Intrinsic value of Five Point Holdings - FPH

Previous Close

$10.71

  Intrinsic Value

$596.84

stock screener

  Rating & Target

str. buy

+999%

Previous close

$10.71

 
Intrinsic value

$596.84

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of FPH 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 2017), $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 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  222
  344
  514
  746
  1,052
  1,446
  1,941
  2,549
  3,280
  4,143
  5,144
  6,289
  7,581
  9,020
  10,605
  12,337
  14,211
  16,225
  18,375
  20,659
  23,074
  25,616
  28,284
  31,077
  33,994
  37,036
  40,204
  43,500
  46,928
  50,490
Variable operating expenses, $m
  183
  274
  401
  574
  803
  1,097
  1,467
  1,921
  2,467
  3,112
  3,843
  4,699
  5,664
  6,739
  7,924
  9,217
  10,617
  12,122
  13,729
  15,435
  17,239
  19,139
  21,132
  23,219
  25,398
  27,671
  30,038
  32,501
  35,061
  37,723
Fixed operating expenses, $m
  113
  116
  118
  121
  124
  126
  129
  132
  135
  138
  141
  144
  147
  151
  154
  157
  161
  164
  168
  172
  175
  179
  183
  187
  191
  195
  200
  204
  209
  213
Total operating expenses, $m
  296
  390
  519
  695
  927
  1,223
  1,596
  2,053
  2,602
  3,250
  3,984
  4,843
  5,811
  6,890
  8,078
  9,374
  10,778
  12,286
  13,897
  15,607
  17,414
  19,318
  21,315
  23,406
  25,589
  27,866
  30,238
  32,705
  35,270
  37,936
Operating income, $m
  -74
  -46
  -5
  51
  125
  222
  345
  496
  678
  893
  1,160
  1,446
  1,770
  2,130
  2,528
  2,962
  3,433
  3,938
  4,479
  5,052
  5,659
  6,298
  6,969
  7,671
  8,405
  9,170
  9,966
  10,795
  11,658
  12,554
EBITDA, $m
  371
  633
  1,002
  1,504
  2,170
  3,026
  4,103
  5,425
  7,015
  8,894
  11,074
  13,568
  16,380
  19,513
  22,968
  26,739
  30,821
  35,208
  39,893
  44,869
  50,129
  55,668
  61,481
  67,566
  73,922
  80,550
  87,452
  94,634
  102,101
  109,862
Interest expense (income), $m
  3
  29
  29
  29
  29
  29
  30
  30
  31
  31
  32
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  56
  59
  62
  65
  68
  71
  75
  78
Earnings before tax, $m
  -103
  -75
  -34
  21
  96
  193
  315
  465
  646
  861
  1,127
  1,412
  1,734
  2,094
  2,490
  2,922
  3,391
  3,895
  4,433
  5,004
  5,609
  6,245
  6,913
  7,613
  8,343
  9,105
  9,899
  10,724
  11,583
  12,475
Tax expense, $m
  0
  0
  0
  6
  26
  52
  85
  126
  174
  232
  304
  381
  468
  565
  672
  789
  916
  1,052
  1,197
  1,351
  1,514
  1,686
  1,867
  2,055
  2,253
  2,458
  2,673
  2,896
  3,127
  3,368
Net income, $m
  -103
  -75
  -34
  16
  70
  141
  230
  339
  472
  628
  823
  1,031
  1,266
  1,528
  1,817
  2,133
  2,475
  2,843
  3,236
  3,653
  4,094
  4,559
  5,047
  5,557
  6,091
  6,647
  7,226
  7,829
  8,456
  9,107

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
  -2,180
  -3,369
  -5,038
  -7,310
  -10,313
  -14,178
  -19,031
  -24,989
  -32,155
  -40,614
  -50,433
  -61,660
  -74,320
  -88,427
  -103,974
  -120,947
  -139,321
  -159,066
  -180,150
  -202,542
  -226,213
  -251,137
  -277,296
  -304,678
  -333,279
  -363,102
  -394,160
  -426,474
  -460,074
  -494,996
Adjusted assets (=assets-cash), $m
  -2,180
  -3,369
  -5,038
  -7,310
  -10,313
  -14,178
  -19,031
  -24,989
  -32,155
  -40,614
  -50,433
  -61,660
  -74,320
  -88,427
  -103,974
  -120,947
  -139,321
  -159,066
  -180,150
  -202,542
  -226,213
  -251,137
  -277,296
  -304,678
  -333,279
  -363,102
  -394,160
  -426,474
  -460,074
  -494,996
Revenue / Adjusted assets
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
  -0.102
Average production assets, $m
  4,286
  6,622
  9,904
  14,370
  20,274
  27,872
  37,412
  49,124
  63,211
  79,841
  99,144
  121,213
  146,103
  173,833
  204,397
  237,763
  273,883
  312,699
  354,147
  398,167
  444,699
  493,697
  545,121
  598,950
  655,174
  713,802
  774,858
  838,383
  904,434
  973,086
Working capital, $m
  -1,508
  -2,329
  -3,483
  -5,054
  -7,131
  -9,803
  -13,159
  -17,279
  -22,234
  -28,083
  -34,872
  -42,635
  -51,389
  -61,143
  -71,894
  -83,630
  -96,334
  -109,987
  -124,566
  -140,049
  -156,417
  -173,651
  -191,739
  -210,672
  -230,448
  -251,070
  -272,545
  -294,889
  -318,122
  -342,269
Total debt, $m
  534
  537
  540
  545
  551
  558
  568
  580
  594
  611
  631
  653
  679
  707
  738
  772
  809
  848
  890
  935
  982
  1,032
  1,085
  1,139
  1,197
  1,256
  1,318
  1,383
  1,450
  1,520
Total liabilities, $m
  4
  7
  10
  15
  21
  28
  38
  50
  64
  81
  101
  123
  149
  177
  208
  242
  279
  318
  360
  405
  452
  502
  555
  609
  667
  726
  788
  853
  920
  990
Total equity, $m
  -2,185
  -3,375
  -5,048
  -7,324
  -10,334
  -14,206
  -19,069
  -25,039
  -32,219
  -40,695
  -50,534
  -61,783
  -74,469
  -88,604
  -104,182
  -121,189
  -139,599
  -159,384
  -180,510
  -202,947
  -226,665
  -251,639
  -277,851
  -305,287
  -333,945
  -363,828
  -394,948
  -427,327
  -460,994
  -495,986
Total liabilities and equity, $m
  -2,181
  -3,368
  -5,038
  -7,309
  -10,313
  -14,178
  -19,031
  -24,989
  -32,155
  -40,614
  -50,433
  -61,660
  -74,320
  -88,427
  -103,974
  -120,947
  -139,320
  -159,066
  -180,150
  -202,542
  -226,213
  -251,137
  -277,296
  -304,678
  -333,278
  -363,102
  -394,160
  -426,474
  -460,074
  -494,996
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002
  1.002

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -103
  -75
  -34
  16
  70
  141
  230
  339
  472
  628
  823
  1,031
  1,266
  1,528
  1,817
  2,133
  2,475
  2,843
  3,236
  3,653
  4,094
  4,559
  5,047
  5,557
  6,091
  6,647
  7,226
  7,829
  8,456
  9,107
Depreciation, amort., depletion, $m
  445
  679
  1,007
  1,454
  2,044
  2,804
  3,758
  4,929
  6,338
  8,001
  9,914
  12,121
  14,610
  17,383
  20,440
  23,776
  27,388
  31,270
  35,415
  39,817
  44,470
  49,370
  54,512
  59,895
  65,517
  71,380
  77,486
  83,838
  90,443
  97,309
Funds from operations, $m
  343
  604
  973
  1,469
  2,114
  2,945
  3,988
  5,269
  6,810
  8,629
  10,737
  13,152
  15,876
  18,912
  22,257
  25,910
  29,864
  34,113
  38,651
  43,470
  48,564
  53,929
  59,559
  65,452
  71,608
  78,027
  84,712
  91,667
  98,899
  106,416
Change in working capital, $m
  -565
  -822
  -1,154
  -1,571
  -2,077
  -2,672
  -3,356
  -4,120
  -4,955
  -5,849
  -6,790
  -7,762
  -8,755
  -9,754
  -10,750
  -11,736
  -12,705
  -13,653
  -14,579
  -15,483
  -16,367
  -17,234
  -18,088
  -18,933
  -19,776
  -20,622
  -21,475
  -22,344
  -23,233
  -24,147
Cash from operations, $m
  908
  1,426
  2,127
  3,040
  4,191
  5,617
  7,343
  9,388
  11,764
  14,478
  17,527
  20,915
  24,631
  28,665
  33,008
  37,646
  42,568
  47,766
  53,230
  58,953
  64,931
  71,163
  77,647
  84,386
  91,384
  98,648
  106,187
  114,011
  122,131
  130,563
Maintenance CAPEX, $m
  -269
  -429
  -662
  -990
  -1,437
  -2,027
  -2,787
  -3,741
  -4,912
  -6,321
  -7,984
  -9,914
  -12,121
  -14,610
  -17,383
  -20,440
  -23,776
  -27,388
  -31,270
  -35,415
  -39,817
  -44,470
  -49,370
  -54,512
  -59,895
  -65,517
  -71,380
  -77,486
  -83,838
  -90,443
New CAPEX, $m
  -1,599
  -2,336
  -3,281
  -4,466
  -5,904
  -7,598
  -9,540
  -11,712
  -14,087
  -16,630
  -19,303
  -22,069
  -24,889
  -27,731
  -30,564
  -33,366
  -36,120
  -38,816
  -41,449
  -44,019
  -46,533
  -48,997
  -51,425
  -53,829
  -56,224
  -58,628
  -61,056
  -63,525
  -66,051
  -68,652
Cash from investing activities, $m
  -1,868
  -2,765
  -3,943
  -5,456
  -7,341
  -9,625
  -12,327
  -15,453
  -18,999
  -22,951
  -27,287
  -31,983
  -37,010
  -42,341
  -47,947
  -53,806
  -59,896
  -66,204
  -72,719
  -79,434
  -86,350
  -93,467
  -100,795
  -108,341
  -116,119
  -124,145
  -132,436
  -141,011
  -149,889
  -159,095
Free cash flow, $m
  -960
  -1,339
  -1,817
  -2,416
  -3,150
  -4,008
  -4,984
  -6,065
  -7,235
  -8,472
  -9,761
  -11,069
  -12,380
  -13,675
  -14,940
  -16,160
  -17,328
  -18,438
  -19,489
  -20,481
  -21,418
  -22,304
  -23,148
  -23,955
  -24,735
  -25,497
  -26,249
  -27,000
  -27,758
  -28,532
Issuance/(repayment) of debt, $m
  2
  2
  3
  5
  6
  8
  10
  12
  14
  17
  20
  22
  25
  28
  31
  34
  37
  39
  42
  45
  47
  50
  52
  55
  57
  60
  62
  65
  67
  70
Issuance/(repurchase) of shares, $m
  -814
  -1,191
  -1,673
  -2,276
  -3,009
  -3,873
  -4,863
  -5,970
  -7,180
  -8,476
  -9,839
  -11,249
  -12,686
  -14,134
  -15,578
  -17,007
  -18,411
  -19,785
  -21,127
  -22,437
  -23,718
  -24,974
  -26,211
  -27,437
  -28,658
  -29,883
  -31,120
  -32,379
  -33,667
  -34,992
Cash from financing (excl. dividends), $m  
  -812
  -1,189
  -1,670
  -2,271
  -3,003
  -3,865
  -4,853
  -5,958
  -7,166
  -8,459
  -9,819
  -11,227
  -12,661
  -14,106
  -15,547
  -16,973
  -18,374
  -19,746
  -21,085
  -22,392
  -23,671
  -24,924
  -26,159
  -27,382
  -28,601
  -29,823
  -31,058
  -32,314
  -33,600
  -34,922
Total cash flow (excl. dividends), $m
  -1,773
  -2,527
  -3,486
  -4,688
  -6,153
  -7,873
  -9,837
  -12,023
  -14,400
  -16,932
  -19,580
  -22,295
  -25,041
  -27,782
  -30,487
  -33,133
  -35,702
  -38,183
  -40,573
  -42,873
  -45,088
  -47,229
  -49,307
  -51,337
  -53,336
  -55,320
  -57,307
  -59,314
  -61,357
  -63,454
Retained Cash Flow (-), $m
  711
  1,116
  1,638
  2,276
  3,009
  3,873
  4,863
  5,970
  7,180
  8,476
  9,839
  11,249
  12,686
  14,134
  15,578
  17,007
  18,411
  19,785
  21,127
  22,437
  23,718
  24,974
  26,211
  27,437
  28,658
  29,883
  31,120
  32,379
  33,667
  34,992
Prev. year cash balance distribution, $m
  1,371
  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
  711
  1,116
  1,638
  2,276
  3,009
  3,873
  4,863
  5,970
  7,180
  8,476
  9,839
  11,249
  12,686
  14,134
  15,578
  17,007
  18,411
  19,785
  21,127
  22,437
  23,718
  24,974
  26,211
  27,437
  28,658
  29,883
  31,120
  32,379
  33,667
  34,992
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  682
  1,022
  1,426
  1,874
  2,333
  2,811
  3,285
  3,731
  4,125
  4,444
  4,672
  4,800
  4,824
  4,745
  4,574
  4,322
  4,006
  3,644
  3,253
  2,851
  2,453
  2,072
  1,718
  1,397
  1,115
  872
  668
  501
  368
  263
Current shareholders' claim on cash, %
  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

Five Point Holdings, LLC, formerly Newhall Holding Company, LLC, is the owner and developer of mixed-use, planned communities in coastal California. The Company is primarily engaged in the business of planning and developing its three mixed-use, planned communities. It operates in three segments: Newhall, San Francisco and Great Park. Its three mixed-use, planned communities are: Newhall Ranch in Los Angeles County; The San Francisco Shipyard and Candlestick Point in the City of San Francisco; and Great Park Neighborhoods in Orange County. Newhall Ranch consists of approximately 15,000 acres in northern Los Angeles County. Newhall Ranch is designed to include approximately 21,500 home sites and approximately 11.5 million square feet of commercial space. The San Francisco Shipyard and Candlestick Point consists of approximately 800 acres of bay front property in the city of San Francisco. Great Park Neighborhoods consists of approximately 2,100 acres in Orange County, California.

FINANCIAL RATIOS  of  Five Point Holdings (FPH)

Valuation Ratios
P/E Ratio -44.8
Price to Sales 37.9
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow -11.8
Price to Free Cash Flow -11.7
Growth Rates
Sales Growth Rate 8.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 1
Current Ratio NaN
LT Debt to Equity 42.4%
Total Debt to Equity 70.8%
Interest Coverage -34
Management Effectiveness
Return On Assets -2.4%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital -9.6%
Ret/ On T. Cap. - 3 Yr. Avg. -4%
Return On Equity -13.1%
Return On Equity - 3 Yr. Avg. -5.1%
Asset Turnover 0
Profitability Ratios
Gross Margin 48.7%
Gross Margin - 3 Yr. Avg. 42.2%
EBITDA Margin -253.8%
EBITDA Margin - 3 Yr. Avg. -88.3%
Operating Margin -266.7%
Oper. Margin - 3 Yr. Avg. -92.6%
Pre-Tax Margin -269.2%
Pre-Tax Margin - 3 Yr. Avg. -93.4%
Net Profit Margin -84.6%
Net Profit Margin - 3 Yr. Avg. -31%
Effective Tax Rate 7.6%
Eff/ Tax Rate - 3 Yr. Avg. 2.5%
Payout Ratio 0%

FPH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FPH stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by Five Point Holdings. The default revenue input number comes from 2017 income statement of Five Point Holdings. 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 FPH 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 4.3%, whose default value for FPH is calculated based on our internal credit rating of Five Point Holdings, 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 Five Point Holdings.
    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 FPH stock the variable cost ratio is equal to 86.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $111 million in the base year in the intrinsic value calculation for FPH 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 Five Point Holdings.

Corporate tax rate of 27% is the nominal tax rate for Five Point Holdings. 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 FPH stock is equal to 13.2%.

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 FPH are equal to 1927.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Five Point Holdings 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 FPH is equal to -677.9%. 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 - $0 million for Five Point Holdings - 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 133 million for Five Point Holdings 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 Five Point Holdings at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ FivePoint's massive waterfront retail development remains on shaky ground   [Aug-14-18 04:14PM  American City Business Journals]
▶ Navy to test soil for radiation where housing was built at San Francisco Shipyard   [Jun-15-18 04:56PM  American City Business Journals]
▶ Five Point: 1Q Earnings Snapshot   [May-15-18 08:36AM  Associated Press]
▶ Will new Opportunity Zones attract investors to the Bay Area's poorest areas?   [Apr-26-18 04:06PM  American City Business Journals]
▶ Exclusive: FivePoint executive and former Oakland planning director joins Google   [Apr-12-18 08:00AM  American City Business Journals]
▶ High Growth Stocks To Invest In   [Mar-15-18 12:02PM  Simply Wall St.]
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