Intrinsic value of Medical Properties Trust - MPW

Previous Close

$13.14

  Intrinsic Value

$2.21

stock screener

  Rating & Target

str. sell

-83%

  Value-price divergence*

-14%

Previous close

$13.14

 
Intrinsic value

$2.21

 
Up/down potential

-83%

 
Rating

str. sell

 
Value-price divergence*

-14%

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

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

We calculate the intrinsic value of MPW 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 2016), $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 4.8

 

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, %
  22.40
  32.50
  29.75
  27.28
  25.05
  23.04
  21.24
  19.61
  18.15
  16.84
  15.65
  14.59
  13.63
  12.77
  11.99
  11.29
  10.66
  10.10
  9.59
  9.13
  8.71
  8.34
  8.01
  7.71
  7.44
  7.19
  6.97
  6.78
  6.60
  6.44
  6.30
Revenue, $m
  541
  717
  930
  1,184
  1,480
  1,821
  2,208
  2,641
  3,121
  3,646
  4,217
  4,832
  5,491
  6,192
  6,934
  7,717
  8,540
  9,402
  10,304
  11,244
  12,224
  13,244
  14,305
  15,407
  16,553
  17,744
  18,981
  20,268
  21,605
  22,996
  24,444
Variable operating expenses, $m
 
  153
  198
  252
  315
  388
  470
  563
  665
  777
  898
  1,029
  1,170
  1,319
  1,477
  1,644
  1,819
  2,003
  2,195
  2,395
  2,604
  2,821
  3,047
  3,282
  3,526
  3,779
  4,043
  4,317
  4,602
  4,898
  5,207
Fixed operating expenses, $m
 
  89
  91
  94
  96
  98
  101
  103
  106
  109
  111
  114
  117
  120
  123
  126
  129
  132
  136
  139
  143
  146
  150
  154
  157
  161
  165
  169
  174
  178
  182
Total operating expenses, $m
  200
  242
  289
  346
  411
  486
  571
  666
  771
  886
  1,009
  1,143
  1,287
  1,439
  1,600
  1,770
  1,948
  2,135
  2,331
  2,534
  2,747
  2,967
  3,197
  3,436
  3,683
  3,940
  4,208
  4,486
  4,776
  5,076
  5,389
Operating income, $m
  342
  475
  641
  838
  1,069
  1,335
  1,637
  1,975
  2,350
  2,761
  3,207
  3,689
  4,204
  4,753
  5,334
  5,948
  6,592
  7,267
  7,973
  8,710
  9,478
  10,277
  11,108
  11,972
  12,870
  13,803
  14,773
  15,781
  16,830
  17,920
  19,055
EBITDA, $m
  440
  699
  931
  1,207
  1,531
  1,903
  2,326
  2,799
  3,324
  3,898
  4,523
  5,196
  5,917
  6,685
  7,497
  8,355
  9,256
  10,200
  11,187
  12,217
  13,291
  14,408
  15,570
  16,778
  18,033
  19,338
  20,694
  22,103
  23,569
  25,093
  26,680
Interest expense (income), $m
  139
  131
  178
  234
  302
  380
  470
  573
  687
  814
  953
  1,104
  1,267
  1,442
  1,627
  1,824
  2,031
  2,249
  2,477
  2,716
  2,965
  3,224
  3,494
  3,775
  4,067
  4,370
  4,685
  5,013
  5,353
  5,707
  6,075
Earnings before tax, $m
  219
  344
  463
  604
  767
  955
  1,167
  1,403
  1,663
  1,947
  2,254
  2,584
  2,937
  3,311
  3,707
  4,124
  4,561
  5,018
  5,496
  5,994
  6,513
  7,053
  7,614
  8,197
  8,803
  9,433
  10,088
  10,769
  11,476
  12,213
  12,979
Tax expense, $m
  -7
  93
  125
  163
  207
  258
  315
  379
  449
  526
  609
  698
  793
  894
  1,001
  1,113
  1,231
  1,355
  1,484
  1,618
  1,759
  1,904
  2,056
  2,213
  2,377
  2,547
  2,724
  2,908
  3,099
  3,297
  3,504
Net income, $m
  225
  251
  338
  441
  560
  697
  852
  1,024
  1,214
  1,421
  1,645
  1,887
  2,144
  2,417
  2,706
  3,010
  3,329
  3,663
  4,012
  4,376
  4,755
  5,149
  5,558
  5,984
  6,426
  6,886
  7,364
  7,861
  8,378
  8,915
  9,475

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  83
  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
  6,419
  8,433
  10,942
  13,927
  17,415
  21,428
  25,979
  31,074
  36,715
  42,897
  49,612
  56,850
  64,599
  72,846
  81,580
  90,792
  100,472
  110,615
  121,219
  132,283
  143,812
  155,810
  168,289
  181,261
  194,742
  208,751
  223,310
  238,443
  254,178
  270,546
  287,577
Adjusted assets (=assets-cash), $m
  6,336
  8,433
  10,942
  13,927
  17,415
  21,428
  25,979
  31,074
  36,715
  42,897
  49,612
  56,850
  64,599
  72,846
  81,580
  90,792
  100,472
  110,615
  121,219
  132,283
  143,812
  155,810
  168,289
  181,261
  194,742
  208,751
  223,310
  238,443
  254,178
  270,546
  287,577
Revenue / Adjusted assets
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
Average production assets, $m
  5,063
  6,708
  8,704
  11,078
  13,852
  17,044
  20,664
  24,717
  29,204
  34,122
  39,463
  45,220
  51,384
  57,944
  64,891
  72,218
  79,918
  87,987
  96,421
  105,222
  114,392
  123,936
  133,862
  144,181
  154,904
  166,047
  177,627
  189,665
  202,181
  215,200
  228,747
Working capital, $m
  0
  -110
  -142
  -181
  -226
  -279
  -338
  -404
  -477
  -558
  -645
  -739
  -840
  -947
  -1,061
  -1,181
  -1,307
  -1,439
  -1,576
  -1,720
  -1,870
  -2,026
  -2,189
  -2,357
  -2,533
  -2,715
  -2,904
  -3,101
  -3,306
  -3,518
  -3,740
Total debt, $m
  2,909
  3,955
  5,209
  6,701
  8,445
  10,452
  12,727
  15,275
  18,096
  21,187
  24,544
  28,163
  32,037
  36,161
  40,528
  45,134
  49,974
  55,046
  60,348
  65,880
  71,644
  77,643
  83,883
  90,369
  97,109
  104,114
  111,393
  118,960
  126,827
  135,011
  143,527
Total liabilities, $m
  3,170
  4,217
  5,471
  6,963
  8,707
  10,714
  12,989
  15,537
  18,358
  21,449
  24,806
  28,425
  32,299
  36,423
  40,790
  45,396
  50,236
  55,308
  60,610
  66,142
  71,906
  77,905
  84,145
  90,631
  97,371
  104,376
  111,655
  119,222
  127,089
  135,273
  143,789
Total equity, $m
  3,248
  4,217
  5,471
  6,963
  8,707
  10,714
  12,989
  15,537
  18,358
  21,449
  24,806
  28,425
  32,299
  36,423
  40,790
  45,396
  50,236
  55,308
  60,610
  66,142
  71,906
  77,905
  84,145
  90,631
  97,371
  104,376
  111,655
  119,222
  127,089
  135,273
  143,789
Total liabilities and equity, $m
  6,418
  8,434
  10,942
  13,926
  17,414
  21,428
  25,978
  31,074
  36,716
  42,898
  49,612
  56,850
  64,598
  72,846
  81,580
  90,792
  100,472
  110,616
  121,220
  132,284
  143,812
  155,810
  168,290
  181,262
  194,742
  208,752
  223,310
  238,444
  254,178
  270,546
  287,578
Debt-to-equity ratio
  0.896
  0.940
  0.950
  0.960
  0.970
  0.980
  0.980
  0.980
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  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
Adjusted equity ratio
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  225
  251
  338
  441
  560
  697
  852
  1,024
  1,214
  1,421
  1,645
  1,887
  2,144
  2,417
  2,706
  3,010
  3,329
  3,663
  4,012
  4,376
  4,755
  5,149
  5,558
  5,984
  6,426
  6,886
  7,364
  7,861
  8,378
  8,915
  9,475
Depreciation, amort., depletion, $m
  98
  224
  290
  369
  462
  568
  689
  824
  973
  1,137
  1,315
  1,507
  1,713
  1,931
  2,163
  2,407
  2,664
  2,933
  3,214
  3,507
  3,813
  4,131
  4,462
  4,806
  5,163
  5,535
  5,921
  6,322
  6,739
  7,173
  7,625
Funds from operations, $m
  225
  475
  628
  810
  1,022
  1,265
  1,540
  1,848
  2,187
  2,558
  2,961
  3,394
  3,857
  4,349
  4,869
  5,418
  5,993
  6,596
  7,226
  7,883
  8,568
  9,280
  10,020
  10,790
  11,590
  12,421
  13,285
  14,183
  15,117
  16,089
  17,100
Change in working capital, $m
  -40
  -27
  -33
  -39
  -45
  -52
  -59
  -66
  -73
  -80
  -87
  -94
  -101
  -107
  -114
  -120
  -126
  -132
  -138
  -144
  -150
  -156
  -162
  -169
  -175
  -182
  -189
  -197
  -205
  -213
  -221
Cash from operations, $m
  265
  502
  660
  849
  1,067
  1,317
  1,600
  1,914
  2,261
  2,639
  3,048
  3,488
  3,958
  4,456
  4,983
  5,537
  6,119
  6,728
  7,364
  8,027
  8,718
  9,436
  10,183
  10,959
  11,765
  12,603
  13,474
  14,380
  15,322
  16,302
  17,321
Maintenance CAPEX, $m
  0
  -169
  -224
  -290
  -369
  -462
  -568
  -689
  -824
  -973
  -1,137
  -1,315
  -1,507
  -1,713
  -1,931
  -2,163
  -2,407
  -2,664
  -2,933
  -3,214
  -3,507
  -3,813
  -4,131
  -4,462
  -4,806
  -5,163
  -5,535
  -5,921
  -6,322
  -6,739
  -7,173
New CAPEX, $m
  -1,854
  -1,646
  -1,996
  -2,374
  -2,775
  -3,192
  -3,620
  -4,053
  -4,487
  -4,917
  -5,341
  -5,757
  -6,163
  -6,560
  -6,948
  -7,327
  -7,700
  -8,068
  -8,435
  -8,801
  -9,170
  -9,544
  -9,926
  -10,318
  -10,723
  -11,143
  -11,580
  -12,037
  -12,516
  -13,019
  -13,547
Cash from investing activities, $m
  -927
  -1,815
  -2,220
  -2,664
  -3,144
  -3,654
  -4,188
  -4,742
  -5,311
  -5,890
  -6,478
  -7,072
  -7,670
  -8,273
  -8,879
  -9,490
  -10,107
  -10,732
  -11,368
  -12,015
  -12,677
  -13,357
  -14,057
  -14,780
  -15,529
  -16,306
  -17,115
  -17,958
  -18,838
  -19,758
  -20,720
Free cash flow, $m
  -662
  -1,313
  -1,559
  -1,815
  -2,077
  -2,336
  -2,588
  -2,828
  -3,050
  -3,252
  -3,431
  -3,585
  -3,713
  -3,817
  -3,896
  -3,953
  -3,988
  -4,004
  -4,003
  -3,988
  -3,960
  -3,921
  -3,875
  -3,822
  -3,764
  -3,703
  -3,641
  -3,578
  -3,517
  -3,457
  -3,399
Issuance/(repayment) of debt, $m
  -385
  1,046
  1,254
  1,492
  1,744
  2,006
  2,275
  2,548
  2,820
  3,091
  3,358
  3,619
  3,874
  4,124
  4,367
  4,606
  4,840
  5,072
  5,302
  5,532
  5,764
  5,999
  6,239
  6,486
  6,740
  7,004
  7,279
  7,567
  7,868
  8,184
  8,516
Issuance/(repurchase) of shares, $m
  1,174
  800
  917
  1,052
  1,184
  1,309
  1,424
  1,524
  1,607
  1,670
  1,712
  1,732
  1,730
  1,706
  1,661
  1,595
  1,511
  1,408
  1,290
  1,156
  1,010
  851
  681
  502
  314
  118
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  771
  1,846
  2,171
  2,544
  2,928
  3,315
  3,699
  4,072
  4,427
  4,761
  5,070
  5,351
  5,604
  5,830
  6,028
  6,201
  6,351
  6,480
  6,592
  6,688
  6,774
  6,850
  6,920
  6,988
  7,054
  7,122
  7,279
  7,567
  7,868
  8,184
  8,516
Total cash flow (excl. dividends), $m
  106
  533
  612
  728
  851
  979
  1,111
  1,244
  1,377
  1,509
  1,639
  1,767
  1,891
  2,013
  2,132
  2,248
  2,363
  2,476
  2,588
  2,701
  2,814
  2,929
  3,046
  3,166
  3,291
  3,419
  3,638
  3,988
  4,351
  4,727
  5,116
Retained Cash Flow (-), $m
  -1,146
  -1,052
  -1,254
  -1,492
  -1,744
  -2,006
  -2,275
  -2,548
  -2,820
  -3,091
  -3,358
  -3,619
  -3,874
  -4,124
  -4,367
  -4,606
  -4,840
  -5,072
  -5,302
  -5,532
  -5,764
  -5,999
  -6,239
  -6,486
  -6,740
  -7,004
  -7,279
  -7,567
  -7,868
  -8,184
  -8,516
Prev. year cash balance distribution, $m
 
  83
  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
 
  -435
  -642
  -764
  -893
  -1,027
  -1,165
  -1,304
  -1,444
  -1,582
  -1,718
  -1,852
  -1,983
  -2,111
  -2,235
  -2,357
  -2,477
  -2,596
  -2,714
  -2,831
  -2,950
  -3,071
  -3,193
  -3,320
  -3,450
  -3,585
  -3,641
  -3,578
  -3,517
  -3,457
  -3,399
Discount rate, %
 
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
 
  -401
  -542
  -586
  -616
  -632
  -632
  -618
  -591
  -552
  -505
  -452
  -396
  -340
  -285
  -235
  -189
  -148
  -114
  -86
  -63
  -45
  -31
  -21
  -14
  -9
  -5
  -3
  -2
  -1
  0
Current shareholders' claim on cash, %
  100
  85.4
  74.5
  66.0
  59.2
  53.8
  49.3
  45.7
  42.7
  40.3
  38.2
  36.5
  35.1
  33.9
  32.9
  32.0
  31.3
  30.7
  30.3
  29.9
  29.6
  29.3
  29.2
  29.0
  29.0
  28.9
  28.9
  28.9
  28.9
  28.9
  28.9

Medical Properties Trust, Inc. is a real estate investment trust (REIT). The Company focuses on investing in and owning net-leased healthcare facilities across the United States and selectively in foreign jurisdictions. The Company's segment is its investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in its tenants. The Company conducts its operations through MPT Operating Partnership, L.P. The Company acquires and develops healthcare facilities, and leases the facilities to healthcare operating companies under long-term net leases. The Company makes mortgage loans to healthcare operators collateralized by their real estate assets. As of February 24, 2017, the Company's portfolio consisted of 232 properties, including 215 facilities (of the 220 facilities that it owns) were leased to 30 tenants, five were under development, and the remaining assets were in the form of mortgage loans to four operators.

FINANCIAL RATIOS  of  Medical Properties Trust (MPW)

Valuation Ratios
P/E Ratio 18.7
Price to Sales 7.8
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 15.9
Price to Free Cash Flow -2.7
Growth Rates
Sales Growth Rate 22.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.6%
Cap. Spend. - 3 Yr. Gr. Rate 21.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 89.6%
Total Debt to Equity 89.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.1%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity 8.4%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 99.4%
Gross Margin - 3 Yr. Avg. 99.3%
EBITDA Margin 84.3%
EBITDA Margin - 3 Yr. Avg. 73.3%
Operating Margin 63%
Oper. Margin - 3 Yr. Avg. 56.1%
Pre-Tax Margin 40.5%
Pre-Tax Margin - 3 Yr. Avg. 29.6%
Net Profit Margin 41.6%
Net Profit Margin - 3 Yr. Avg. 29.9%
Effective Tax Rate -3.2%
Eff/ Tax Rate - 3 Yr. Avg. -0.8%
Payout Ratio 96.9%

MPW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MPW stock intrinsic value calculation we used $541 million for the last fiscal year's total revenue generated by Medical Properties Trust. The default revenue input number comes from 2016 income statement of Medical Properties 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 MPW stock valuation model: a) initial revenue growth rate of 32.5% 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 8.4%, whose default value for MPW is calculated based on our internal credit rating of Medical Properties 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 Medical Properties 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 MPW stock the variable cost ratio is equal to 21.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $87 million in the base year in the intrinsic value calculation for MPW 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 4.5% for Medical Properties Trust.

Corporate tax rate of 27% is the nominal tax rate for Medical Properties 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 MPW 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 MPW are equal to 935.8%.

Life of production assets of 51.7 years is the average useful life of capital assets used in Medical Properties 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 MPW is equal to -15.3%. 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 - $3248 million for Medical Properties 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 366.901 million for Medical Properties 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 Medical Properties Trust at the current share price and the inputted number of shares is $4.8 billion.

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COMPANY NEWS

▶ Birmingham company, execs spark $7.5M diabetes initiative at UAB   [Oct-12-17 06:15PM  American City Business Journals]
▶ Steward closes deal to acquire 18 hospitals in six states   [Sep-29-17 03:48PM  American City Business Journals]
▶ 3 High-Yield Stocks You Missed   [Sep-27-17 08:33AM  Motley Fool]
▶ 3 Stocks Retirees Should Buy on a Market Pullback   [Sep-14-17 05:22PM  Motley Fool]
▶ Medical Properties reports 2Q results   [Aug-09-17 11:00PM  Associated Press]
▶ 3 Value Stocks for Shrewd Investors   [Jul-31-17 08:19PM  Motley Fool]
▶ 3 Top Stocks for Risk-Averse Investors   [Jul-18-17 01:30PM  Motley Fool]
▶ 3 Embarrassingly Cheap Dividend Stocks   [Jul-09-17 07:09AM  Motley Fool]
▶ 3 Stocks With Better Dividends Than Welltower Inc.   [Jun-28-17 04:43PM  Motley Fool]
▶ 2 Stocks With Better Dividends Than ConocoPhillips   [Jun-27-17 02:15PM  Motley Fool]
▶ Birmingham wins big in Ernst & Young Entrepreneur of the Year Awards   [Jun-08-17 11:25PM  American City Business Journals]
▶ 3 Top-Notch High-Yield Stocks to Buy Right Now   [May-23-17 12:00PM  Motley Fool]
▶ Steward to acquire 18 hospitals through merger with Tennessee system   [May-19-17 04:30PM  American City Business Journals]
▶ Boston health care system plans to merge with TN medical provider   [10:33AM  American City Business Journals]
▶ Medical Properties reports 1Q results   [May-04-17 08:37AM  Associated Press]
▶ 3 Top REITs to Buy in 2017   [May-02-17 07:45AM  Motley Fool]
▶ 5 High-Yield Dividend Stocks to Buy in April   [Apr-11-17 08:54AM  Motley Fool]
▶ [$$] Medical Properties Trust Gets a Good Diagnosis   [Mar-11-17 12:36AM  Barrons.com]
▶ 3 Best Stocks for Your Roth IRA   [Feb-20-17 03:54PM  Motley Fool]
▶ 3 Best Stocks for Your Roth IRA   [03:54PM  at Motley Fool]
▶ [$$] Community Health Sells Eight Hospitals to Steward Health Care   [Feb-16-17 07:09PM  at The Wall Street Journal]
Financial statements of MPW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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