Intrinsic value of Urstadt Biddle Properties - UBP

Previous Close

$18.28

  Intrinsic Value

$3.23

stock screener

  Rating & Target

str. sell

-82%

  Value-price divergence*

+26%

Previous close

$18.28

 
Intrinsic value

$3.23

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence*

+26%

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

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

We calculate the intrinsic value of UBP 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 0.8

 

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, %
  1.74
  3.40
  3.56
  3.70
  3.83
  3.95
  4.06
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
Revenue, $m
  117
  121
  125
  130
  135
  140
  146
  152
  158
  165
  172
  180
  188
  197
  206
  215
  225
  236
  247
  259
  271
  284
  298
  313
  328
  344
  361
  378
  397
  416
  437
Variable operating expenses, $m
 
  78
  80
  83
  86
  90
  94
  97
  102
  106
  111
  115
  121
  126
  132
  138
  145
  151
  158
  166
  174
  182
  191
  200
  210
  220
  231
  242
  254
  267
  280
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
  71
  78
  80
  83
  86
  90
  94
  97
  102
  106
  111
  115
  121
  126
  132
  138
  145
  151
  158
  166
  174
  182
  191
  200
  210
  220
  231
  242
  254
  267
  280
Operating income, $m
  45
  43
  45
  47
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  129
  136
  142
  149
  157
EBITDA, $m
  68
  71
  74
  76
  79
  82
  86
  89
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  145
  152
  160
  167
  175
  184
  193
  202
  212
  222
  233
  245
  257
Interest expense (income), $m
  13
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  39
  41
  44
  46
  48
  51
Earnings before tax, $m
  35
  31
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
Tax expense, $m
  0
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
Net income, $m
  34
  23
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  70
  74
  77

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7
  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
  931
  953
  986
  1,023
  1,062
  1,104
  1,149
  1,197
  1,247
  1,301
  1,358
  1,418
  1,482
  1,550
  1,621
  1,696
  1,775
  1,859
  1,947
  2,039
  2,137
  2,240
  2,348
  2,461
  2,581
  2,707
  2,839
  2,978
  3,124
  3,278
  3,439
Adjusted assets (=assets-cash), $m
  924
  953
  986
  1,023
  1,062
  1,104
  1,149
  1,197
  1,247
  1,301
  1,358
  1,418
  1,482
  1,550
  1,621
  1,696
  1,775
  1,859
  1,947
  2,039
  2,137
  2,240
  2,348
  2,461
  2,581
  2,707
  2,839
  2,978
  3,124
  3,278
  3,439
Revenue / Adjusted assets
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
Average production assets, $m
  804
  831
  860
  892
  927
  963
  1,002
  1,044
  1,088
  1,135
  1,185
  1,237
  1,293
  1,352
  1,414
  1,479
  1,548
  1,621
  1,698
  1,779
  1,864
  1,953
  2,048
  2,147
  2,251
  2,361
  2,476
  2,597
  2,725
  2,859
  3,000
Working capital, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
Total debt, $m
  281
  284
  296
  309
  323
  338
  353
  370
  388
  407
  427
  448
  471
  494
  520
  546
  574
  603
  634
  667
  701
  737
  775
  815
  857
  902
  948
  997
  1,049
  1,103
  1,159
Total liabilities, $m
  332
  335
  347
  360
  374
  389
  404
  421
  439
  458
  478
  499
  522
  545
  571
  597
  625
  654
  685
  718
  752
  788
  826
  866
  908
  953
  999
  1,048
  1,100
  1,154
  1,210
Total equity, $m
  599
  617
  639
  663
  688
  716
  745
  775
  808
  843
  880
  919
  960
  1,004
  1,050
  1,099
  1,150
  1,204
  1,261
  1,321
  1,385
  1,451
  1,521
  1,595
  1,672
  1,754
  1,840
  1,930
  2,024
  2,124
  2,228
Total liabilities and equity, $m
  931
  952
  986
  1,023
  1,062
  1,105
  1,149
  1,196
  1,247
  1,301
  1,358
  1,418
  1,482
  1,549
  1,621
  1,696
  1,775
  1,858
  1,946
  2,039
  2,137
  2,239
  2,347
  2,461
  2,580
  2,707
  2,839
  2,978
  3,124
  3,278
  3,438
Debt-to-equity ratio
  0.469
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
  0.520
  0.520
Adjusted equity ratio
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  23
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  59
  61
  64
  67
  70
  74
  77
Depreciation, amort., depletion, $m
  23
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  95
  100
Funds from operations, $m
  61
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  127
  134
  140
  147
  154
  161
  169
  177
Change in working capital, $m
  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
Cash from operations, $m
  60
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  127
  133
  140
  147
  154
  161
  169
  177
Maintenance CAPEX, $m
  0
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -95
New CAPEX, $m
  -59
  -27
  -30
  -32
  -34
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -141
Cash from investing activities, $m
  -80
  -54
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -113
  -118
  -125
  -131
  -138
  -144
  -152
  -159
  -167
  -176
  -185
  -194
  -204
  -214
  -225
  -236
Free cash flow, $m
  -20
  -4
  -5
  -7
  -8
  -10
  -11
  -12
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
Issuance/(repayment) of debt, $m
  -2
  10
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
Issuance/(repurchase) of shares, $m
  74
  0
  0
  0
  0
  1
  2
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
Cash from financing (excl. dividends), $m  
  72
  10
  12
  13
  14
  16
  18
  20
  22
  24
  25
  27
  29
  32
  34
  36
  39
  41
  43
  46
  48
  52
  55
  58
  61
  64
  68
  72
  75
  80
  84
Total cash flow (excl. dividends), $m
  52
  6
  7
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Retained Cash Flow (-), $m
  -58
  -18
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -77
  -81
  -86
  -90
  -95
  -100
  -105
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
 
  -12
  -15
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -79
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  -11
  -13
  -14
  -14
  -14
  -14
  -13
  -12
  -12
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  99.8
  99.6
  99.3
  99.0
  98.6
  98.2
  97.7
  97.1
  96.6
  96.0
  95.4
  94.7
  94.1
  93.4
  92.7
  92.0
  91.2
  90.5
  89.8
  89.0
  88.3
  87.5
  86.7
  86.0
  85.2
  84.5

Urstadt Biddle Properties Inc. is a real estate investment trust, which is engaged in the acquisition, ownership and management of commercial real estate. The Company owns Ridgeway Shopping Center (Ridgeway) property, which is located in Stamford, Connecticut. Its segments include Ridgeway and All Other Operating Segments. Its primary business is the ownership of real estate investments with primary emphasis on properties in the metropolitan New York tri-state area outside of the City of New York. As of October 31, 2016, the Company's properties consisted principally of neighborhood and community shopping centers and seven office buildings. As of March 30, 2017, the Company owned or had equity interests in 80 properties, including neighborhood and community shopping centers, office buildings, single tenant retail or restaurant properties and office/retail mixed-use properties located in four states throughout the United States.

FINANCIAL RATIOS  of  Urstadt Biddle Properties (UBP)

Valuation Ratios
P/E Ratio 21
Price to Sales 6.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 11.9
Price to Free Cash Flow 715.5
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.6%
Cap. Spend. - 3 Yr. Gr. Rate 8.1%
Financial Strength
Quick Ratio 1
Current Ratio NaN
LT Debt to Equity 45.6%
Total Debt to Equity 46.9%
Interest Coverage 4
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.5%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 9.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 68.4%
Gross Margin - 3 Yr. Avg. 66.4%
EBITDA Margin 60.7%
EBITDA Margin - 3 Yr. Avg. 71.7%
Operating Margin 39.3%
Oper. Margin - 3 Yr. Avg. 37.1%
Pre-Tax Margin 29.9%
Pre-Tax Margin - 3 Yr. Avg. 41.8%
Net Profit Margin 29.1%
Net Profit Margin - 3 Yr. Avg. 45.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 150%

UBP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UBP stock intrinsic value calculation we used $117 million for the last fiscal year's total revenue generated by Urstadt Biddle Properties. The default revenue input number comes from 2016 income statement of Urstadt Biddle Properties. 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 UBP stock valuation model: a) initial revenue growth rate of 3.4% 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 6.5%, whose default value for UBP is calculated based on our internal credit rating of Urstadt Biddle Properties, 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 Urstadt Biddle Properties.
    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 UBP stock the variable cost ratio is equal to 64.1%.

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 UBP 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 4.6% for Urstadt Biddle Properties.

Corporate tax rate of 27% is the nominal tax rate for Urstadt Biddle Properties. 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 UBP 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 UBP are equal to 686.8%.

Life of production assets of 34.9 years is the average useful life of capital assets used in Urstadt Biddle Properties 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 UBP is equal to 0.9%. 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 - $599 million for Urstadt Biddle Properties - 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 46.366 million for Urstadt Biddle Properties 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 Urstadt Biddle Properties at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Urstadt reports 2Q results   [Jun-08-17 04:26PM  Associated Press]
▶ Urstadt Biddle reports 2Q results   [04:22PM  Associated Press]
▶ Urstadt reports 1Q results   [Mar-10-17 04:18PM  Associated Press]
▶ Urstadt Biddle Properties Inc. Announces New Hire   [Feb-11-16 04:33PM  Business Wire]
▶ A Few Investors Are High On Container Store Group Inc (TCS)   [Nov-23  02:03PM  at Insider Monkey]
▶ 10-Q for Urstadt Biddle Properties, Inc.   [Jun-10  08:09PM  at Company Spotlight]
▶ 10-Q for Urstadt Biddle Properties, Inc.   [May-06  08:12PM  at Company Spotlight]
▶ Solving The Riddle Of Urstadt Biddle   [07:00AM  at Forbes]
Financial statements of UBP
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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