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

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$20.83

  Intrinsic Value

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  Value-price divergence*

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*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
  3.60
  3.74
  3.87
  3.98
  4.08
  4.17
  4.26
  4.33
  4.40
  4.46
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
Revenue, $m
  678
  682
  707
  735
  764
  795
  828
  863
  901
  940
  982
  1,027
  1,073
  1,123
  1,175
  1,230
  1,288
  1,349
  1,413
  1,481
  1,552
  1,627
  1,706
  1,789
  1,876
  1,968
  2,064
  2,166
  2,272
  2,384
  2,502
Variable operating expenses, $m
 
  353
  365
  377
  390
  404
  419
  434
  451
  469
  488
  458
  479
  501
  524
  549
  575
  602
  631
  661
  693
  726
  762
  799
  837
  878
  921
  967
  1,014
  1,064
  1,117
Fixed operating expenses, $m
 
  171
  175
  180
  184
  189
  194
  199
  203
  209
  214
  219
  225
  230
  236
  242
  248
  254
  260
  267
  274
  280
  288
  295
  302
  310
  317
  325
  333
  342
  350
Total operating expenses, $m
  493
  524
  540
  557
  574
  593
  613
  633
  654
  678
  702
  677
  704
  731
  760
  791
  823
  856
  891
  928
  967
  1,006
  1,050
  1,094
  1,139
  1,188
  1,238
  1,292
  1,347
  1,406
  1,467
Operating income, $m
  185
  157
  167
  178
  189
  202
  216
  230
  246
  263
  281
  349
  370
  391
  415
  439
  465
  493
  522
  553
  586
  620
  657
  696
  737
  780
  826
  874
  925
  978
  1,035
EBITDA, $m
  348
  357
  373
  390
  408
  427
  448
  471
  495
  521
  548
  577
  608
  640
  675
  712
  751
  792
  835
  881
  930
  981
  1,035
  1,092
  1,153
  1,216
  1,283
  1,354
  1,428
  1,507
  1,590
Interest expense (income), $m
  69
  65
  69
  73
  77
  81
  86
  91
  96
  102
  108
  114
  120
  127
  135
  143
  151
  159
  169
  178
  188
  199
  210
  222
  234
  247
  261
  275
  291
  306
  323
Earnings before tax, $m
  113
  92
  98
  105
  113
  121
  130
  140
  150
  161
  173
  235
  249
  264
  280
  296
  314
  333
  353
  375
  397
  421
  447
  474
  502
  533
  565
  598
  634
  672
  712
Tax expense, $m
  6
  25
  26
  28
  30
  33
  35
  38
  41
  44
  47
  64
  67
  71
  76
  80
  85
  90
  95
  101
  107
  114
  121
  128
  136
  144
  152
  162
  171
  181
  192
Net income, $m
  107
  67
  72
  77
  82
  88
  95
  102
  110
  118
  127
  172
  182
  193
  204
  216
  229
  243
  258
  274
  290
  308
  326
  346
  367
  389
  412
  437
  463
  490
  519

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
  3,375
  3,501
  3,636
  3,781
  3,935
  4,100
  4,274
  4,459
  4,655
  4,863
  5,082
  5,314
  5,558
  5,817
  6,089
  6,376
  6,678
  6,996
  7,331
  7,684
  8,055
  8,446
  8,856
  9,288
  9,742
  10,219
  10,721
  11,249
  11,803
  12,385
Adjusted assets (=assets-cash), $m
  3,337
  3,375
  3,501
  3,636
  3,781
  3,935
  4,100
  4,274
  4,459
  4,655
  4,863
  5,082
  5,314
  5,558
  5,817
  6,089
  6,376
  6,678
  6,996
  7,331
  7,684
  8,055
  8,446
  8,856
  9,288
  9,742
  10,219
  10,721
  11,249
  11,803
  12,385
Revenue / Adjusted assets
  0.203
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
  0.202
Average production assets, $m
  2,236
  2,252
  2,337
  2,427
  2,523
  2,626
  2,736
  2,852
  2,976
  3,107
  3,245
  3,392
  3,546
  3,710
  3,882
  4,064
  4,255
  4,457
  4,669
  4,893
  5,128
  5,376
  5,637
  5,911
  6,199
  6,502
  6,821
  7,155
  7,507
  7,877
  8,266
Working capital, $m
  0
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
  -121
  -127
  -133
  -140
  -147
  -154
  -161
  -169
  -178
Total debt, $m
  1,612
  1,724
  1,819
  1,921
  2,030
  2,146
  2,270
  2,402
  2,541
  2,689
  2,845
  3,011
  3,186
  3,370
  3,565
  3,770
  3,986
  4,214
  4,454
  4,707
  4,973
  5,253
  5,547
  5,857
  6,182
  6,525
  6,884
  7,263
  7,660
  8,078
  8,517
Total liabilities, $m
  3,062
  2,545
  2,640
  2,742
  2,851
  2,967
  3,091
  3,223
  3,362
  3,510
  3,666
  3,832
  4,007
  4,191
  4,386
  4,591
  4,807
  5,035
  5,275
  5,528
  5,794
  6,074
  6,368
  6,678
  7,003
  7,346
  7,705
  8,084
  8,481
  8,899
  9,338
Total equity, $m
  829
  830
  861
  895
  930
  968
  1,008
  1,051
  1,097
  1,145
  1,196
  1,250
  1,307
  1,367
  1,431
  1,498
  1,568
  1,643
  1,721
  1,804
  1,890
  1,982
  2,078
  2,179
  2,285
  2,397
  2,514
  2,637
  2,767
  2,903
  3,047
Total liabilities and equity, $m
  3,891
  3,375
  3,501
  3,637
  3,781
  3,935
  4,099
  4,274
  4,459
  4,655
  4,862
  5,082
  5,314
  5,558
  5,817
  6,089
  6,375
  6,678
  6,996
  7,332
  7,684
  8,056
  8,446
  8,857
  9,288
  9,743
  10,219
  10,721
  11,248
  11,802
  12,385
Debt-to-equity ratio
  1.945
  2.080
  2.110
  2.150
  2.180
  2.220
  2.250
  2.280
  2.320
  2.350
  2.380
  2.410
  2.440
  2.460
  2.490
  2.520
  2.540
  2.570
  2.590
  2.610
  2.630
  2.650
  2.670
  2.690
  2.710
  2.720
  2.740
  2.750
  2.770
  2.780
  2.800
Adjusted equity ratio
  0.082
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246
  0.246

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  107
  67
  72
  77
  82
  88
  95
  102
  110
  118
  127
  172
  182
  193
  204
  216
  229
  243
  258
  274
  290
  308
  326
  346
  367
  389
  412
  437
  463
  490
  519
Depreciation, amort., depletion, $m
  163
  200
  206
  212
  218
  225
  233
  241
  249
  258
  267
  228
  238
  249
  261
  273
  286
  299
  313
  328
  344
  361
  378
  397
  416
  436
  458
  480
  504
  529
  555
Funds from operations, $m
  196
  267
  277
  289
  301
  314
  328
  342
  358
  375
  393
  399
  420
  442
  465
  489
  515
  542
  571
  602
  634
  668
  705
  743
  783
  825
  870
  917
  967
  1,019
  1,074
Change in working capital, $m
  -23
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Cash from operations, $m
  219
  289
  279
  291
  303
  316
  330
  345
  361
  378
  396
  403
  423
  445
  468
  493
  519
  547
  576
  607
  639
  674
  710
  748
  789
  832
  877
  924
  974
  1,027
  1,083
Maintenance CAPEX, $m
  0
  -146
  -151
  -157
  -163
  -169
  -176
  -184
  -191
  -200
  -209
  -218
  -228
  -238
  -249
  -261
  -273
  -286
  -299
  -313
  -328
  -344
  -361
  -378
  -397
  -416
  -436
  -458
  -480
  -504
  -529
New CAPEX, $m
  -182
  -78
  -84
  -90
  -97
  -103
  -110
  -116
  -124
  -131
  -138
  -146
  -155
  -163
  -172
  -182
  -191
  -202
  -212
  -224
  -235
  -248
  -261
  -274
  -288
  -303
  -319
  -335
  -352
  -370
  -389
Cash from investing activities, $m
  -182
  -224
  -235
  -247
  -260
  -272
  -286
  -300
  -315
  -331
  -347
  -364
  -383
  -401
  -421
  -443
  -464
  -488
  -511
  -537
  -563
  -592
  -622
  -652
  -685
  -719
  -755
  -793
  -832
  -874
  -918
Free cash flow, $m
  37
  65
  44
  43
  43
  43
  44
  45
  46
  48
  49
  38
  41
  44
  47
  51
  55
  59
  64
  70
  76
  82
  89
  96
  104
  113
  122
  132
  142
  153
  165
Issuance/(repayment) of debt, $m
  -22
  92
  95
  102
  109
  116
  124
  132
  140
  148
  156
  165
  175
  184
  195
  205
  216
  228
  240
  253
  266
  280
  294
  310
  326
  342
  360
  378
  398
  418
  439
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
  92
  95
  102
  109
  116
  124
  132
  140
  148
  156
  165
  175
  184
  195
  205
  216
  228
  240
  253
  266
  280
  294
  310
  326
  342
  360
  378
  398
  418
  439
Total cash flow (excl. dividends), $m
  622
  156
  139
  145
  152
  160
  168
  176
  186
  195
  206
  204
  216
  228
  242
  256
  271
  287
  304
  322
  341
  362
  383
  406
  430
  455
  482
  510
  540
  571
  604
Retained Cash Flow (-), $m
  19
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -117
  -123
  -130
  -136
  -143
Prev. year cash balance distribution, $m
 
  47
  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
 
  174
  108
  112
  117
  122
  127
  133
  140
  147
  155
  150
  159
  168
  178
  189
  201
  213
  226
  240
  255
  270
  287
  305
  323
  343
  364
  386
  410
  435
  461
Discount rate, %
 
  9.80
  10.29
  10.80
  11.34
  11.91
  12.51
  13.13
  13.79
  14.48
  15.20
  15.96
  16.76
  17.60
  18.48
  19.40
  20.37
  21.39
  22.46
  23.58
  24.76
  26.00
  27.30
  28.67
  30.10
  31.61
  33.19
  34.85
  36.59
  38.42
  40.34
PV of cash for distribution, $m
 
  159
  89
  82
  76
  69
  63
  56
  50
  44
  38
  29
  25
  20
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  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 27.9
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 80.6
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 $658 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 3.6% 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 9.8%, 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 52.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $167 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% 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 330.4%.

Life of production assets of 14.9 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 -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 - $848 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.


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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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