Intrinsic value of Oritani Financial - ORIT

Previous Close

$16.15

  Intrinsic Value

$0.00

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  Rating & Target

str. sell

-100%

Previous close

$16.15

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of ORIT 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 0.9

 

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, %
  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
  123
  126
  130
  133
  137
  142
  146
  152
  157
  163
  170
  177
  184
  192
  200
  209
  218
  228
  238
  249
  261
  273
  286
  299
  314
  329
  344
  361
  379
  397
Variable operating expenses, $m
  26
  27
  28
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
  85
Fixed operating expenses, $m
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
Total operating expenses, $m
  41
  43
  44
  44
  46
  47
  48
  50
  52
  54
  55
  57
  59
  61
  64
  66
  69
  71
  74
  76
  80
  82
  86
  89
  93
  96
  101
  105
  109
  114
Operating income, $m
  82
  84
  86
  88
  91
  94
  98
  101
  105
  110
  114
  119
  125
  130
  136
  143
  150
  157
  165
  173
  181
  190
  200
  210
  221
  232
  244
  256
  269
  283
EBITDA, $m
  478
  489
  502
  516
  532
  549
  568
  589
  611
  635
  660
  687
  716
  747
  779
  814
  851
  890
  931
  974
  1,020
  1,068
  1,119
  1,172
  1,229
  1,288
  1,351
  1,417
  1,486
  1,559
Interest expense (income), $m
  38
  213
  198
  201
  205
  209
  213
  218
  224
  230
  236
  243
  250
  258
  266
  275
  284
  294
  305
  316
  328
  340
  353
  367
  381
  397
  413
  430
  448
  466
  486
Earnings before tax, $m
  -131
  -114
  -115
  -116
  -118
  -119
  -121
  -122
  -124
  -126
  -129
  -131
  -133
  -136
  -139
  -142
  -145
  -148
  -151
  -155
  -159
  -163
  -167
  -171
  -176
  -181
  -186
  -191
  -197
  -203
Tax expense, $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
Net income, $m
  -131
  -114
  -115
  -116
  -118
  -119
  -121
  -122
  -124
  -126
  -129
  -131
  -133
  -136
  -139
  -142
  -145
  -148
  -151
  -155
  -159
  -163
  -167
  -171
  -176
  -181
  -186
  -191
  -197
  -203

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
  2,870
  2,936
  3,012
  3,096
  3,190
  3,293
  3,405
  3,527
  3,658
  3,798
  3,948
  4,108
  4,279
  4,460
  4,653
  4,857
  5,073
  5,301
  5,542
  5,797
  6,065
  6,349
  6,647
  6,962
  7,293
  7,642
  8,010
  8,396
  8,803
  9,231
Adjusted assets (=assets-cash), $m
  2,870
  2,936
  3,012
  3,096
  3,190
  3,293
  3,405
  3,527
  3,658
  3,798
  3,948
  4,108
  4,279
  4,460
  4,653
  4,857
  5,073
  5,301
  5,542
  5,797
  6,065
  6,349
  6,647
  6,962
  7,293
  7,642
  8,010
  8,396
  8,803
  9,231
Revenue / Adjusted assets
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
Average production assets, $m
  3,967
  4,058
  4,162
  4,279
  4,409
  4,551
  4,706
  4,874
  5,055
  5,249
  5,457
  5,678
  5,914
  6,164
  6,430
  6,712
  7,010
  7,326
  7,659
  8,011
  8,382
  8,774
  9,187
  9,622
  10,080
  10,562
  11,070
  11,604
  12,166
  12,757
Working capital, $m
  -3,636
  -3,720
  -3,816
  -3,923
  -4,042
  -4,172
  -4,314
  -4,468
  -4,634
  -4,812
  -5,002
  -5,205
  -5,421
  -5,651
  -5,895
  -6,153
  -6,426
  -6,716
  -7,021
  -7,344
  -7,684
  -8,043
  -8,422
  -8,820
  -9,240
  -9,682
  -10,148
  -10,637
  -11,152
  -11,694
Total debt, $m
  3,663
  3,723
  3,791
  3,867
  3,952
  4,044
  4,145
  4,254
  4,372
  4,499
  4,634
  4,778
  4,931
  5,095
  5,268
  5,451
  5,646
  5,851
  6,068
  6,297
  6,539
  6,794
  7,063
  7,346
  7,644
  7,958
  8,289
  8,637
  9,003
  9,388
Total liabilities, $m
  2,583
  2,643
  2,711
  2,787
  2,871
  2,964
  3,065
  3,174
  3,292
  3,418
  3,553
  3,698
  3,851
  4,014
  4,188
  4,371
  4,565
  4,771
  4,988
  5,217
  5,459
  5,714
  5,983
  6,266
  6,564
  6,878
  7,209
  7,557
  7,923
  8,308
Total equity, $m
  287
  294
  301
  310
  319
  329
  341
  353
  366
  380
  395
  411
  428
  446
  465
  486
  507
  530
  554
  580
  607
  635
  665
  696
  729
  764
  801
  840
  880
  923
Total liabilities and equity, $m
  2,870
  2,937
  3,012
  3,097
  3,190
  3,293
  3,406
  3,527
  3,658
  3,798
  3,948
  4,109
  4,279
  4,460
  4,653
  4,857
  5,072
  5,301
  5,542
  5,797
  6,066
  6,349
  6,648
  6,962
  7,293
  7,642
  8,010
  8,397
  8,803
  9,231
Debt-to-equity ratio
  12.760
  12.680
  12.590
  12.490
  12.390
  12.280
  12.170
  12.060
  11.950
  11.840
  11.740
  11.630
  11.520
  11.420
  11.320
  11.220
  11.130
  11.040
  10.950
  10.860
  10.780
  10.700
  10.630
  10.550
  10.480
  10.410
  10.350
  10.290
  10.230
  10.170
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -131
  -114
  -115
  -116
  -118
  -119
  -121
  -122
  -124
  -126
  -129
  -131
  -133
  -136
  -139
  -142
  -145
  -148
  -151
  -155
  -159
  -163
  -167
  -171
  -176
  -181
  -186
  -191
  -197
  -203
Depreciation, amort., depletion, $m
  397
  406
  416
  428
  441
  455
  471
  487
  505
  525
  546
  568
  591
  616
  643
  671
  701
  733
  766
  801
  838
  877
  919
  962
  1,008
  1,056
  1,107
  1,160
  1,217
  1,276
Funds from operations, $m
  266
  292
  301
  312
  323
  336
  350
  365
  381
  399
  417
  437
  458
  481
  504
  530
  556
  585
  615
  646
  679
  715
  752
  791
  832
  875
  921
  969
  1,020
  1,073
Change in working capital, $m
  -71
  -84
  -96
  -107
  -119
  -130
  -142
  -154
  -166
  -178
  -190
  -203
  -216
  -230
  -244
  -258
  -273
  -289
  -306
  -323
  -340
  -359
  -378
  -399
  -420
  -442
  -465
  -490
  -515
  -542
Cash from operations, $m
  337
  375
  397
  419
  442
  466
  492
  519
  547
  576
  607
  640
  674
  710
  748
  788
  830
  874
  920
  969
  1,020
  1,074
  1,130
  1,189
  1,252
  1,317
  1,386
  1,459
  1,535
  1,615
Maintenance CAPEX, $m
  -390
  -397
  -406
  -416
  -428
  -441
  -455
  -471
  -487
  -505
  -525
  -546
  -568
  -591
  -616
  -643
  -671
  -701
  -733
  -766
  -801
  -838
  -877
  -919
  -962
  -1,008
  -1,056
  -1,107
  -1,160
  -1,217
New CAPEX, $m
  -63
  -91
  -104
  -117
  -130
  -142
  -155
  -168
  -181
  -194
  -208
  -221
  -236
  -251
  -266
  -282
  -298
  -315
  -333
  -352
  -371
  -392
  -413
  -435
  -458
  -482
  -508
  -534
  -562
  -591
Cash from investing activities, $m
  -453
  -488
  -510
  -533
  -558
  -583
  -610
  -639
  -668
  -699
  -733
  -767
  -804
  -842
  -882
  -925
  -969
  -1,016
  -1,066
  -1,118
  -1,172
  -1,230
  -1,290
  -1,354
  -1,420
  -1,490
  -1,564
  -1,641
  -1,722
  -1,808
Free cash flow, $m
  -116
  -113
  -114
  -114
  -116
  -117
  -118
  -120
  -121
  -123
  -125
  -127
  -129
  -132
  -134
  -137
  -140
  -143
  -146
  -149
  -153
  -156
  -160
  -164
  -168
  -173
  -178
  -182
  -188
  -193
Issuance/(repayment) of debt, $m
  -273
  59
  68
  76
  84
  93
  101
  109
  118
  126
  135
  144
  154
  163
  173
  184
  194
  205
  217
  229
  242
  255
  269
  283
  298
  314
  331
  348
  366
  385
Issuance/(repurchase) of shares, $m
  418
  121
  123
  125
  127
  129
  132
  135
  137
  140
  144
  147
  150
  154
  158
  162
  166
  171
  175
  180
  186
  191
  197
  203
  209
  216
  223
  230
  238
  246
Cash from financing (excl. dividends), $m  
  145
  180
  191
  201
  211
  222
  233
  244
  255
  266
  279
  291
  304
  317
  331
  346
  360
  376
  392
  409
  428
  446
  466
  486
  507
  530
  554
  578
  604
  631
Total cash flow (excl. dividends), $m
  28
  68
  77
  87
  96
  105
  115
  124
  134
  144
  154
  164
  175
  186
  197
  209
  221
  234
  247
  261
  275
  290
  306
  322
  339
  357
  376
  395
  416
  438
Retained Cash Flow (-), $m
  -418
  -121
  -123
  -125
  -127
  -129
  -132
  -135
  -137
  -140
  -144
  -147
  -150
  -154
  -158
  -162
  -166
  -171
  -175
  -180
  -186
  -191
  -197
  -203
  -209
  -216
  -223
  -230
  -238
  -246
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
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
Cash available for distribution, $m
  -390
  -53
  -46
  -38
  -31
  -24
  -17
  -10
  -4
  3
  10
  17
  24
  31
  39
  47
  55
  63
  71
  80
  89
  99
  109
  119
  130
  141
  153
  165
  178
  192
Discount rate, %
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.68
  21.72
  22.80
  23.94
  25.14
  26.40
  27.72
  29.10
  30.56
  32.09
  33.69
  35.38
  37.15
  39.00
  40.95
  43.00
  45.15
  47.41
  49.78
  52.27
  54.88
  57.63
PV of cash for distribution, $m
  -342
  -41
  -30
  -21
  -14
  -9
  -5
  -2
  -1
  0
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  35.2
  24.8
  17.5
  12.4
  8.8
  6.3
  4.5
  3.3
  2.4
  1.7
  1.2
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Oritani Financial Corp. is a holding company for Oritani Bank (the Bank). The Bank offers a range of retail and commercial loan and deposit products. The Bank operates in the New Jersey Counties of Bergen, Hudson, Essex and Passaic. The Bank's loan portfolio includes residential loans, residential commercial real estate loans, credit or grocery retail commercial real estate loans, other commercial real estate loans, and construction and land loans. Its investment securities are classified as held to maturity, including mortgage-backed securities, and available for sale, including equity securities and mortgage-backed securities. Its deposits include checking (non-interest and interest-bearing demand deposits), money market deposit accounts, savings accounts and time deposits. The Bank offers personal banking services, such as mobile banking, and online banking and others services, and business banking services, such as business accounts and business services.

FINANCIAL RATIOS  of  Oritani Financial (ORIT)

Valuation Ratios
P/E Ratio 15.2
Price to Sales 0
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 20.1
Price to Free Cash Flow 20.1
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 114.8%
Total Debt to Equity 114.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.7%
Return On Equity 9%
Return On Equity - 3 Yr. Avg. 9.3%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 35.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio 106.1%

ORIT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ORIT stock intrinsic value calculation we used $121 million for the last fiscal year's total revenue generated by Oritani Financial. The default revenue input number comes from 2017 income statement of Oritani Financial. 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 ORIT 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 14%, whose default value for ORIT is calculated based on our internal credit rating of Oritani Financial, 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 Oritani Financial.
    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 ORIT stock the variable cost ratio is equal to 21.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15 million in the base year in the intrinsic value calculation for ORIT 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 Oritani Financial.

Corporate tax rate of 27% is the nominal tax rate for Oritani Financial. 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 ORIT stock is equal to 5.4%.

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 ORIT are equal to 3214%.

Life of production assets of 10 years is the average useful life of capital assets used in Oritani Financial 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 ORIT is equal to -2946.3%. 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 - $0 million for Oritani Financial - 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 56 million for Oritani Financial 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 Oritani Financial at the current share price and the inputted number of shares is $0.9 billion.

RELATED COMPANIES Price Int.Val. Rating
OCFC OceanFirst Fin 29.04 47.74  str.buy

COMPANY NEWS

▶ Oritani: Fiscal 4Q Earnings Snapshot   [Jul-24-18 05:43PM  Associated Press]
▶ 5 Bank Stocks That Pay Big Dividends to Shareholders   [Jun-29-18 02:12PM  InvestorPlace]
▶ Oritani: Fiscal 3Q Earnings Snapshot   [Apr-25-18 08:59AM  Associated Press]
▶ Oritani posts 2Q profit   [Jan-29-18 07:39PM  Associated Press]
▶ Oritani Financial Corp. Announces $0.45 Special Dividend   [Nov-21-17 09:15AM  GlobeNewswire]
▶ Oritani posts 1Q profit   [Oct-26-17 06:35AM  Associated Press]
▶ Should You Buy Oritani Financial Corp (ORIT) At $16.85?   [Sep-29-17 03:57PM  Simply Wall St.]
▶ Oritani posts 4Q profit   [Jul-28-17 08:05PM  Associated Press]
▶ Oritani Financial Corp. Reports Earnings and Dividend   [Apr-28-17 11:23AM  GlobeNewswire]
▶ Oritani posts 2Q profit   [08:15AM  Associated Press]
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