Intrinsic value of FRP Holdings - FRPH

Previous Close

$64.15

  Intrinsic Value

$6.10

stock screener

  Rating & Target

str. sell

-90%

Previous close

$64.15

 
Intrinsic value

$6.10

 
Up/down potential

-90%

 
Rating

str. sell

We calculate the intrinsic value of FRPH 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 0.6

 

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, %
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  50
  57
  64
  72
  81
  90
  99
  109
  119
  130
  141
  153
  165
  177
  190
  204
  218
  233
  248
  264
  280
  297
  315
  334
  353
  374
  395
  417
  440
  464
Variable operating expenses, $m
  28
  31
  36
  40
  45
  50
  55
  61
  66
  72
  78
  85
  92
  99
  106
  113
  121
  129
  138
  147
  156
  165
  175
  186
  196
  208
  219
  232
  245
  258
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
  28
  31
  36
  40
  45
  50
  55
  61
  66
  72
  78
  85
  92
  99
  106
  113
  121
  129
  138
  147
  156
  165
  175
  186
  196
  208
  219
  232
  245
  258
Operating income, $m
  22
  25
  29
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  103
  110
  117
  124
  132
  140
  148
  157
  166
  175
  185
  195
  206
EBITDA, $m
  59
  68
  77
  86
  96
  107
  118
  130
  142
  155
  168
  182
  197
  212
  227
  243
  260
  278
  296
  315
  335
  355
  376
  399
  422
  446
  471
  498
  525
  554
Interest expense (income), $m
  0
  6
  8
  9
  11
  13
  15
  17
  19
  21
  23
  25
  28
  30
  33
  36
  39
  42
  45
  48
  51
  55
  58
  62
  66
  70
  74
  79
  83
  88
  93
Earnings before tax, $m
  16
  17
  19
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  91
  96
  102
  107
  113
Tax expense, $m
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
Net income, $m
  11
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82

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
  481
  550
  623
  701
  784
  871
  962
  1,057
  1,157
  1,261
  1,370
  1,482
  1,600
  1,721
  1,848
  1,980
  2,116
  2,259
  2,406
  2,560
  2,720
  2,887
  3,061
  3,242
  3,430
  3,627
  3,833
  4,047
  4,272
  4,506
Adjusted assets (=assets-cash), $m
  481
  550
  623
  701
  784
  871
  962
  1,057
  1,157
  1,261
  1,370
  1,482
  1,600
  1,721
  1,848
  1,980
  2,116
  2,259
  2,406
  2,560
  2,720
  2,887
  3,061
  3,242
  3,430
  3,627
  3,833
  4,047
  4,272
  4,506
Revenue / Adjusted assets
  0.104
  0.104
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
Average production assets, $m
  372
  425
  482
  542
  606
  673
  743
  817
  894
  974
  1,058
  1,145
  1,236
  1,330
  1,428
  1,529
  1,635
  1,745
  1,859
  1,978
  2,101
  2,230
  2,364
  2,504
  2,650
  2,802
  2,961
  3,127
  3,300
  3,481
Working capital, $m
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
Total debt, $m
  145
  173
  204
  237
  271
  308
  346
  386
  427
  471
  516
  563
  612
  663
  716
  771
  828
  888
  949
  1,014
  1,081
  1,150
  1,223
  1,299
  1,377
  1,460
  1,546
  1,635
  1,729
  1,827
Total liabilities, $m
  201
  230
  261
  293
  328
  364
  402
  442
  484
  527
  572
  620
  669
  720
  772
  828
  885
  944
  1,006
  1,070
  1,137
  1,207
  1,279
  1,355
  1,434
  1,516
  1,602
  1,692
  1,785
  1,883
Total equity, $m
  280
  320
  363
  408
  456
  507
  560
  615
  673
  734
  797
  863
  931
  1,002
  1,076
  1,152
  1,232
  1,315
  1,401
  1,490
  1,583
  1,680
  1,781
  1,887
  1,996
  2,111
  2,231
  2,356
  2,486
  2,622
Total liabilities and equity, $m
  481
  550
  624
  701
  784
  871
  962
  1,057
  1,157
  1,261
  1,369
  1,483
  1,600
  1,722
  1,848
  1,980
  2,117
  2,259
  2,407
  2,560
  2,720
  2,887
  3,060
  3,242
  3,430
  3,627
  3,833
  4,048
  4,271
  4,505
Debt-to-equity ratio
  0.520
  0.540
  0.560
  0.580
  0.590
  0.610
  0.620
  0.630
  0.630
  0.640
  0.650
  0.650
  0.660
  0.660
  0.670
  0.670
  0.670
  0.680
  0.680
  0.680
  0.680
  0.680
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.700
  0.700
Adjusted equity ratio
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
Depreciation, amort., depletion, $m
  37
  42
  48
  54
  61
  67
  74
  82
  89
  97
  106
  115
  124
  133
  143
  153
  163
  174
  186
  198
  210
  223
  236
  250
  265
  280
  296
  313
  330
  348
Funds from operations, $m
  49
  55
  62
  70
  77
  86
  94
  103
  113
  123
  133
  144
  155
  166
  178
  191
  204
  217
  231
  246
  261
  277
  293
  310
  328
  347
  366
  387
  408
  430
Change in working capital, $m
  -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
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  49
  56
  63
  70
  78
  87
  95
  104
  114
  124
  134
  145
  156
  168
  180
  192
  205
  219
  233
  247
  263
  279
  295
  312
  330
  349
  369
  389
  410
  433
Maintenance CAPEX, $m
  -32
  -37
  -42
  -48
  -54
  -61
  -67
  -74
  -82
  -89
  -97
  -106
  -115
  -124
  -133
  -143
  -153
  -163
  -174
  -186
  -198
  -210
  -223
  -236
  -250
  -265
  -280
  -296
  -313
  -330
New CAPEX, $m
  -48
  -53
  -57
  -60
  -64
  -67
  -70
  -74
  -77
  -80
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -146
  -152
  -159
  -166
  -173
  -181
Cash from investing activities, $m
  -80
  -90
  -99
  -108
  -118
  -128
  -137
  -148
  -159
  -169
  -181
  -193
  -206
  -218
  -231
  -245
  -259
  -273
  -288
  -305
  -322
  -339
  -357
  -376
  -396
  -417
  -439
  -462
  -486
  -511
Free cash flow, $m
  -31
  -34
  -36
  -38
  -40
  -41
  -42
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -55
  -56
  -57
  -59
  -60
  -62
  -64
  -66
  -68
  -70
  -73
  -75
  -78
Issuance/(repayment) of debt, $m
  26
  29
  31
  33
  34
  36
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
Issuance/(repurchase) of shares, $m
  25
  27
  29
  30
  31
  32
  33
  34
  35
  35
  36
  36
  37
  38
  38
  39
  39
  40
  41
  41
  42
  43
  44
  45
  47
  48
  49
  51
  52
  54
Cash from financing (excl. dividends), $m  
  51
  56
  60
  63
  65
  68
  71
  74
  77
  78
  81
  83
  86
  89
  91
  94
  96
  99
  103
  105
  109
  113
  117
  121
  126
  130
  135
  141
  146
  152
Total cash flow (excl. dividends), $m
  20
  22
  23
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  38
  40
  41
  43
  45
  47
  48
  50
  53
  55
  57
  59
  62
  65
  68
  71
  74
Retained Cash Flow (-), $m
  -36
  -40
  -43
  -45
  -48
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -110
  -115
  -120
  -125
  -130
  -136
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
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
Cash available for distribution, $m
  -16
  -18
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
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
  -15
  -16
  -16
  -16
  -15
  -14
  -14
  -13
  -12
  -11
  -10
  -8
  -7
  -6
  -5
  -5
  -4
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.3
  92.8
  89.8
  87.0
  84.6
  82.4
  80.4
  78.6
  76.9
  75.4
  74.0
  72.8
  71.6
  70.5
  69.5
  68.6
  67.7
  66.9
  66.1
  65.4
  64.7
  64.0
  63.4
  62.8
  62.2
  61.6
  61.1
  60.5
  60.0
  59.5

FRP Holdings, Inc. is a holding company engaged in various real estate businesses. The Company conducts its business through its subsidiaries, FRP Maryland, Inc., FRP Development Corp. and Florida Rock Properties, Inc. The segments of the Company include leasing and management of warehouse and office building owned by the Company (the Asset Management Segment), leasing and management of mining royalty land owned by the Company (the Mining Royalty Lands Segment) and real property acquisition, entitlement, development and construction primarily for warehouse and office buildings (the Land Development and Construction Segment). The Company's Asset Management Segment owns leases and manages warehouse and office buildings. Its Mining Royalty Lands Segment owns several properties comprising approximately 15,000 acres under lease for mining rents or royalties. Its Land Development and Construction Segment owns and monitors the parcels of land that are in various stages of development.

FINANCIAL RATIOS  of  FRP Holdings (FRPH)

Valuation Ratios
P/E Ratio 317.9
Price to Sales 63.6
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 106
Price to Free Cash Flow 635.7
Growth Rates
Sales Growth Rate -73%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -82.1%
Cap. Spend. - 3 Yr. Gr. Rate -23.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 18.1%
Total Debt to Equity 20.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. 3.8%
Asset Turnover 0
Profitability Ratios
Gross Margin 60%
Gross Margin - 3 Yr. Avg. 59.8%
EBITDA Margin 50%
EBITDA Margin - 3 Yr. Avg. 62.7%
Operating Margin 40%
Oper. Margin - 3 Yr. Avg. 40.1%
Pre-Tax Margin 30%
Pre-Tax Margin - 3 Yr. Avg. 37.5%
Net Profit Margin 20%
Net Profit Margin - 3 Yr. Avg. 25.1%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

FRPH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FRPH stock intrinsic value calculation we used $43 million for the last fiscal year's total revenue generated by FRP Holdings. The default revenue input number comes from 2017 income statement of FRP 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 FRPH stock valuation model: a) initial revenue growth rate of 15.3% 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 6.5%, whose default value for FRPH is calculated based on our internal credit rating of FRP 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 FRP 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 FRPH stock the variable cost ratio is equal to 55.6%.

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 FRPH 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 FRP Holdings.

Corporate tax rate of 27% is the nominal tax rate for FRP 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 FRPH stock is equal to 1.7%.

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 FRPH are equal to 750%.

Life of production assets of 10 years is the average useful life of capital assets used in FRP 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 FRPH is equal to -10.1%. 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 - $244 million for FRP 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 10 million for FRP 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 FRP Holdings at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ FRP Holdings: 1Q Earnings Snapshot   [May-08-18 02:45PM  Associated Press]
▶ FRP Holdings Inc to Host Earnings Call   [09:15AM  ACCESSWIRE]
▶ FRP Holdings posts 2Q profit   [Aug-04-17 08:37PM  Associated Press]
▶ Patriot Transportation Is a Forgotten Spinoff   [Jul-18-17 02:00PM  GuruFocus.com]
▶ ETFs with exposure to FRP Holdings, Inc. : June 13, 2017   [Jun-13-17 12:31PM  Capital Cube]
▶ FRP Holdings posts 2Q profit   [May-02-17 11:56AM  Associated Press]
▶ How FRP Holdings Inc (FRPH) Stacks Up Against Its Peers   [Dec-19-16 06:00AM  at Insider Monkey]
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