Intrinsic value of First Industrial Realty Trust - FR

Previous Close

$30.17

  Intrinsic Value

$2.59

stock screener

  Rating & Target

str. sell

-91%

Previous close

$30.17

 
Intrinsic value

$2.59

 
Up/down potential

-91%

 
Rating

str. sell

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

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

We calculate the intrinsic value of FR 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  3.28
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  378
  398
  419
  441
  464
  488
  513
  540
  568
  597
  627
  659
  693
  728
  765
  804
  845
  887
  932
  979
  1,028
  1,080
  1,135
  1,192
  1,252
  1,314
  1,380
  1,450
  1,522
  1,599
  1,679
Variable operating expenses, $m
 
  56
  59
  62
  65
  68
  72
  76
  79
  84
  88
  92
  97
  102
  107
  113
  118
  124
  130
  137
  144
  151
  159
  167
  175
  184
  193
  203
  213
  224
  235
Fixed operating expenses, $m
 
  215
  221
  226
  232
  238
  244
  250
  256
  262
  269
  276
  282
  289
  297
  304
  312
  320
  328
  336
  344
  353
  362
  371
  380
  389
  399
  409
  419
  430
  440
Total operating expenses, $m
  257
  271
  280
  288
  297
  306
  316
  326
  335
  346
  357
  368
  379
  391
  404
  417
  430
  444
  458
  473
  488
  504
  521
  538
  555
  573
  592
  612
  632
  654
  675
Operating income, $m
  121
  127
  140
  153
  167
  182
  198
  215
  232
  251
  271
  291
  313
  337
  361
  387
  415
  443
  474
  506
  540
  576
  614
  654
  696
  741
  788
  838
  890
  945
  1,003
EBITDA, $m
  245
  257
  277
  298
  319
  342
  366
  392
  418
  446
  476
  507
  540
  575
  612
  651
  691
  734
  779
  827
  877
  930
  986
  1,045
  1,106
  1,172
  1,240
  1,313
  1,389
  1,469
  1,553
Interest expense (income), $m
  64
  62
  66
  70
  74
  78
  83
  87
  92
  98
  103
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
  185
  194
  205
  215
  227
  239
  251
  264
  278
  292
Earnings before tax, $m
  127
  65
  74
  83
  93
  104
  115
  127
  140
  153
  167
  182
  198
  215
  233
  252
  272
  294
  316
  340
  365
  392
  420
  450
  481
  514
  549
  587
  626
  667
  711
Tax expense, $m
  1
  18
  20
  23
  25
  28
  31
  34
  38
  41
  45
  49
  54
  58
  63
  68
  74
  79
  85
  92
  99
  106
  113
  121
  130
  139
  148
  158
  169
  180
  192
Net income, $m
  121
  48
  54
  61
  68
  76
  84
  93
  102
  112
  122
  133
  145
  157
  170
  184
  199
  214
  231
  248
  266
  286
  306
  328
  351
  375
  401
  428
  457
  487
  519

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  2,793
  2,927
  3,081
  3,242
  3,412
  3,589
  3,775
  3,970
  4,174
  4,388
  4,612
  4,848
  5,095
  5,354
  5,626
  5,911
  6,210
  6,524
  6,853
  7,199
  7,562
  7,943
  8,342
  8,762
  9,202
  9,665
  10,150
  10,660
  11,194
  11,756
  12,345
Adjusted assets (=assets-cash), $m
  2,783
  2,927
  3,081
  3,242
  3,412
  3,589
  3,775
  3,970
  4,174
  4,388
  4,612
  4,848
  5,095
  5,354
  5,626
  5,911
  6,210
  6,524
  6,853
  7,199
  7,562
  7,943
  8,342
  8,762
  9,202
  9,665
  10,150
  10,660
  11,194
  11,756
  12,345
Revenue / Adjusted assets
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
Average production assets, $m
  2,526
  2,660
  2,800
  2,947
  3,101
  3,262
  3,431
  3,608
  3,793
  3,988
  4,192
  4,406
  4,631
  4,866
  5,113
  5,372
  5,644
  5,929
  6,229
  6,543
  6,873
  7,219
  7,582
  7,964
  8,364
  8,784
  9,225
  9,688
  10,175
  10,685
  11,221
Working capital, $m
  0
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
Total debt, $m
  1,347
  1,428
  1,514
  1,604
  1,699
  1,798
  1,901
  2,010
  2,124
  2,243
  2,369
  2,500
  2,638
  2,782
  2,934
  3,093
  3,260
  3,435
  3,619
  3,812
  4,015
  4,227
  4,450
  4,684
  4,930
  5,188
  5,459
  5,743
  6,042
  6,355
  6,684
Total liabilities, $m
  1,552
  1,633
  1,719
  1,809
  1,904
  2,003
  2,106
  2,215
  2,329
  2,448
  2,574
  2,705
  2,843
  2,987
  3,139
  3,298
  3,465
  3,640
  3,824
  4,017
  4,220
  4,432
  4,655
  4,889
  5,135
  5,393
  5,664
  5,948
  6,247
  6,560
  6,889
Total equity, $m
  1,241
  1,294
  1,362
  1,433
  1,508
  1,586
  1,668
  1,755
  1,845
  1,939
  2,039
  2,143
  2,252
  2,366
  2,486
  2,613
  2,745
  2,884
  3,029
  3,182
  3,342
  3,511
  3,687
  3,873
  4,068
  4,272
  4,486
  4,712
  4,948
  5,196
  5,457
Total liabilities and equity, $m
  2,793
  2,927
  3,081
  3,242
  3,412
  3,589
  3,774
  3,970
  4,174
  4,387
  4,613
  4,848
  5,095
  5,353
  5,625
  5,911
  6,210
  6,524
  6,853
  7,199
  7,562
  7,943
  8,342
  8,762
  9,203
  9,665
  10,150
  10,660
  11,195
  11,756
  12,346
Debt-to-equity ratio
  1.085
  1.100
  1.110
  1.120
  1.130
  1.130
  1.140
  1.150
  1.150
  1.160
  1.160
  1.170
  1.170
  1.180
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  121
  48
  54
  61
  68
  76
  84
  93
  102
  112
  122
  133
  145
  157
  170
  184
  199
  214
  231
  248
  266
  286
  306
  328
  351
  375
  401
  428
  457
  487
  519
Depreciation, amort., depletion, $m
  124
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  216
  227
  239
  251
  263
  277
  291
  305
  321
  337
  354
  372
  390
  410
  431
  452
  475
  499
  524
  550
Funds from operations, $m
  161
  178
  191
  205
  220
  236
  252
  270
  288
  307
  328
  349
  372
  396
  421
  447
  475
  505
  536
  569
  603
  640
  678
  719
  761
  806
  853
  903
  956
  1,011
  1,069
Change in working capital, $m
  -12
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  173
  178
  192
  206
  221
  236
  253
  270
  289
  308
  329
  350
  373
  397
  422
  448
  476
  506
  537
  570
  605
  641
  680
  720
  763
  808
  855
  905
  958
  1,013
  1,071
Maintenance CAPEX, $m
  0
  -124
  -130
  -137
  -144
  -152
  -160
  -168
  -177
  -186
  -195
  -205
  -216
  -227
  -239
  -251
  -263
  -277
  -291
  -305
  -321
  -337
  -354
  -372
  -390
  -410
  -431
  -452
  -475
  -499
  -524
New CAPEX, $m
  -287
  -134
  -140
  -147
  -154
  -161
  -169
  -177
  -186
  -195
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -285
  -299
  -314
  -330
  -346
  -363
  -381
  -400
  -420
  -441
  -463
  -486
  -510
  -536
Cash from investing activities, $m
  -111
  -258
  -270
  -284
  -298
  -313
  -329
  -345
  -363
  -381
  -399
  -419
  -440
  -462
  -486
  -510
  -535
  -562
  -590
  -619
  -651
  -683
  -717
  -753
  -790
  -830
  -872
  -915
  -961
  -1,009
  -1,060
Free cash flow, $m
  62
  -79
  -79
  -78
  -77
  -77
  -76
  -75
  -74
  -72
  -71
  -69
  -68
  -66
  -64
  -61
  -59
  -56
  -53
  -50
  -46
  -42
  -38
  -33
  -28
  -23
  -17
  -10
  -4
  4
  12
Issuance/(repayment) of debt, $m
  -93
  81
  86
  90
  94
  99
  104
  109
  114
  119
  125
  131
  138
  145
  152
  159
  167
  175
  184
  193
  202
  213
  223
  234
  246
  258
  271
  284
  298
  313
  329
Issuance/(repurchase) of shares, $m
  120
  15
  14
  10
  7
  2
  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  
  27
  96
  100
  100
  101
  101
  104
  109
  114
  119
  125
  131
  138
  145
  152
  159
  167
  175
  184
  193
  202
  213
  223
  234
  246
  258
  271
  284
  298
  313
  329
Total cash flow (excl. dividends), $m
  89
  17
  21
  22
  24
  25
  28
  34
  40
  47
  54
  62
  70
  79
  88
  98
  108
  119
  131
  143
  157
  171
  185
  201
  218
  235
  254
  274
  295
  317
  341
Retained Cash Flow (-), $m
  -168
  -63
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -115
  -120
  -126
  -132
  -139
  -146
  -153
  -160
  -168
  -177
  -185
  -195
  -204
  -215
  -225
  -236
  -248
  -261
Prev. year cash balance distribution, $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
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
 
  -36
  -47
  -49
  -51
  -54
  -54
  -52
  -50
  -48
  -45
  -42
  -39
  -36
  -32
  -28
  -24
  -20
  -15
  -9
  -4
  2
  9
  16
  23
  31
  40
  49
  59
  69
  80
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  -33
  -39
  -37
  -35
  -32
  -29
  -24
  -20
  -16
  -13
  -10
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.6
  99.2
  98.9
  98.8
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7

First Industrial Realty Trust, Inc. is a real estate investment trust (REIT). The Trust is a self-administered real estate company, which owns, manages, acquires, sells, develops and redevelops industrial real estate. As of December 31, 2016, the Company's in-service portfolio consisted of 215 light industrial properties, 53 research and development (R&D)/flex properties, 167 bulk warehouse properties and 100 regional warehouse properties containing an aggregate of approximately 62.2 million square feet of gross leasable area (GLA) located in 23 states. The Company's in-service portfolio includes all properties that have reached stabilized occupancy, developed and redeveloped properties and acquired properties that are occupied at acquisition or one year from the acquisition date. The Company's operations are conducted primarily through the First Industrial, L.P. (the Operating Partnership), of which the Company is the sole general partner.

FINANCIAL RATIOS  of  First Industrial Realty Trust (FR)

Valuation Ratios
P/E Ratio 29.2
Price to Sales 9.3
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 20.4
Price to Free Cash Flow -31
Growth Rates
Sales Growth Rate 3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.7%
Cap. Spend. - 3 Yr. Gr. Rate 8.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 108.5%
Total Debt to Equity 108.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 71.2%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 83.3%
EBITDA Margin - 3 Yr. Avg. 72.6%
Operating Margin 32%
Oper. Margin - 3 Yr. Avg. 29.9%
Pre-Tax Margin 33.6%
Pre-Tax Margin - 3 Yr. Avg. 20.4%
Net Profit Margin 32%
Net Profit Margin - 3 Yr. Avg. 22.1%
Effective Tax Rate 0.8%
Eff/ Tax Rate - 3 Yr. Avg. 0.3%
Payout Ratio 68.6%

FR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FR stock intrinsic value calculation we used $378 million for the last fiscal year's total revenue generated by First Industrial Realty Trust. The default revenue input number comes from 2016 income statement of First Industrial Realty 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 FR stock valuation model: a) initial revenue growth rate of 5.3% 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 8.7%, whose default value for FR is calculated based on our internal credit rating of First Industrial Realty 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 First Industrial Realty 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 FR stock the variable cost ratio is equal to 14%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $210 million in the base year in the intrinsic value calculation for FR 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 First Industrial Realty Trust.

Corporate tax rate of 27% is the nominal tax rate for First Industrial Realty 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 FR 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 FR are equal to 668.3%.

Life of production assets of 20.4 years is the average useful life of capital assets used in First Industrial Realty 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 FR is equal to -2.6%. 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 - $1241 million for First Industrial Realty 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 119.797 million for First Industrial Realty 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 First Industrial Realty Trust at the current share price and the inputted number of shares is $3.6 billion.

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COMPANY NEWS

▶ 7 REIT Payouts Getting Set To Grow In February   [Jan-14-18 09:07AM  Forbes]
▶ Stocks Generating Improved Relative Strength: First Industrial Realty Trust   [Dec-08-17 03:00AM  Investor's Business Daily]
▶ First Industrial Realty Trust reports 3Q results   [Oct-25-17 06:47PM  Associated Press]
▶ [$$] How to Profit from the Rise of the Drones   [Sep-12-17 11:11AM  Barrons.com]
▶ First Industrial Realty Trust Getting Closer To Key Technical Measure   [Sep-08-17 03:00AM  Investor's Business Daily]
▶ First Industrial Realty Trust reports 2Q results   [12:33AM  Associated Press]
▶ First Industrial Realty Trust reports 1Q results   [Apr-25-17 06:01PM  Associated Press]
▶ First Industrial Realty Trust reports 4Q results   [Feb-22-17 07:54PM  Associated Press]
Financial statements of FR
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