Intrinsic value of HFF, Inc. - HF

Previous Close

$47.69

  Intrinsic Value

$82.39

stock screener

  Rating & Target

str. buy

+73%

Previous close

$47.69

 
Intrinsic value

$82.39

 
Up/down potential

+73%

 
Rating

str. buy

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

We calculate the intrinsic value of HF 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 1.9

 

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, %
  16.20
  15.08
  14.07
  13.16
  12.35
  11.61
  10.95
  10.36
  9.82
  9.34
  8.91
  8.51
  8.16
  7.85
  7.56
  7.31
  7.08
  6.87
  6.68
  6.51
  6.36
  6.23
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.59
  5.53
Revenue, $m
  769
  885
  1,010
  1,143
  1,284
  1,433
  1,590
  1,755
  1,927
  2,107
  2,294
  2,490
  2,693
  2,904
  3,124
  3,352
  3,589
  3,836
  4,092
  4,359
  4,636
  4,925
  5,225
  5,538
  5,865
  6,205
  6,560
  6,931
  7,318
  7,723
Variable operating expenses, $m
  617
  709
  808
  913
  1,025
  1,143
  1,267
  1,397
  1,534
  1,676
  1,816
  1,971
  2,132
  2,299
  2,473
  2,654
  2,841
  3,037
  3,240
  3,451
  3,670
  3,898
  4,136
  4,384
  4,643
  4,912
  5,193
  5,487
  5,793
  6,114
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
  617
  709
  808
  913
  1,025
  1,143
  1,267
  1,397
  1,534
  1,676
  1,816
  1,971
  2,132
  2,299
  2,473
  2,654
  2,841
  3,037
  3,240
  3,451
  3,670
  3,898
  4,136
  4,384
  4,643
  4,912
  5,193
  5,487
  5,793
  6,114
Operating income, $m
  152
  176
  202
  230
  259
  290
  323
  357
  393
  431
  478
  519
  561
  605
  651
  699
  748
  799
  853
  908
  966
  1,026
  1,089
  1,154
  1,222
  1,293
  1,367
  1,444
  1,525
  1,609
EBITDA, $m
  173
  199
  227
  257
  289
  322
  358
  395
  434
  474
  516
  560
  606
  653
  703
  754
  808
  863
  921
  981
  1,043
  1,108
  1,176
  1,246
  1,320
  1,396
  1,476
  1,559
  1,647
  1,738
Interest expense (income), $m
  9
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  97
  102
  107
Earnings before tax, $m
  132
  155
  180
  206
  233
  263
  293
  326
  359
  395
  439
  478
  517
  559
  602
  647
  693
  741
  791
  844
  898
  954
  1,013
  1,074
  1,138
  1,205
  1,275
  1,347
  1,423
  1,502
Tax expense, $m
  36
  42
  48
  56
  63
  71
  79
  88
  97
  107
  119
  129
  140
  151
  162
  175
  187
  200
  214
  228
  242
  258
  274
  290
  307
  325
  344
  364
  384
  406
Net income, $m
  97
  113
  131
  150
  170
  192
  214
  238
  262
  288
  321
  349
  378
  408
  439
  472
  506
  541
  578
  616
  655
  697
  740
  784
  831
  880
  930
  983
  1,039
  1,097

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
  349
  402
  459
  519
  583
  651
  722
  797
  875
  957
  1,042
  1,131
  1,224
  1,320
  1,419
  1,523
  1,631
  1,743
  1,859
  1,980
  2,106
  2,237
  2,374
  2,516
  2,665
  2,819
  2,981
  3,149
  3,325
  3,509
Adjusted assets (=assets-cash), $m
  349
  402
  459
  519
  583
  651
  722
  797
  875
  957
  1,042
  1,131
  1,224
  1,320
  1,419
  1,523
  1,631
  1,743
  1,859
  1,980
  2,106
  2,237
  2,374
  2,516
  2,665
  2,819
  2,981
  3,149
  3,325
  3,509
Revenue / Adjusted assets
  2.203
  2.201
  2.200
  2.202
  2.202
  2.201
  2.202
  2.202
  2.202
  2.202
  2.202
  2.202
  2.200
  2.200
  2.202
  2.201
  2.200
  2.201
  2.201
  2.202
  2.201
  2.202
  2.201
  2.201
  2.201
  2.201
  2.201
  2.201
  2.201
  2.201
Average production assets, $m
  64
  73
  84
  95
  107
  119
  132
  146
  160
  175
  190
  207
  224
  241
  259
  278
  298
  318
  340
  362
  385
  409
  434
  460
  487
  515
  545
  575
  607
  641
Working capital, $m
  -92
  -106
  -121
  -137
  -154
  -172
  -191
  -211
  -231
  -253
  -275
  -299
  -323
  -349
  -375
  -402
  -431
  -460
  -491
  -523
  -556
  -591
  -627
  -665
  -704
  -745
  -787
  -832
  -878
  -927
Total debt, $m
  377
  405
  434
  465
  498
  533
  570
  608
  649
  691
  735
  781
  828
  878
  930
  983
  1,039
  1,096
  1,157
  1,219
  1,284
  1,352
  1,422
  1,496
  1,572
  1,652
  1,735
  1,822
  1,913
  2,008
Total liabilities, $m
  180
  208
  237
  268
  301
  336
  373
  411
  452
  494
  538
  584
  631
  681
  732
  786
  842
  899
  959
  1,022
  1,087
  1,155
  1,225
  1,298
  1,375
  1,455
  1,538
  1,625
  1,716
  1,811
Total equity, $m
  169
  195
  222
  251
  282
  315
  350
  386
  424
  463
  505
  548
  592
  639
  687
  737
  789
  844
  900
  959
  1,019
  1,083
  1,149
  1,218
  1,290
  1,365
  1,443
  1,524
  1,609
  1,698
Total liabilities and equity, $m
  349
  403
  459
  519
  583
  651
  723
  797
  876
  957
  1,043
  1,132
  1,223
  1,320
  1,419
  1,523
  1,631
  1,743
  1,859
  1,981
  2,106
  2,238
  2,374
  2,516
  2,665
  2,820
  2,981
  3,149
  3,325
  3,509
Debt-to-equity ratio
  2.230
  2.080
  1.950
  1.850
  1.760
  1.690
  1.630
  1.580
  1.530
  1.490
  1.460
  1.430
  1.400
  1.370
  1.350
  1.330
  1.320
  1.300
  1.290
  1.270
  1.260
  1.250
  1.240
  1.230
  1.220
  1.210
  1.200
  1.200
  1.190
  1.180
Adjusted equity ratio
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  97
  113
  131
  150
  170
  192
  214
  238
  262
  288
  321
  349
  378
  408
  439
  472
  506
  541
  578
  616
  655
  697
  740
  784
  831
  880
  930
  983
  1,039
  1,097
Depreciation, amort., depletion, $m
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  38
  41
  45
  48
  52
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  121
  128
Funds from operations, $m
  118
  136
  156
  177
  200
  224
  249
  275
  302
  331
  359
  390
  422
  456
  491
  528
  565
  605
  646
  688
  732
  778
  826
  876
  928
  983
  1,039
  1,099
  1,160
  1,225
Change in working capital, $m
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -49
Cash from operations, $m
  130
  150
  171
  193
  217
  242
  268
  295
  323
  353
  381
  413
  447
  482
  518
  555
  594
  634
  676
  720
  766
  813
  862
  914
  968
  1,024
  1,082
  1,143
  1,207
  1,273
Maintenance CAPEX, $m
  -11
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -45
  -48
  -52
  -56
  -60
  -64
  -68
  -72
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
New CAPEX, $m
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
Cash from investing activities, $m
  -20
  -23
  -25
  -28
  -31
  -33
  -37
  -40
  -43
  -47
  -51
  -54
  -58
  -63
  -66
  -71
  -76
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
  -125
  -132
  -140
  -147
  -155
Free cash flow, $m
  111
  128
  146
  165
  186
  208
  231
  255
  280
  306
  331
  359
  389
  419
  451
  484
  519
  554
  591
  630
  670
  712
  756
  801
  849
  898
  949
  1,003
  1,060
  1,118
Issuance/(repayment) of debt, $m
  25
  27
  29
  31
  33
  35
  37
  39
  40
  42
  44
  46
  48
  50
  51
  54
  56
  58
  60
  62
  65
  68
  70
  73
  77
  80
  83
  87
  91
  95
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $m  
  25
  27
  29
  31
  33
  35
  37
  39
  40
  42
  44
  46
  48
  50
  51
  54
  56
  58
  60
  62
  65
  68
  70
  73
  77
  80
  83
  87
  91
  95
Total cash flow (excl. dividends), $m
  136
  155
  175
  197
  219
  243
  267
  293
  320
  348
  375
  405
  436
  469
  503
  538
  574
  612
  652
  693
  735
  780
  826
  875
  925
  978
  1,033
  1,090
  1,150
  1,213
Retained Cash Flow (-), $m
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -85
  -89
Prev. year cash balance distribution, $m
  205
  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
  317
  129
  148
  167
  188
  210
  233
  257
  282
  308
  334
  362
  392
  422
  454
  488
  522
  558
  595
  634
  674
  716
  760
  806
  853
  903
  955
  1,009
  1,065
  1,124
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
  304
  118
  129
  138
  146
  152
  157
  161
  162
  162
  158
  154
  149
  142
  133
  124
  114
  103
  92
  81
  70
  59
  50
  41
  33
  26
  20
  16
  12
  8
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

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

FINANCIAL RATIOS  of  HFF, Inc. (HF)

Valuation Ratios
P/E Ratio 23.6
Price to Sales 3.5
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 23
Price to Free Cash Flow 24.5
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.7%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 0.4%
Total Debt to Equity 123.2%
Interest Coverage 15
Management Effectiveness
Return On Assets 11.3%
Ret/ On Assets - 3 Yr. Avg. 11.9%
Return On Total Capital 14.5%
Ret/ On T. Cap. - 3 Yr. Avg. 17.3%
Return On Equity 34.1%
Return On Equity - 3 Yr. Avg. 36.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 43.7%
Gross Margin - 3 Yr. Avg. 43.6%
EBITDA Margin 28.8%
EBITDA Margin - 3 Yr. Avg. 29%
Operating Margin 18.4%
Oper. Margin - 3 Yr. Avg. 19.9%
Pre-Tax Margin 24.8%
Pre-Tax Margin - 3 Yr. Avg. 25.8%
Net Profit Margin 14.9%
Net Profit Margin - 3 Yr. Avg. 15.3%
Effective Tax Rate 39.8%
Eff/ Tax Rate - 3 Yr. Avg. 40.7%
Payout Ratio 88.3%

HF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HF stock intrinsic value calculation we used $662 million for the last fiscal year's total revenue generated by HFF, Inc.. The default revenue input number comes from 0001 income statement of HFF, 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 HF stock valuation model: a) initial revenue growth rate of 16.2% 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 4.3%, whose default value for HF is calculated based on our internal credit rating of HFF, 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 HFF, 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 HF stock the variable cost ratio is equal to 80.4%.

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 HF 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 5.6% for HFF, Inc..

Corporate tax rate of 27% is the nominal tax rate for HFF, 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 HF 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 HF are equal to 8.3%.

Life of production assets of 3.9 years is the average useful life of capital assets used in HFF, 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 HF is equal to -12%. 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 - $350.546 million for HFF, 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 39.224 million for HFF, 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 HFF, Inc. at the current share price and the inputted number of shares is $1.9 billion.

RELATED COMPANIES Price Int.Val. Rating
MMI Marcus & Milli 42.39 67.74  str.buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.