Intrinsic value of Four Corners Property Trust - FCPT

Previous Close

$26.54

  Intrinsic Value

$2.04

stock screener

  Rating & Target

str. sell

-92%

Previous close

$26.54

 
Intrinsic value

$2.04

 
Up/down potential

-92%

 
Rating

str. sell

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

We calculate the intrinsic value of FCPT 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 0001), $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 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.85
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
Revenue, $m
  139
  146
  153
  160
  167
  175
  184
  193
  202
  212
  222
  233
  244
  256
  269
  282
  296
  310
  326
  342
  359
  377
  395
  415
  435
  457
  480
  504
  529
  555
Variable operating expenses, $m
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
  94
  99
  104
  109
  114
  120
  126
  132
  139
  145
  153
  160
  168
  177
  185
  195
  204
Fixed operating expenses, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
Total operating expenses, $m
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
  125
  131
  137
  144
  150
  158
  165
  173
  182
  191
  201
  210
Operating income, $m
  85
  89
  93
  98
  102
  107
  113
  118
  124
  130
  136
  143
  150
  158
  166
  174
  183
  192
  201
  211
  222
  233
  245
  257
  270
  284
  298
  313
  329
  345
EBITDA, $m
  117
  123
  129
  135
  141
  148
  155
  163
  171
  179
  188
  197
  207
  217
  228
  240
  252
  264
  277
  291
  306
  321
  337
  354
  372
  390
  410
  430
  452
  474
Interest expense (income), $m
  13
  28
  29
  31
  32
  34
  36
  38
  39
  41
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  96
  101
  106
  112
  117
Earnings before tax, $m
  57
  60
  62
  65
  68
  72
  75
  79
  82
  86
  91
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
  178
  187
  197
  206
  217
  228
Tax expense, $m
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  61
Net income, $m
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
  130
  137
  144
  151
  158
  166

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  1,124
  1,176
  1,231
  1,289
  1,350
  1,414
  1,482
  1,553
  1,628
  1,707
  1,790
  1,877
  1,969
  2,065
  2,167
  2,273
  2,385
  2,503
  2,627
  2,756
  2,893
  3,036
  3,187
  3,345
  3,511
  3,686
  3,869
  4,062
  4,264
  4,476
Adjusted assets (=assets-cash), $m
  1,124
  1,176
  1,231
  1,289
  1,350
  1,414
  1,482
  1,553
  1,628
  1,707
  1,790
  1,877
  1,969
  2,065
  2,167
  2,273
  2,385
  2,503
  2,627
  2,756
  2,893
  3,036
  3,187
  3,345
  3,511
  3,686
  3,869
  4,062
  4,264
  4,476
Revenue / Adjusted assets
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
  0.124
Average production assets, $m
  975
  1,020
  1,067
  1,118
  1,171
  1,226
  1,285
  1,347
  1,412
  1,480
  1,552
  1,628
  1,708
  1,791
  1,879
  1,971
  2,069
  2,171
  2,278
  2,391
  2,509
  2,633
  2,764
  2,901
  3,045
  3,197
  3,356
  3,523
  3,698
  3,882
Working capital, $m
  -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
  -4
  -4
Total debt, $m
  545
  572
  600
  630
  662
  695
  730
  767
  806
  847
  890
  936
  983
  1,033
  1,086
  1,141
  1,199
  1,260
  1,325
  1,392
  1,463
  1,537
  1,615
  1,697
  1,784
  1,874
  1,969
  2,069
  2,174
  2,285
Total liabilities, $m
  583
  610
  639
  669
  701
  734
  769
  806
  845
  886
  929
  974
  1,022
  1,072
  1,125
  1,180
  1,238
  1,299
  1,363
  1,431
  1,501
  1,576
  1,654
  1,736
  1,822
  1,913
  2,008
  2,108
  2,213
  2,323
Total equity, $m
  540
  566
  592
  620
  649
  680
  713
  747
  783
  821
  861
  903
  947
  993
  1,042
  1,093
  1,147
  1,204
  1,263
  1,326
  1,391
  1,460
  1,533
  1,609
  1,689
  1,773
  1,861
  1,954
  2,051
  2,153
Total liabilities and equity, $m
  1,123
  1,176
  1,231
  1,289
  1,350
  1,414
  1,482
  1,553
  1,628
  1,707
  1,790
  1,877
  1,969
  2,065
  2,167
  2,273
  2,385
  2,503
  2,626
  2,757
  2,892
  3,036
  3,187
  3,345
  3,511
  3,686
  3,869
  4,062
  4,264
  4,476
Debt-to-equity ratio
  1.010
  1.010
  1.010
  1.020
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.060
  1.060
  1.060
Adjusted equity ratio
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
  130
  137
  144
  151
  158
  166
Depreciation, amort., depletion, $m
  32
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
Funds from operations, $m
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
  182
  191
  200
  210
  221
  232
  243
  255
  268
  282
  296
Change in working capital, $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 from operations, $m
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
  118
  124
  130
  136
  143
  150
  157
  165
  173
  182
  191
  200
  210
  221
  232
  243
  256
  268
  282
  296
Maintenance CAPEX, $m
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -117
  -123
New CAPEX, $m
  -44
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -113
  -118
  -124
  -131
  -137
  -144
  -151
  -159
  -167
  -175
  -184
Cash from investing activities, $m
  -75
  -77
  -82
  -86
  -90
  -95
  -100
  -105
  -110
  -115
  -121
  -128
  -134
  -141
  -148
  -155
  -163
  -171
  -179
  -189
  -198
  -208
  -219
  -229
  -241
  -253
  -266
  -279
  -292
  -307
Free cash flow, $m
  -1
  0
  0
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
Issuance/(repayment) of debt, $m
  29
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  110
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  29
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  91
  95
  100
  105
  110
Total cash flow (excl. dividends), $m
  28
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  94
  99
Retained Cash Flow (-), $m
  -26
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -59
  -62
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -93
  -97
  -102
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
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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Current shareholders' claim on cash, %
  100.0
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Four Corners Property Trust, Inc. is a self-administered company and real estate investment trust (REIT), which owns, acquires and leases properties for use in the restaurant and food service related industries. The Company operates through two segments: real estate operations and restaurant operations. Its real estate operations segment consists of rental revenues primarily generated by leasing restaurant properties to tenants through triple-net lease arrangements under which the tenant is primarily responsible for ongoing costs relating to the properties. Its restaurant operations segment is conducted through its taxable REIT subsidiary, Kerrow Holdings, LLC, and consists of its Kerrow Restaurant Operating Business. As of December 19, 2017, it had owned 506 properties, all within the continental United States. Of these properties, 418 were held for investment and leased to tenants under triple-net leases and had an aggregate leasable area of approximately 3.4 million square feet.

FINANCIAL RATIOS  of  Four Corners Property Trust (FCPT)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 12.8
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 22.4
Price to Free Cash Flow 22.4
Growth Rates
Sales Growth Rate 275.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 94.4%
Total Debt to Equity 94.4%
Interest Coverage 7
Management Effectiveness
Return On Assets 19.7%
Ret/ On Assets - 3 Yr. Avg. 7%
Return On Total Capital 18.1%
Ret/ On T. Cap. - 3 Yr. Avg. 6.5%
Return On Equity 34.6%
Return On Equity - 3 Yr. Avg. 12.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 89.5%
EBITDA Margin - 3 Yr. Avg. 45.8%
Operating Margin 48.4%
Oper. Margin - 3 Yr. Avg. 24.2%
Pre-Tax Margin 62.1%
Pre-Tax Margin - 3 Yr. Avg. 29.8%
Net Profit Margin 126.6%
Net Profit Margin - 3 Yr. Avg. 48.3%
Effective Tax Rate -103.9%
Eff/ Tax Rate - 3 Yr. Avg. -23.5%
Payout Ratio 77.7%

FCPT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCPT stock intrinsic value calculation we used $133.209 million for the last fiscal year's total revenue generated by Four Corners Property Trust. The default revenue input number comes from 0001 income statement of Four Corners Property Trust. 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 FCPT stock valuation model: a) initial revenue growth rate of 4.6% 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 8.1%, whose default value for FCPT is calculated based on our internal credit rating of Four Corners Property Trust, 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 Four Corners Property Trust.
    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 FCPT stock the variable cost ratio is equal to 36.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3 million in the base year in the intrinsic value calculation for FCPT 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 5.4% for Four Corners Property Trust.

Corporate tax rate of 27% is the nominal tax rate for Four Corners Property Trust. 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 FCPT 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 FCPT are equal to 699.4%.

Life of production assets of 42.6 years is the average useful life of capital assets used in Four Corners Property Trust 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 FCPT is equal to -0.8%. 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 - $514.487 million for Four Corners Property Trust - 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 62.93 million for Four Corners Property Trust 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 Four Corners Property Trust at the current share price and the inputted number of shares is $1.7 billion.

RELATED COMPANIES Price Int.Val. Rating
DRI Darden Restaur 111.82 87.03  sell

COMPANY NEWS

▶ FCPT to Report Third Quarter 2018 Financial Results   [Oct-04-18 04:05PM  Business Wire]
▶ FCPT Declares Third Quarter 2018 Dividend   [Sep-20-18 05:02PM  Business Wire]
▶ FCPT Announces $100 Million Private Notes Placement   [Sep-18-18 04:05PM  Business Wire]
▶ Deals Day: Brinker selling nearly 100 restaurants for more than $300M   [Aug-03-18 06:56AM  American City Business Journals]
▶ Four Corners Property: 2Q Earnings Snapshot   [Jul-25-18 07:02PM  Associated Press]
▶ FCPT to Report Second Quarter 2018 Financial Results   [Jul-23-18 02:19PM  Business Wire]
▶ Time to Take Profits in Darden Restaurants, Inc. Stock   [Jul-10-18 12:42AM  InvestorPlace]
▶ FCPT Declares Second Quarter 2018 Dividend   [Jun-18-18 04:30PM  Business Wire]
▶ 'You Gotta Eat' REIT Portfolio   [07:31AM  Forbes]
▶ Four Corners Property: 1Q Earnings Snapshot   [Apr-25-18 06:20PM  Associated Press]
▶ FCPT to Report First Quarter 2018 Financial Results   [Apr-06-18 05:09PM  Business Wire]
▶ FCPT Declares First Quarter 2018 Dividend   [Mar-15-18 04:30PM  Business Wire]
▶ Four Corners Property reports 4Q results   [Feb-20-18 06:21PM  Associated Press]
▶ Starbucks property sells for $1.3 million   [Feb-16-18 10:53AM  American City Business Journals]
▶ FCPT Announces New Chief Accounting Officer   [Jan-29-18 04:59PM  Business Wire]
▶ FCPT to Report Fourth Quarter 2017 Financial Results   [Jan-25-18 12:45PM  Business Wire]
▶ FCPT Announces Tax Treatment of 2017 Distributions   [Jan-18-18 04:30PM  Business Wire]

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