Intrinsic value of Getty Realty - GTY

Previous Close

$28.31

  Intrinsic Value

$6.55

stock screener

  Rating & Target

str. sell

-77%

Previous close

$28.31

 
Intrinsic value

$6.55

 
Up/down potential

-77%

 
Rating

str. sell

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

We calculate the intrinsic value of GTY 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 1.0

 

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, %
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  125
  130
  136
  142
  148
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  271
  284
  298
  312
  328
  344
  361
  379
  397
  417
  438
  459
  482
Variable operating expenses, $m
  73
  75
  78
  82
  85
  89
  92
  96
  101
  105
  103
  108
  113
  119
  125
  131
  137
  144
  151
  158
  166
  174
  182
  191
  201
  211
  221
  232
  244
  256
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
  73
  75
  78
  82
  85
  89
  92
  96
  101
  105
  103
  108
  113
  119
  125
  131
  137
  144
  151
  158
  166
  174
  182
  191
  201
  211
  221
  232
  244
  256
Operating income, $m
  52
  55
  58
  60
  63
  67
  70
  73
  77
  81
  91
  96
  100
  105
  110
  116
  121
  127
  133
  140
  147
  154
  161
  169
  178
  187
  196
  205
  216
  226
EBITDA, $m
  167
  174
  181
  190
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  313
  328
  344
  361
  379
  397
  417
  437
  459
  481
  505
  530
  556
  584
  613
  643
Interest expense (income), $m
  16
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
Earnings before tax, $m
  35
  37
  40
  43
  46
  49
  52
  56
  60
  63
  74
  78
  83
  88
  93
  98
  104
  110
  116
  122
  129
  136
  144
  152
  160
  169
  178
  188
  198
  209
Tax expense, $m
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  20
  21
  22
  24
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
Net income, $m
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  54
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137
  145
  152

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
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -162
  -171
  -179
  -188
  -197
  -207
Adjusted assets (=assets-cash), $m
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -162
  -171
  -179
  -188
  -197
  -207
Revenue / Adjusted assets
  -2.315
  -2.321
  -2.345
  -2.328
  -2.313
  -2.313
  -2.314
  -2.329
  -2.342
  -2.325
  -2.321
  -2.318
  -2.326
  -2.333
  -2.327
  -2.321
  -2.324
  -2.336
  -2.328
  -2.328
  -2.328
  -2.326
  -2.324
  -2.329
  -2.340
  -2.322
  -2.330
  -2.330
  -2.330
  -2.329
Average production assets, $m
  1,081
  1,127
  1,176
  1,228
  1,283
  1,341
  1,403
  1,467
  1,536
  1,608
  1,683
  1,763
  1,848
  1,936
  2,030
  2,128
  2,231
  2,339
  2,454
  2,574
  2,700
  2,832
  2,972
  3,118
  3,272
  3,434
  3,604
  3,782
  3,970
  4,167
Working capital, $m
  -540
  -563
  -588
  -614
  -641
  -670
  -701
  -733
  -767
  -803
  -841
  -881
  -923
  -968
  -1,014
  -1,063
  -1,115
  -1,169
  -1,226
  -1,286
  -1,349
  -1,416
  -1,485
  -1,558
  -1,635
  -1,716
  -1,801
  -1,890
  -1,984
  -2,083
Total debt, $m
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
  122
Total liabilities, $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 equity, $m
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -162
  -171
  -179
  -188
  -197
  -207
Total liabilities and equity, $m
  -54
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -155
  -162
  -171
  -179
  -188
  -197
  -207
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
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  54
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137
  145
  152
Depreciation, amort., depletion, $m
  114
  119
  124
  129
  135
  140
  147
  153
  160
  167
  168
  176
  185
  194
  203
  213
  223
  234
  245
  257
  270
  283
  297
  312
  327
  343
  360
  378
  397
  417
Funds from operations, $m
  140
  146
  153
  160
  168
  176
  185
  194
  203
  213
  222
  233
  245
  258
  271
  284
  299
  314
  330
  347
  364
  383
  402
  423
  444
  467
  490
  515
  542
  569
Change in working capital, $m
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -94
  -98
Cash from operations, $m
  162
  169
  178
  186
  196
  205
  215
  226
  237
  249
  260
  273
  287
  302
  317
  333
  350
  368
  387
  407
  427
  449
  472
  496
  521
  548
  575
  605
  635
  668
Maintenance CAPEX, $m
  -104
  -108
  -113
  -118
  -123
  -128
  -134
  -140
  -147
  -154
  -161
  -168
  -176
  -185
  -194
  -203
  -213
  -223
  -234
  -245
  -257
  -270
  -283
  -297
  -312
  -327
  -343
  -360
  -378
  -397
New CAPEX, $m
  -42
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
  -109
  -114
  -120
  -126
  -133
  -139
  -146
  -154
  -162
  -170
  -179
  -188
  -197
Cash from investing activities, $m
  -146
  -154
  -162
  -170
  -178
  -186
  -195
  -205
  -215
  -226
  -237
  -248
  -260
  -274
  -287
  -301
  -316
  -332
  -348
  -365
  -383
  -403
  -422
  -443
  -466
  -489
  -513
  -539
  -566
  -594
Free cash flow, $m
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  24
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  59
  62
  66
  70
  74
Issuance/(repayment) of debt, $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
Issuance/(repurchase) of shares, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
Cash from financing (excl. dividends), $m  
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
Total cash flow (excl. dividends), $m
  13
  13
  13
  14
  15
  16
  17
  18
  19
  20
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
Retained Cash Flow (-), $m
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
Prev. year cash balance distribution, $m
  52
  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
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
Cash available for distribution, $m
  67
  15
  16
  17
  18
  19
  20
  21
  22
  24
  24
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  59
  62
  66
  70
  74
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  63
  13
  13
  13
  13
  12
  12
  12
  11
  10
  9
  8
  8
  7
  6
  6
  5
  4
  4
  3
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Getty Realty Corp. is a real estate investment trust (REIT). The Company specializes in the ownership, leasing and financing of convenience store and gasoline station properties. As of June 30, 2017, the Company's 825 properties were located in 26 states across the United States and Washington, District of Columbia. Its properties are operated under a range of brands, including 76, Aloha, BP, Citgo, Conoco, Exxon, Getty, Mobil, RaceTrac, Shell and Valero. The Company owns the Getty name in connection with its real estate and the petroleum marketing business in the United States. As of June 30, 2017, the Company had owned 738 properties and leased 87 properties from third-party landlords. Its typical property is used as a convenience store and gasoline station. Its properties are concentrated in the Northeast and Mid-Atlantic regions.

FINANCIAL RATIOS  of  Getty Realty (GTY)

Valuation Ratios
P/E Ratio 25.6
Price to Sales 8.5
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 26.3
Price to Free Cash Flow 33.6
Growth Rates
Sales Growth Rate 3.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -96.4%
Cap. Spend. - 3 Yr. Gr. Rate -34.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 69.4%
Total Debt to Equity 69.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 6.1%
Ret/ On Assets - 3 Yr. Avg. 5.7%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 78.3%
Gross Margin - 3 Yr. Avg. 74.4%
EBITDA Margin 67%
EBITDA Margin - 3 Yr. Avg. 56.7%
Operating Margin 43.5%
Oper. Margin - 3 Yr. Avg. 34.7%
Pre-Tax Margin 36.5%
Pre-Tax Margin - 3 Yr. Avg. 30.9%
Net Profit Margin 33%
Net Profit Margin - 3 Yr. Avg. 29.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 94.7%

GTY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GTY stock intrinsic value calculation we used $120 million for the last fiscal year's total revenue generated by Getty Realty. The default revenue input number comes from 2017 income statement of Getty Realty. 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 GTY stock valuation model: a) initial revenue growth rate of 4.2% 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 5.6%, whose default value for GTY is calculated based on our internal credit rating of Getty Realty, 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 Getty Realty.
    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 GTY stock the variable cost ratio is equal to 58.3%.

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 GTY 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 14.4% for Getty Realty.

Corporate tax rate of 27% is the nominal tax rate for Getty Realty. 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 GTY stock is equal to 1.1%.

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 GTY are equal to 864.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Getty Realty 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 GTY is equal to -432%. 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 Getty Realty - 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 37 million for Getty Realty 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 Getty Realty at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
SUN Sunoco 25.80 45.44  str.buy
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ADC Agree Realty 53.49 331.24  str.buy
O Realty Income 55.49 290.96  str.buy
WPG Washington Pri 7.69 2.06  str.sell
BFS Saul Centers 53.58 777.86  str.buy
KRG Kite Realty Gr 16.63 52.44  str.buy

COMPANY NEWS

▶ At US$027.64, Is It Time To Buy Getty Realty Corp (NYSE:GTY)?   [Jun-26-18 09:19AM  Simply Wall St.]
▶ Getty Realty: 1Q Earnings Snapshot   [May-09-18 05:14AM  Associated Press]
▶ Every Retail REIT Is Toast -- Except For These 3   [Apr-19-18 08:36AM  Forbes]
▶ Getty Realty Corp. Acquires 30 Properties for $52 Million   [Apr-17-18 04:34PM  Business Wire]
▶ Is Getty Realty Corp (NYSE:GTY) An Attractive Dividend Stock?   [Apr-03-18 08:47PM  Simply Wall St.]
▶ 3 REIT Winners That Provided Some Stability   [Mar-28-18 11:00AM  TheStreet.com]
▶ Getty Realty reports 4Q results   [Feb-28-18 05:05PM  Associated Press]
▶ Getty Realty Corp. Announces 2017 Dividend Tax Treatment   [Jan-18-18 04:15PM  Business Wire]
▶ Getty Realty Corp. to Host Earnings Call   [Oct-26-17 06:45AM  ACCESSWIRE]
▶ Getty Realty reports 3Q results   [Oct-25-17 06:11PM  Associated Press]
▶ 6 Stocks Trading Below Peter Lynch Value   [03:12PM  GuruFocus.com]
▶ 5 Strong Buy Stocks a Better Bet Than Bitcoin   [Aug-22-17 01:33PM  Zacks]
▶ Getty Realty reports 2Q results   [12:13AM  Associated Press]
▶ Getty Realty Corp. Announces Second Quarter 2017 Results   [Jul-26-17 04:15PM  Business Wire]
▶ ETFs with exposure to Getty Realty Corp. : May 23, 2017   [May-23-17 12:46PM  Capital Cube]
▶ Getty Realty reports 1Q results   [May-04-17 07:17PM  Associated Press]
▶ New Strong Buy Stocks for May 3rd   [May-03-17 09:31AM  Zacks]
▶ New Strong Buy Stocks for April 18th   [Apr-18-17 10:35AM  Zacks]
▶ 4 Eclectic Names Where I Combine Dividends With Value   [Mar-29-17 11:00AM  TheStreet.com]
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