Intrinsic value of UMH Properties - UMH

Previous Close

$15.34

  Intrinsic Value

$2.75

stock screener

  Rating & Target

str. sell

-82%

  Value-price divergence*

-55%

Previous close

$15.34

 
Intrinsic value

$2.75

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence*

-55%

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

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

We calculate the intrinsic value of UMH 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 0.4

 

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, %
  20.73
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  99
  107
  116
  125
  134
  143
  153
  164
  175
  186
  197
  210
  222
  235
  249
  264
  278
  294
  310
  327
  345
  364
  383
  404
  425
  448
  471
  496
  521
  548
  577
Variable operating expenses, $m
 
  69
  75
  81
  86
  93
  99
  106
  113
  120
  128
  135
  144
  152
  161
  170
  180
  190
  201
  212
  223
  235
  248
  261
  275
  289
  304
  320
  337
  354
  373
Fixed operating expenses, $m
 
  19
  20
  20
  21
  21
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
Total operating expenses, $m
  83
  88
  95
  101
  107
  114
  121
  129
  136
  144
  152
  160
  170
  178
  188
  198
  208
  219
  231
  242
  254
  267
  281
  295
  309
  324
  340
  357
  375
  393
  413
Operating income, $m
  16
  18
  21
  24
  26
  29
  32
  35
  39
  42
  46
  49
  53
  57
  61
  66
  70
  75
  80
  86
  91
  97
  103
  109
  116
  123
  131
  138
  147
  155
  164
EBITDA, $m
  39
  43
  48
  53
  57
  63
  68
  73
  79
  85
  91
  98
  105
  112
  119
  127
  135
  143
  152
  162
  171
  181
  192
  203
  215
  227
  240
  254
  268
  283
  298
Interest expense (income), $m
  15
  15
  16
  18
  19
  20
  22
  23
  25
  27
  29
  30
  32
  34
  36
  38
  41
  43
  45
  48
  51
  53
  56
  59
  63
  66
  69
  73
  77
  81
  85
Earnings before tax, $m
  12
  4
  5
  6
  7
  9
  10
  12
  14
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  38
  40
  43
  47
  50
  54
  57
  61
  65
  70
  74
  79
Tax expense, $m
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  13
  14
  15
  17
  18
  19
  20
  21
Net income, $m
  12
  3
  3
  4
  5
  6
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  32
  34
  36
  39
  42
  45
  48
  51
  54
  58

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  680
  734
  793
  854
  917
  983
  1,051
  1,122
  1,196
  1,272
  1,352
  1,436
  1,522
  1,613
  1,707
  1,805
  1,907
  2,014
  2,126
  2,243
  2,365
  2,493
  2,627
  2,766
  2,913
  3,066
  3,227
  3,395
  3,571
  3,756
  3,950
Adjusted assets (=assets-cash), $m
  676
  734
  793
  854
  917
  983
  1,051
  1,122
  1,196
  1,272
  1,352
  1,436
  1,522
  1,613
  1,707
  1,805
  1,907
  2,014
  2,126
  2,243
  2,365
  2,493
  2,627
  2,766
  2,913
  3,066
  3,227
  3,395
  3,571
  3,756
  3,950
Revenue / Adjusted assets
  0.146
  0.146
  0.146
  0.146
  0.146
  0.145
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
Average production assets, $m
  494
  535
  578
  622
  668
  716
  766
  817
  871
  927
  985
  1,046
  1,109
  1,175
  1,243
  1,315
  1,390
  1,468
  1,549
  1,634
  1,723
  1,816
  1,914
  2,015
  2,122
  2,234
  2,351
  2,473
  2,602
  2,736
  2,877
Working capital, $m
  0
  54
  58
  62
  67
  72
  77
  82
  87
  93
  99
  105
  111
  118
  125
  132
  139
  147
  155
  164
  173
  182
  192
  202
  213
  224
  236
  248
  261
  274
  288
Total debt, $m
  351
  378
  409
  441
  475
  510
  546
  584
  623
  664
  706
  750
  796
  844
  894
  946
  1,001
  1,058
  1,117
  1,179
  1,244
  1,312
  1,383
  1,457
  1,535
  1,616
  1,701
  1,791
  1,884
  1,982
  2,085
Total liabilities, $m
  363
  390
  421
  453
  487
  522
  558
  596
  635
  676
  718
  762
  808
  856
  906
  958
  1,013
  1,070
  1,129
  1,191
  1,256
  1,324
  1,395
  1,469
  1,547
  1,628
  1,713
  1,803
  1,896
  1,994
  2,097
Total equity, $m
  317
  344
  372
  400
  430
  461
  493
  526
  561
  597
  634
  673
  714
  756
  800
  846
  895
  945
  997
  1,052
  1,109
  1,169
  1,232
  1,297
  1,366
  1,438
  1,513
  1,592
  1,675
  1,762
  1,852
Total liabilities and equity, $m
  680
  734
  793
  853
  917
  983
  1,051
  1,122
  1,196
  1,273
  1,352
  1,435
  1,522
  1,612
  1,706
  1,804
  1,908
  2,015
  2,126
  2,243
  2,365
  2,493
  2,627
  2,766
  2,913
  3,066
  3,226
  3,395
  3,571
  3,756
  3,949
Debt-to-equity ratio
  1.107
  1.100
  1.100
  1.100
  1.100
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.130
  1.130
  1.130
Adjusted equity ratio
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469
  0.469

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  3
  3
  4
  5
  6
  8
  9
  10
  11
  12
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  32
  34
  36
  39
  42
  45
  48
  51
  54
  58
Depreciation, amort., depletion, $m
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121
  127
  134
Funds from operations, $m
  23
  27
  30
  33
  37
  40
  43
  47
  50
  54
  58
  62
  67
  71
  76
  81
  86
  92
  97
  103
  110
  116
  123
  130
  138
  146
  154
  163
  172
  181
  192
Change in working capital, $m
  -6
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
Cash from operations, $m
  29
  23
  26
  29
  32
  35
  38
  42
  45
  49
  52
  56
  60
  65
  69
  74
  79
  84
  89
  95
  101
  107
  113
  120
  127
  135
  142
  150
  159
  168
  177
Maintenance CAPEX, $m
  0
  -23
  -25
  -27
  -29
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -94
  -99
  -104
  -109
  -115
  -121
  -127
New CAPEX, $m
  -62
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -128
  -135
  -141
Cash from investing activities, $m
  -78
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -101
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -149
  -157
  -165
  -173
  -181
  -191
  -201
  -211
  -221
  -232
  -243
  -256
  -268
Free cash flow, $m
  -49
  -41
  -41
  -42
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -53
  -54
  -55
  -57
  -59
  -60
  -62
  -64
  -66
  -69
  -71
  -73
  -76
  -79
  -81
  -84
  -88
  -91
Issuance/(repayment) of debt, $m
  7
  31
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  94
  98
  103
Issuance/(repurchase) of shares, $m
  72
  25
  24
  24
  24
  24
  24
  25
  25
  25
  25
  25
  25
  26
  26
  26
  26
  27
  27
  27
  28
  28
  29
  29
  30
  30
  31
  31
  32
  32
  33
Cash from financing (excl. dividends), $m  
  78
  56
  55
  56
  58
  59
  60
  63
  64
  66
  67
  69
  71
  74
  76
  78
  80
  84
  86
  89
  93
  96
  100
  103
  108
  111
  116
  120
  126
  130
  136
Total cash flow (excl. dividends), $m
  30
  15
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
Retained Cash Flow (-), $m
  -71
  -27
  -27
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
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
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
Discount rate, %
 
  9.00
  9.45
  9.92
  10.42
  10.94
  11.49
  12.06
  12.66
  13.30
  13.96
  14.66
  15.39
  16.16
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.74
  23.88
  25.07
  26.33
  27.64
  29.03
  30.48
  32.00
  33.60
  35.28
  37.05
PV of cash for distribution, $m
 
  -11
  -12
  -11
  -10
  -9
  -8
  -8
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  94.7
  90.2
  86.2
  82.6
  79.4
  76.4
  73.8
  71.4
  69.2
  67.2
  65.3
  63.6
  62.0
  60.5
  59.1
  57.8
  56.6
  55.5
  54.4
  53.4
  52.4
  51.5
  50.7
  49.8
  49.1
  48.3
  47.6
  46.9
  46.3
  45.7

UMH Properties, Inc. (UMH) is a real estate investment trust. The firm engages in the ownership and operation of manufactured home communities. It leases manufactured home spaces to private manufactured home owners, as well as leases homes to residents. The firm invests in the real estate markets of New York, New Jersey, Pennsylvania, Ohio, and Tennessee. In addition, it invests in debt and equity securities of REITs. United Mobile Homes was incorporated in 1968. The company was formerly known as United Mobile Homes, Inc. UMH Properties is based in Freehold, New Jersey.

FINANCIAL RATIOS  of  UMH Properties (UMH)

Valuation Ratios
P/E Ratio 37.6
Price to Sales 4.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 15.5
Price to Free Cash Flow -13.7
Growth Rates
Sales Growth Rate 20.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 19.2%
Cap. Spend. - 3 Yr. Gr. Rate 18.1%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 92.4%
Total Debt to Equity 110.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 1.9%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 4.3%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 50.5%
Gross Margin - 3 Yr. Avg. 47.7%
EBITDA Margin 50.5%
EBITDA Margin - 3 Yr. Avg. 44.7%
Operating Margin 16.2%
Oper. Margin - 3 Yr. Avg. 12.3%
Pre-Tax Margin 12.1%
Pre-Tax Margin - 3 Yr. Avg. 6.7%
Net Profit Margin 12.1%
Net Profit Margin - 3 Yr. Avg. 6.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 266.7%

UMH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UMH stock intrinsic value calculation we used $99 million for the last fiscal year's total revenue generated by UMH Properties. The default revenue input number comes from 2016 income statement of UMH 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 UMH stock valuation model: a) initial revenue growth rate of 8.3% 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%, whose default value for UMH is calculated based on our internal credit rating of UMH 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 UMH 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 UMH stock the variable cost ratio is equal to 64.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $19 million in the base year in the intrinsic value calculation for UMH 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 UMH Properties.

Corporate tax rate of 27% is the nominal tax rate for UMH 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 UMH 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 UMH are equal to 499%.

Life of production assets of 21.5 years is the average useful life of capital assets used in UMH 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 UMH 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 - $317 million for UMH 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 28.785 million for UMH 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 UMH Properties at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ UMH Properties, Inc. Reports 2nd Quarter 2017 Earnings   [Aug-03-17 04:15PM  PR Newswire]
▶ 4 Hidden Gem REITs Paying Up To 6.6%   [Jul-27-17 09:12AM  Forbes]
▶ UMH Properties, Inc. Announces New Mortgage Loan   [Jun-01-17 04:01PM  PR Newswire]
▶ UMH Properties, Inc. Added To MSCI US REIT Index (RMZ)   [May-16-17 08:37AM  PR Newswire]
▶ UMH reports 1Q results   [May-09-17 06:40PM  Associated Press]
▶ UMH Properties, Inc. Reports Common Shares Outstanding   [Apr-28-17 04:15PM  PR Newswire]
▶ UMH reports 4Q results   [Mar-08-17 06:28PM  Associated Press]
▶ UMH Properties, Inc. Announces Promotion   [Dec-19-16 05:24PM  PR Newswire]
▶ How Dorian LPG Ltd (LPG) Stocks Up Against Its Peers   [Dec-12-16 08:35PM  at Insider Monkey]
▶ Is Jive Software Inc (JIVE) A Good Stock To Buy?   [Dec-07-16 06:38AM  at Insider Monkey]
▶ UMH Properties, Inc. Announces New Mortgage Loans   [Nov-01-16 01:15PM  PR Newswire]
Stock chart of UMH Financial statements of UMH
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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