
  552
  580
  609
  639
  672
  705
  740
  778
  816
  857
  900
EBITDA, $m
  348
  358
  376
  395
  415
  436
  458
  481
  505
  531
  558
  586
  615
  646
  679
  713
  749
  786
  826
  867
  910
  956
  1,004
  1,054
  1,107
  1,163
  1,221
  1,282
  1,346
  1,413
  1,484
Interest expense (income), $m
  69
  69
  76
  83
  90
  98
  106
  115
  124
  133
  143
  153
  164
  175
  187
  200
  213
  227
  241
  257
  273
  289
  307
  326
  345
  365
  387
  409
  433
  458
  484
Earnings before tax, $m
  113
  99
  103
  108
  112
  117
  123
  128
  134
  140
  146
  202
  209
  217
  224
  232
  241
  250
  259
  269
  280
  290
  302
  314
  326
  340
  354
  368
  383
  400
  416
Tax expense, $m
  6
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  55
  56
  58
  61
  63
  65
  67
  70
  73
  75
  78
  82
  85
  88
  92
  95
  99
  104
  108
  112
Net income, $m
  107
  72
  75
  79
  82
  86
  89
  94
  98
  102
  107
  148
  153
  158
  164
  170
  176
  182
  189
  197
  204
  212
  220
  229
  238
  248
  258
  269
  280
  292
  304

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  554
  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
  3,891
  3,636
  3,821
  4,015
  4,218
  4,432
  4,656
  4,892
  5,139
  5,398
  5,670
  5,955
  6,255
  6,569
  6,899
  7,246
  7,610
  7,992
  8,393
  8,813
  9,255
  9,719
  10,206
  10,718
  11,254
  11,818
  12,410
  13,031
  13,683
  14,368
  15,087
Adjusted assets (=assets-cash), $m
  3,337
  3,636
  3,821
  4,015
  4,218
  4,432
  4,656
  4,892
  5,139
  5,398
  5,670
  5,955
  6,255
  6,569
  6,899
  7,246
  7,610
  7,992
  8,393
  8,813
  9,255
  9,719
  10,206
  10,718
  11,254
  11,818
  12,410
  13,031
  13,683
  14,368
  15,087
Revenue / Adjusted assets
  0.203
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
Average production assets, $m
  2,236
  2,350
  2,470
  2,595
  2,727
  2,865
  3,010
  3,162
  3,322
  3,489
  3,665
  3,849
  4,043
  4,246
  4,460
  4,684
  4,919
  5,166
  5,425
  5,697
  5,983
  6,283
  6,597
  6,928
  7,275
  7,639
  8,022
  8,423
  8,845
  9,288
  9,753
Working capital, $m
  0
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -123
  -129
  -135
  -142
  -149
  -157
  -164
  -173
  -181
  -190
  -200
  -210
  -221
  -232
  -243
  -255
  -268
  -282
  -296
Total debt, $m
  1,612
  1,764
  1,927
  2,099
  2,279
  2,468
  2,666
  2,874
  3,093
  3,322
  3,562
  3,814
  4,079
  4,357
  4,649
  4,955
  5,277
  5,615
  5,969
  6,341
  6,732
  7,142
  7,572
  8,024
  8,499
  8,997
  9,520
  10,069
  10,646
  11,252
  11,887
Total liabilities, $m
  3,062
  3,214
  3,377
  3,549
  3,729
  3,918
  4,116
  4,324
  4,543
  4,772
  5,012
  5,264
  5,529
  5,807
  6,099
  6,405
  6,727
  7,065
  7,419
  7,791
  8,182
  8,592
  9,022
  9,474
  9,949
  10,447
  10,970
  11,519
  12,096
  12,702
  13,337
Total equity, $m
  829
  422
  443
  466
  489
  514
  540
  567
  596
  626
  658
  691
  726
  762
  800
  841
  883
  927
  974
  1,022
  1,074
  1,127
  1,184
  1,243
  1,306
  1,371
  1,440
  1,512
  1,587
  1,667
  1,750
Total liabilities and equity, $m
  3,891
  3,636
  3,820
  4,015
  4,218
  4,432
  4,656
  4,891
  5,139
  5,398
  5,670
  5,955
  6,255
  6,569
  6,899
  7,246
  7,610
  7,992
  8,393
  8,813
  9,256
  9,719
  10,206
  10,717
  11,255
  11,818
  12,410
  13,031
  13,683
  14,369
  15,087
Debt-to-equity ratio
  1.945
  4.180
  4.350
  4.510
  4.660
  4.800
  4.940
  5.070
  5.190
  5.300
  5.420
  5.520
  5.620
  5.720
  5.810
  5.900
  5.980
  6.060
  6.130
  6.200
  6.270
  6.330
  6.400
  6.450
  6.510
  6.560
  6.610
  6.660
  6.710
  6.750
  6.790
Adjusted equity ratio
  0.082
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  107
  72
  75
  79
  82
  86
  89
  94
  98
  102
  107
  148
  153
  158
  164
  170
  176
  182
  189
  197
  204
  212
  220
  229
  238
  248
  258
  269
  280
  292
  304
Depreciation, amort., depletion, $m
  163
  190
  197
  205
  212
  221
  229
  238
  248
  258
  269
  231
  242
  254
  267
  280
  295
  309
  325
  341
  358
  376
  395
  415
  436
  457
  480
  504
  530
  556
  584
Funds from operations, $m
  196
  262
  272
  283
  294
  306
  319
  332
  346
  360
  375
  378
  395
  412
  431
  450
  470
  492
  514
  538
  562
  588
  615
  644
  674
  705
  738
  773
  810
  848
  888
Change in working capital, $m
  -23
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
Cash from operations, $m
  219
  265
  276
  287
  298
  311
  323
  337
  351
  365
  381
  384
  401
  419
  437
  457
  478
  499
  522
  546
  571
  597
  625
  654
  684
  716
  750
  785
  822
  861
  902
Maintenance CAPEX, $m
  0
  -134
  -141
  -148
  -155
  -163
  -172
  -180
  -189
  -199
  -209
  -219
  -231
  -242
  -254
  -267
  -280
  -295
  -309
  -325
  -341
  -358
  -376
  -395
  -415
  -436
  -457
  -480
  -504
  -530
  -556
New CAPEX, $m
  -182
  -114
  -120
  -125
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -194
  -203
  -213
  -224
  -235
  -247
  -259
  -272
  -286
  -300
  -315
  -331
  -347
  -364
  -383
  -402
  -422
  -443
  -465
Cash from investing activities, $m
  -182
  -248
  -261
  -273
  -287
  -301
  -317
  -332
  -349
  -367
  -385
  -404
  -425
  -445
  -467
  -491
  -515
  -542
  -568
  -597
  -627
  -658
  -691
  -726
  -762
  -800
  -840
  -882
  -926
  -973
  -1,021
Free cash flow, $m
  37
  17
  15
  13
  11
  9
  7
  4
  2
  -1
  -4
  -20
  -24
  -27
  -30
  -34
  -38
  -42
  -46
  -51
  -56
  -61
  -66
  -72
  -77
  -83
  -90
  -97
  -104
  -111
  -119
Issuance/(repayment) of debt, $m
  -22
  152
  164
  172
  180
  189
  198
  208
  218
  229
  240
  252
  265
  278
  292
  306
  322
  338
  354
  372
  391
  410
  431
  452
  475
  498
  523
  549
  577
  605
  636
Issuance/(repurchase) of shares, $m
  611
  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 financing (excl. dividends), $m  
  585
  152
  164
  172
  180
  189
  198
  208
  218
  229
  240
  252
  265
  278
  292
  306
  322
  338
  354
  372
  391
  410
  431
  452
  475
  498
  523
  549
  577
  605
  636
Total cash flow (excl. dividends), $m
  622
  169
  179
  185
  191
  198
  205
  212
  220
  228
  236
  232
  241
  251
  261
  272
  284
  295
  308
  321
  335
  349
  364
  380
  397
  415
  433
  453
  473
  494
  517
Retained Cash Flow (-), $m
  19
  -19
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -79
  -83
Prev. year cash balance distribution, $m
 
  426
  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
 
  576
  158
  163
  168
  173
  179
  185
  191
  198
  205
  199
  207
  215
  223
  232
  241
  251
  261
  272
  284
  295
  308
  321
  335
  349
  365
  381
  397
  415
  433
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  538
  136
  129
  122
  114
  106
  97
  88
  80
  71
  59
  51
  44
  38
  31
  26
  21
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Empire State Realty OP, L.P. operates as a subsidiary of Empire State Realty Trust, Inc.

FINANCIAL RATIOS  of  Empire State Realty OP Un Series 60 (OGCP)

Valuation Ratios
P/E Ratio 27.8
Price to Sales 4.4
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 80.4
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 28.2%
Cap. Spend. - 3 Yr. Gr. Rate 10%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 194.5%
Total Debt to Equity 194.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 12.8%
Return On Equity - 3 Yr. Avg. 10.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 57.4%
Gross Margin - 3 Yr. Avg. 54.7%
EBITDA Margin 50.9%
EBITDA Margin - 3 Yr. Avg. 48.6%
Operating Margin 27.3%
Oper. Margin - 3 Yr. Avg. 24.2%
Pre-Tax Margin 16.7%
Pre-Tax Margin - 3 Yr. Avg. 13.7%
Net Profit Margin 15.8%
Net Profit Margin - 3 Yr. Avg. 13%
Effective Tax Rate 5.3%
Eff/ Tax Rate - 3 Yr. Avg. 5.6%
Payout Ratio 106.5%

OGCP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OGCP stock intrinsic value calculation we used $678 million for the last fiscal year's total revenue generated by Empire State Realty OP Un Series 60. The default revenue input number comes from 2016 income statement of Empire State Realty OP Un Series 60. 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 OGCP stock valuation model: a) initial revenue growth rate of 5.1% 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 7.2%, whose default value for OGCP is calculated based on our internal credit rating of Empire State Realty OP Un Series 60, 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 Empire State Realty OP Un Series 60.
    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 OGCP stock the variable cost ratio is equal to 76.8%.

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 OGCP 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 Empire State Realty OP Un Series 60.

Corporate tax rate of 27% is the nominal tax rate for Empire State Realty OP Un Series 60. 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 OGCP 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 OGCP are equal to 329.8%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Empire State Realty OP Un Series 60 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 OGCP is equal to -10%. 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 - $829 million for Empire State Realty OP Un Series 60 - 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 51.628 million for Empire State Realty OP Un Series 60 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 Empire State Realty OP Un Series 60 at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
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HHC Howard Hughes 119.91 27.52  str.sell
Stock chart of OGCP Financial statements of OGCP
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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