Intrinsic value of iStar - STAR

Previous Close

$12.06

  Intrinsic Value

$12.66

stock screener

  Rating & Target

hold

+5%

Previous close

$12.06

 
Intrinsic value

$12.66

 
Up/down potential

+5%

 
Rating

hold

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

We calculate the intrinsic value of STAR 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 1.0

 

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, %
  -7.38
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  477
  763
  1,179
  1,763
  2,559
  3,610
  4,963
  6,661
  8,747
  11,255
  14,216
  17,653
  21,583
  26,014
  30,952
  36,394
  42,335
  48,766
  55,678
  63,058
  70,896
  79,181
  87,905
  97,062
  106,646
  116,657
  127,096
  137,967
  149,278
  161,039
  173,263
Variable operating expenses, $m
 
  947
  1,463
  2,188
  3,175
  4,480
  6,159
  8,267
  10,855
  13,968
  17,642
  21,907
  26,784
  32,284
  38,411
  45,165
  52,538
  60,519
  69,096
  78,255
  87,981
  98,264
  109,090
  120,453
  132,348
  144,771
  157,726
  171,217
  185,254
  199,849
  215,019
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
  570
  947
  1,463
  2,188
  3,175
  4,480
  6,159
  8,267
  10,855
  13,968
  17,642
  21,907
  26,784
  32,284
  38,411
  45,165
  52,538
  60,519
  69,096
  78,255
  87,981
  98,264
  109,090
  120,453
  132,348
  144,771
  157,726
  171,217
  185,254
  199,849
  215,019
Operating income, $m
  -93
  -184
  -284
  -425
  -617
  -870
  -1,196
  -1,605
  -2,108
  -2,712
  -3,426
  -4,254
  -5,201
  -6,269
  -7,459
  -8,771
  -10,203
  -11,753
  -13,418
  -15,197
  -17,086
  -19,083
  -21,185
  -23,392
  -25,702
  -28,114
  -30,630
  -33,250
  -35,976
  -38,810
  -41,756
EBITDA, $m
  -39
  -75
  -116
  -174
  -253
  -357
  -490
  -658
  -864
  -1,112
  -1,404
  -1,744
  -2,132
  -2,569
  -3,057
  -3,595
  -4,181
  -4,816
  -5,499
  -6,228
  -7,002
  -7,820
  -8,682
  -9,586
  -10,533
  -11,522
  -12,553
  -13,627
  -14,744
  -15,905
  -17,113
Interest expense (income), $m
  200
  180
  301
  477
  725
  1,061
  1,507
  2,079
  2,799
  3,682
  4,744
  5,998
  7,454
  9,118
  10,995
  13,086
  15,391
  17,907
  20,630
  23,557
  26,683
  30,002
  33,511
  37,206
  41,083
  45,142
  49,382
  53,803
  58,407
  63,197
  68,178
Earnings before tax, $m
  -15
  -364
  -585
  -902
  -1,341
  -1,931
  -2,703
  -3,685
  -4,907
  -6,395
  -8,170
  -10,253
  -12,655
  -15,387
  -18,454
  -21,857
  -25,593
  -29,659
  -34,049
  -38,754
  -43,769
  -49,085
  -54,696
  -60,597
  -66,785
  -73,257
  -80,012
  -87,053
  -94,383
  -102,008
  -109,934
Tax expense, $m
  -10
  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
Net income, $m
  -10
  -364
  -585
  -902
  -1,341
  -1,931
  -2,703
  -3,685
  -4,907
  -6,395
  -8,170
  -10,253
  -12,655
  -15,387
  -18,454
  -21,857
  -25,593
  -29,659
  -34,049
  -38,754
  -43,769
  -49,085
  -54,696
  -60,597
  -66,785
  -73,257
  -80,012
  -87,053
  -94,383
  -102,008
  -109,934

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  329
  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
  4,826
  7,200
  11,124
  16,636
  24,138
  34,055
  46,818
  62,843
  82,517
  106,180
  134,114
  166,539
  203,609
  245,418
  291,999
  343,339
  399,385
  460,058
  525,260
  594,884
  668,827
  746,990
  829,294
  915,675
  1,006,095
  1,100,539
  1,199,020
  1,301,579
  1,408,285
  1,519,236
  1,634,555
Adjusted assets (=assets-cash), $m
  4,497
  7,200
  11,124
  16,636
  24,138
  34,055
  46,818
  62,843
  82,517
  106,180
  134,114
  166,539
  203,609
  245,418
  291,999
  343,339
  399,385
  460,058
  525,260
  594,884
  668,827
  746,990
  829,294
  915,675
  1,006,095
  1,100,539
  1,199,020
  1,301,579
  1,408,285
  1,519,236
  1,634,555
Revenue / Adjusted assets
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
  0.106
Average production assets, $m
  2,036
  3,257
  5,031
  7,524
  10,918
  15,403
  21,176
  28,424
  37,323
  48,025
  60,660
  75,326
  92,093
  111,003
  132,072
  155,293
  180,643
  208,085
  237,576
  269,067
  302,512
  337,865
  375,091
  414,162
  455,059
  497,776
  542,319
  588,707
  636,970
  687,153
  739,312
Working capital, $m
  0
  -527
  -814
  -1,217
  -1,765
  -2,491
  -3,424
  -4,596
  -6,035
  -7,766
  -9,809
  -12,181
  -14,892
  -17,950
  -21,357
  -25,112
  -29,211
  -33,649
  -38,418
  -43,510
  -48,918
  -54,635
  -60,655
  -66,973
  -73,586
  -80,493
  -87,696
  -95,197
  -103,002
  -111,117
  -119,551
Total debt, $m
  3,390
  5,679
  9,003
  13,672
  20,026
  28,426
  39,236
  52,809
  69,473
  89,515
  113,175
  140,639
  172,038
  207,450
  246,904
  290,389
  337,860
  389,251
  444,476
  503,448
  566,077
  632,282
  701,993
  775,158
  851,743
  931,737
  1,015,151
  1,102,018
  1,192,399
  1,286,374
  1,384,049
Total liabilities, $m
  3,809
  6,098
  9,422
  14,091
  20,445
  28,845
  39,655
  53,228
  69,892
  89,934
  113,594
  141,058
  172,457
  207,869
  247,323
  290,808
  338,279
  389,670
  444,895
  503,867
  566,496
  632,701
  702,412
  775,577
  852,162
  932,156
  1,015,570
  1,102,437
  1,192,818
  1,286,793
  1,384,468
Total equity, $m
  1,017
  1,102
  1,702
  2,545
  3,693
  5,210
  7,163
  9,615
  12,625
  16,245
  20,519
  25,480
  31,152
  37,549
  44,676
  52,531
  61,106
  70,389
  80,365
  91,017
  102,330
  114,290
  126,882
  140,098
  153,933
  168,382
  183,450
  199,142
  215,468
  232,443
  250,087
Total liabilities and equity, $m
  4,826
  7,200
  11,124
  16,636
  24,138
  34,055
  46,818
  62,843
  82,517
  106,179
  134,113
  166,538
  203,609
  245,418
  291,999
  343,339
  399,385
  460,059
  525,260
  594,884
  668,826
  746,991
  829,294
  915,675
  1,006,095
  1,100,538
  1,199,020
  1,301,579
  1,408,286
  1,519,236
  1,634,555
Debt-to-equity ratio
  3.333
  5.160
  5.290
  5.370
  5.420
  5.460
  5.480
  5.490
  5.500
  5.510
  5.520
  5.520
  5.520
  5.520
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
  5.530
Adjusted equity ratio
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153
  0.153

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -10
  -364
  -585
  -902
  -1,341
  -1,931
  -2,703
  -3,685
  -4,907
  -6,395
  -8,170
  -10,253
  -12,655
  -15,387
  -18,454
  -21,857
  -25,593
  -29,659
  -34,049
  -38,754
  -43,769
  -49,085
  -54,696
  -60,597
  -66,785
  -73,257
  -80,012
  -87,053
  -94,383
  -102,008
  -109,934
Depreciation, amort., depletion, $m
  54
  109
  168
  251
  364
  513
  706
  947
  1,244
  1,601
  2,022
  2,511
  3,070
  3,700
  4,402
  5,176
  6,021
  6,936
  7,919
  8,969
  10,084
  11,262
  12,503
  13,805
  15,169
  16,593
  18,077
  19,624
  21,232
  22,905
  24,644
Funds from operations, $m
  17
  -255
  -417
  -651
  -977
  -1,418
  -1,997
  -2,737
  -3,663
  -4,794
  -6,148
  -7,742
  -9,586
  -11,687
  -14,052
  -16,680
  -19,572
  -22,723
  -26,129
  -29,785
  -33,685
  -37,823
  -42,193
  -46,792
  -51,616
  -56,664
  -61,935
  -67,430
  -73,151
  -79,102
  -85,290
Change in working capital, $m
  -3
  -197
  -287
  -403
  -549
  -725
  -933
  -1,172
  -1,439
  -1,731
  -2,043
  -2,372
  -2,711
  -3,058
  -3,407
  -3,755
  -4,099
  -4,438
  -4,769
  -5,092
  -5,408
  -5,717
  -6,020
  -6,318
  -6,613
  -6,908
  -7,203
  -7,501
  -7,805
  -8,115
  -8,434
Cash from operations, $m
  20
  -58
  -130
  -248
  -429
  -693
  -1,063
  -1,565
  -2,224
  -3,063
  -4,105
  -5,370
  -6,874
  -8,630
  -10,645
  -12,925
  -15,473
  -18,285
  -21,361
  -24,693
  -28,277
  -32,106
  -36,173
  -40,474
  -45,003
  -49,757
  -54,732
  -59,928
  -65,346
  -70,987
  -76,856
Maintenance CAPEX, $m
  0
  -68
  -109
  -168
  -251
  -364
  -513
  -706
  -947
  -1,244
  -1,601
  -2,022
  -2,511
  -3,070
  -3,700
  -4,402
  -5,176
  -6,021
  -6,936
  -7,919
  -8,969
  -10,084
  -11,262
  -12,503
  -13,805
  -15,169
  -16,593
  -18,077
  -19,624
  -21,232
  -22,905
New CAPEX, $m
  -212
  -1,221
  -1,775
  -2,493
  -3,393
  -4,486
  -5,773
  -7,248
  -8,899
  -10,703
  -12,635
  -14,666
  -16,767
  -18,910
  -21,069
  -23,221
  -25,350
  -27,443
  -29,491
  -31,491
  -33,444
  -35,354
  -37,226
  -39,070
  -40,897
  -42,717
  -44,543
  -46,388
  -48,264
  -50,183
  -52,159
Cash from investing activities, $m
  467
  -1,289
  -1,884
  -2,661
  -3,644
  -4,850
  -6,286
  -7,954
  -9,846
  -11,947
  -14,236
  -16,688
  -19,278
  -21,980
  -24,769
  -27,623
  -30,526
  -33,464
  -36,427
  -39,410
  -42,413
  -45,438
  -48,488
  -51,573
  -54,702
  -57,886
  -61,136
  -64,465
  -67,888
  -71,415
  -75,064
Free cash flow, $m
  487
  -1,346
  -2,014
  -2,909
  -4,073
  -5,542
  -7,349
  -9,520
  -12,070
  -15,010
  -18,341
  -22,058
  -26,152
  -30,609
  -35,414
  -40,549
  -45,999
  -51,749
  -57,787
  -64,103
  -70,690
  -77,543
  -84,662
  -92,048
  -99,705
  -107,642
  -115,868
  -124,393
  -133,233
  -142,403
  -151,920
Issuance/(repayment) of debt, $m
  -722
  2,289
  3,324
  4,669
  6,354
  8,400
  10,810
  13,574
  16,664
  20,042
  23,660
  27,464
  31,399
  35,412
  39,454
  43,485
  47,472
  51,390
  55,226
  58,972
  62,629
  66,205
  69,711
  73,165
  76,585
  79,994
  83,413
  86,868
  90,380
  93,975
  97,675
Issuance/(repurchase) of shares, $m
  -99
  777
  1,186
  1,745
  2,489
  3,449
  4,655
  6,137
  7,917
  10,015
  12,444
  15,214
  18,327
  21,784
  25,581
  29,712
  34,168
  38,942
  44,024
  49,407
  55,082
  61,044
  67,289
  73,814
  80,619
  87,707
  95,080
  102,745
  110,709
  118,983
  127,578
Cash from financing (excl. dividends), $m  
  -818
  3,066
  4,510
  6,414
  8,843
  11,849
  15,465
  19,711
  24,581
  30,057
  36,104
  42,678
  49,726
  57,196
  65,035
  73,197
  81,640
  90,332
  99,250
  108,379
  117,711
  127,249
  137,000
  146,979
  157,204
  167,701
  178,493
  189,613
  201,089
  212,958
  225,253
Total cash flow (excl. dividends), $m
  -331
  1,720
  2,495
  3,505
  4,771
  6,306
  8,116
  10,191
  12,511
  15,047
  17,764
  20,620
  23,574
  26,587
  29,622
  32,648
  35,641
  38,583
  41,463
  44,275
  47,021
  49,706
  52,338
  54,931
  57,499
  60,058
  62,626
  65,219
  67,856
  70,555
  73,333
Retained Cash Flow (-), $m
  42
  -777
  -1,186
  -1,745
  -2,489
  -3,449
  -4,655
  -6,137
  -7,917
  -10,015
  -12,444
  -15,214
  -18,327
  -21,784
  -25,581
  -29,712
  -34,168
  -38,942
  -44,024
  -49,407
  -55,082
  -61,044
  -67,289
  -73,814
  -80,619
  -87,707
  -95,080
  -102,745
  -110,709
  -118,983
  -127,578
Prev. year cash balance distribution, $m
 
  329
  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
 
  1,272
  1,310
  1,760
  2,282
  2,858
  3,461
  4,054
  4,594
  5,032
  5,319
  5,406
  5,247
  4,802
  4,040
  2,936
  1,472
  -359
  -2,562
  -5,132
  -8,061
  -11,338
  -14,950
  -18,883
  -23,120
  -27,649
  -32,454
  -37,526
  -42,853
  -48,428
  -54,245
Discount rate, %
 
  11.90
  12.50
  13.12
  13.78
  14.46
  15.19
  15.95
  16.74
  17.58
  18.46
  19.38
  20.35
  21.37
  22.44
  23.56
  24.74
  25.98
  27.28
  28.64
  30.07
  31.57
  33.15
  34.81
  36.55
  38.38
  40.30
  42.31
  44.43
  46.65
  48.98
PV of cash for distribution, $m
 
  1,137
  1,035
  1,216
  1,362
  1,454
  1,482
  1,439
  1,331
  1,171
  977
  770
  568
  387
  237
  123
  43
  -7
  -33
  -43
  -42
  -36
  -27
  -20
  -13
  -8
  -5
  -3
  -1
  -1
  0
Current shareholders' claim on cash, %
  100
  46.5
  22.1
  10.8
  5.4
  2.8
  1.5
  0.8
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0
  0.0

iStar Inc. finances, invests in and develops real estate and real estate related projects as part of its integrated investment platform. The Company's four business segments are Real Estate Finance, Net Lease, Operating Properties, and Land and Development. The Real Estate Finance portfolio consists of senior and mezzanine real estate loans that may be either fixed-rate or variable-rate. The Net Lease portfolio consists of properties owned by the Company and leased to single tenants, where the properties are subject to long-term leases. The Operating Properties portfolio consists of commercial and residential properties, which represent a pool of assets across a range of geographies and property types. The Land and Development portfolio consists of land entitled for master planned communities, as well as waterfront and urban infill land parcels located throughout the United States. Its Land and Development projects include Great Oaks, Sage Scottsdale, Naples Reserve and Coney Island.

FINANCIAL RATIOS  of  iStar (STAR)

Valuation Ratios
P/E Ratio -86.9
Price to Sales 1.8
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 43.4
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate -7.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 24.7%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 333.3%
Total Debt to Equity 333.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 1.9%
Return On Total Capital -0.2%
Ret/ On T. Cap. - 3 Yr. Avg. -1.1%
Return On Equity -1%
Return On Equity - 3 Yr. Avg. -5.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 58.1%
Gross Margin - 3 Yr. Avg. 59.4%
EBITDA Margin 50.1%
EBITDA Margin - 3 Yr. Avg. 42.8%
Operating Margin -19.5%
Oper. Margin - 3 Yr. Avg. -26.4%
Pre-Tax Margin -3.1%
Pre-Tax Margin - 3 Yr. Avg. -12.1%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -12.2%
Effective Tax Rate 66.7%
Eff/ Tax Rate - 3 Yr. Avg. 17.4%
Payout Ratio -510%

STAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STAR stock intrinsic value calculation we used $477 million for the last fiscal year's total revenue generated by iStar. The default revenue input number comes from 2016 income statement of iStar. 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 STAR stock valuation model: a) initial revenue growth rate of 60% 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 11.9%, whose default value for STAR is calculated based on our internal credit rating of iStar, 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 iStar.
    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 STAR stock the variable cost ratio is equal to 124.1%.

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 STAR 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 5.3% for iStar.

Corporate tax rate of 27% is the nominal tax rate for iStar. 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 STAR 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 STAR are equal to 426.7%.

Life of production assets of 37.7 years is the average useful life of capital assets used in iStar 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 STAR is equal to -69%. 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 - $1017 million for iStar - 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 82.663 million for iStar 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 iStar at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
KBH KB Home 27.05 85.04  str.buy
UTI Universal Tech 3.32 1.29  str.sell
AAT American Asset 39.07 4.30  str.sell
SLG SL Green Realt 97.40 19.26  str.sell
LXP Lexington Real 10.38 1.45  str.sell
O Realty Income 55.54 6.16  str.sell
DRE Duke Realty 28.85 2.44  str.sell

COMPANY NEWS

▶ iStar Announces Proposed Financing Transactions   [Sep-11-17 04:05PM  PR Newswire]
▶ iStar Declares Preferred Stock Dividends   [Aug-15-17 06:38PM  PR Newswire]
▶ IStar posts 2Q profit   [Aug-03-17 07:41AM  Associated Press]
▶ Luxury living: Expensive condos sprouting & selling on Scottsdale Road   [Jun-04-17 09:00PM  American City Business Journals]
▶ iStar Declares Preferred Stock Dividends   [May-17-17 04:05PM  PR Newswire]
▶ IStar reports 1Q loss   [08:21AM  Associated Press]
▶ US Court of Appeals Affirms Judgment in Favor of iStar   [Apr-14-17 08:00AM  PR Newswire]
▶ ETFs with exposure to iStar, Inc. : April 7, 2017   [Apr-07-17 05:32PM  Capital Cube]
▶ IStar reports 4Q loss   [07:30AM  Associated Press]
▶ iStar Announces Fiscal Year 2016 Results   [07:06AM  PR Newswire]
▶ iStar Declares Preferred Stock Dividends   [Feb-15-17 04:30PM  PR Newswire]
▶ iStar Announces Tax Treatment of 2016 Dividends   [Jan-31-17 11:26PM  PR Newswire]
▶ iStar Reprices Its Senior Secured Credit Facility   [Jan-27-17 07:14PM  PR Newswire]
▶ iStar Added to MSCI US REIT Index (RMZ)   [Nov-16-16 10:05PM  PR Newswire]
▶ iStar Declares Preferred Stock Dividends   [Nov-15-16 04:48PM  PR Newswire]
▶ iStar Declares Preferred Stock Dividends   [Aug-15-16 09:37PM  PR Newswire]
Financial statements of STAR
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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