Intrinsic value of Griffin Industrial Realty, Inc. - GRIF

Previous Close

$37.37

  Intrinsic Value

$5.13

stock screener

  Rating & Target

str. sell

-86%

Previous close

$37.37

 
Intrinsic value

$5.13

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of GRIF 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 0.2

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  35
  35
  36
  37
  39
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
  112
Variable operating expenses, $m
  8
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  28
  29
  30
  31
  31
  32
  33
  34
  34
  36
  36
  38
  39
  40
  41
  42
  43
  45
  46
  47
  49
  50
  52
  54
  55
  57
  59
  61
  63
  64
Operating income, $m
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  23
  24
  26
  28
  31
  33
  35
  38
  41
  44
  47
EBITDA, $m
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  23
  24
  26
  28
  31
  33
  35
  38
  41
  44
  47
Interest expense (income), $m
  5
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
Earnings before tax, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  18
  20
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
Net income, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15

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
  267
  273
  280
  288
  297
  306
  317
  328
  340
  353
  367
  382
  398
  415
  432
  451
  471
  493
  515
  539
  564
  590
  618
  647
  678
  710
  744
  780
  818
  858
Adjusted assets (=assets-cash), $m
  267
  273
  280
  288
  297
  306
  317
  328
  340
  353
  367
  382
  398
  415
  432
  451
  471
  493
  515
  539
  564
  590
  618
  647
  678
  710
  744
  780
  818
  858
Revenue / Adjusted assets
  0.131
  0.128
  0.129
  0.128
  0.131
  0.131
  0.129
  0.131
  0.129
  0.130
  0.131
  0.131
  0.131
  0.130
  0.130
  0.131
  0.130
  0.130
  0.130
  0.130
  0.129
  0.131
  0.129
  0.130
  0.130
  0.130
  0.130
  0.129
  0.130
  0.131
Average production assets, $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
Working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
Total debt, $m
  148
  152
  157
  162
  167
  174
  180
  187
  195
  203
  212
  222
  232
  243
  254
  266
  279
  293
  307
  322
  338
  355
  372
  391
  411
  431
  453
  476
  500
  526
Total liabilities, $m
  170
  174
  179
  184
  189
  195
  202
  209
  217
  225
  234
  244
  254
  264
  276
  288
  301
  314
  329
  344
  360
  376
  394
  413
  432
  453
  475
  498
  522
  547
Total equity, $m
  97
  99
  101
  104
  107
  111
  115
  119
  123
  128
  133
  138
  144
  150
  157
  163
  171
  178
  186
  195
  204
  214
  224
  234
  245
  257
  269
  282
  296
  311
Total liabilities and equity, $m
  267
  273
  280
  288
  296
  306
  317
  328
  340
  353
  367
  382
  398
  414
  433
  451
  472
  492
  515
  539
  564
  590
  618
  647
  677
  710
  744
  780
  818
  858
Debt-to-equity ratio
  1.540
  1.540
  1.550
  1.550
  1.560
  1.570
  1.570
  1.580
  1.590
  1.590
  1.600
  1.610
  1.610
  1.620
  1.620
  1.630
  1.640
  1.640
  1.650
  1.650
  1.660
  1.660
  1.670
  1.670
  1.670
  1.680
  1.680
  1.690
  1.690
  1.690
Adjusted equity ratio
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
Depreciation, amort., depletion, $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
Funds from operations, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
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
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Issuance/(repurchase) of shares, $m
  3
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  3
  2
  2
  1
  0
  0
Cash from financing (excl. dividends), $m  
  6
  8
  8
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  18
  19
  20
  21
  21
  22
  23
  23
  24
  24
  24
  25
Total cash flow (excl. dividends), $m
  5
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
Retained Cash Flow (-), $m
  -3
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
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
  3
  3
  4
  5
  5
  6
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Discount rate, %
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.2
  96.2
  94.2
  92.1
  90.1
  88.1
  86.1
  84.3
  82.5
  80.9
  79.3
  77.9
  76.5
  75.2
  74.0
  72.9
  71.8
  70.9
  70.0
  69.3
  68.6
  68.0
  67.5
  67.0
  66.7
  66.4
  66.2
  66.1
  66.0
  66.0

Griffin Industrial Realty, Inc. is engaged in real estate business. The Company is principally engaged in developing, managing and leasing industrial/warehouse properties and office/flex properties. As of November 30, 2016, the Company owned 33 buildings comprising approximately 3,297,000 square feet that was 93% leased. As of November 30, 2016, approximately 87% of its owned square footage was industrial/warehouse space, with the balance principally office/flex space. As of November 30, 2016, approximately 96% of its industrial/warehouse space was leased and approximately 74% of its office/flex space was leased. As of November 30, 2016, in NE Tradeport, the Company held the rights to 795,000 square feet available for development under the State Traffic Certificate (STC), which was related to four approved building sites on approximately 70 acres and an approved addition to one of its existing buildings.

FINANCIAL RATIOS  of  Griffin Industrial Realty, Inc. (GRIF)

Valuation Ratios
P/E Ratio 188.7
Price to Sales 6.1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 27
Price to Free Cash Flow -15.7
Growth Rates
Sales Growth Rate 10.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -38.7%
Cap. Spend. - 3 Yr. Gr. Rate 3.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 120.9%
Total Debt to Equity 120.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 1.5%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. -0%
Return On Equity 1.1%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 71%
Gross Margin - 3 Yr. Avg. 68.5%
EBITDA Margin 48.4%
EBITDA Margin - 3 Yr. Avg. 45.5%
Operating Margin 19.4%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 3.2%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin 3.2%
Net Profit Margin - 3 Yr. Avg. -0.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 33.3%
Payout Ratio 200%

GRIF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GRIF stock intrinsic value calculation we used $34 million for the last fiscal year's total revenue generated by Griffin Industrial Realty, Inc.. The default revenue input number comes from 0001 income statement of Griffin Industrial Realty, Inc.. 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 GRIF stock valuation model: a) initial revenue growth rate of 2% 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 9.3%, whose default value for GRIF is calculated based on our internal credit rating of Griffin Industrial Realty, Inc., 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 Griffin Industrial Realty, Inc..
    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 GRIF stock the variable cost ratio is equal to 23.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 million in the base year in the intrinsic value calculation for GRIF 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 Griffin Industrial Realty, Inc..

Corporate tax rate of 27% is the nominal tax rate for Griffin Industrial Realty, Inc.. 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 GRIF 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 GRIF are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Griffin Industrial Realty, Inc. 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 GRIF is equal to 3.2%. 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 - $94.828 million for Griffin Industrial Realty, Inc. - 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 5.065 million for Griffin Industrial Realty, Inc. 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 Griffin Industrial Realty, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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