Intrinsic value of Prologis - PLD

Previous Close

$64.44

  Intrinsic Value

$7.01

stock screener

  Rating & Target

str. sell

-89%

  Value-price divergence*

-16%

Previous close

$64.44

 
Intrinsic value

$7.01

 
Up/down potential

-89%

 
Rating

str. sell

 
Value-price divergence*

-16%

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

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

We calculate the intrinsic value of PLD 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 34.4

 

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, %
  15.29
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  2,533
  2,921
  3,337
  3,783
  4,256
  4,756
  5,283
  5,837
  6,416
  7,021
  7,652
  8,310
  8,994
  9,705
  10,445
  11,213
  12,011
  12,841
  13,704
  14,601
  15,534
  16,505
  17,517
  18,570
  19,668
  20,813
  22,008
  23,255
  24,557
  25,917
  27,339
Variable operating expenses, $m
 
  2,529
  2,890
  3,276
  3,685
  4,119
  4,575
  5,054
  5,556
  6,080
  6,627
  7,196
  7,789
  8,405
  9,045
  9,711
  10,402
  11,121
  11,868
  12,644
  13,453
  14,294
  15,170
  16,082
  17,033
  18,024
  19,059
  20,139
  21,266
  22,444
  23,675
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
  1,862
  2,529
  2,890
  3,276
  3,685
  4,119
  4,575
  5,054
  5,556
  6,080
  6,627
  7,196
  7,789
  8,405
  9,045
  9,711
  10,402
  11,121
  11,868
  12,644
  13,453
  14,294
  15,170
  16,082
  17,033
  18,024
  19,059
  20,139
  21,266
  22,444
  23,675
Operating income, $m
  671
  391
  447
  507
  570
  637
  708
  782
  860
  941
  1,025
  1,114
  1,205
  1,301
  1,400
  1,503
  1,610
  1,721
  1,836
  1,957
  2,082
  2,212
  2,347
  2,488
  2,636
  2,789
  2,949
  3,116
  3,291
  3,473
  3,663
EBITDA, $m
  1,602
  1,464
  1,672
  1,896
  2,133
  2,383
  2,647
  2,925
  3,215
  3,518
  3,835
  4,164
  4,507
  4,863
  5,234
  5,619
  6,019
  6,435
  6,867
  7,317
  7,784
  8,271
  8,778
  9,306
  9,856
  10,430
  11,028
  11,653
  12,306
  12,987
  13,700
Interest expense (income), $m
  0
  371
  453
  541
  635
  734
  840
  951
  1,068
  1,190
  1,317
  1,450
  1,589
  1,733
  1,883
  2,039
  2,201
  2,369
  2,544
  2,726
  2,915
  3,112
  3,317
  3,530
  3,752
  3,984
  4,225
  4,477
  4,740
  5,014
  5,301
Earnings before tax, $m
  1,347
  20
  -6
  -34
  -64
  -97
  -132
  -169
  -208
  -249
  -292
  -337
  -384
  -433
  -484
  -537
  -592
  -649
  -708
  -770
  -834
  -900
  -970
  -1,042
  -1,117
  -1,195
  -1,276
  -1,361
  -1,449
  -1,541
  -1,638
Tax expense, $m
  54
  5
  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
  1,210
  15
  -6
  -34
  -64
  -97
  -132
  -169
  -208
  -249
  -292
  -337
  -384
  -433
  -484
  -537
  -592
  -649
  -708
  -770
  -834
  -900
  -970
  -1,042
  -1,117
  -1,195
  -1,276
  -1,361
  -1,449
  -1,541
  -1,638

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  807
  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
  30,250
  33,960
  38,806
  43,984
  49,486
  55,304
  61,433
  67,867
  74,604
  81,642
  88,982
  96,627
  104,581
  112,853
  121,450
  130,384
  139,669
  149,318
  159,349
  169,779
  180,631
  191,924
  203,683
  215,933
  228,701
  242,015
  255,906
  270,404
  285,544
  301,360
  317,890
Adjusted assets (=assets-cash), $m
  29,443
  33,960
  38,806
  43,984
  49,486
  55,304
  61,433
  67,867
  74,604
  81,642
  88,982
  96,627
  104,581
  112,853
  121,450
  130,384
  139,669
  149,318
  159,349
  169,779
  180,631
  191,924
  203,683
  215,933
  228,701
  242,015
  255,906
  270,404
  285,544
  301,360
  317,890
Revenue / Adjusted assets
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
  0.086
Average production assets, $m
  23,804
  27,447
  31,364
  35,549
  39,996
  44,698
  49,652
  54,852
  60,297
  65,985
  71,918
  78,097
  84,526
  91,211
  98,159
  105,380
  112,884
  120,683
  128,790
  137,220
  145,991
  155,118
  164,623
  174,523
  184,843
  195,604
  206,830
  218,548
  230,785
  243,568
  256,928
Working capital, $m
  0
  -932
  -1,065
  -1,207
  -1,358
  -1,517
  -1,685
  -1,862
  -2,047
  -2,240
  -2,441
  -2,651
  -2,869
  -3,096
  -3,332
  -3,577
  -3,832
  -4,096
  -4,372
  -4,658
  -4,955
  -5,265
  -5,588
  -5,924
  -6,274
  -6,639
  -7,021
  -7,418
  -7,834
  -8,268
  -8,721
Total debt, $m
  10,608
  12,940
  15,450
  18,133
  20,983
  23,997
  27,171
  30,504
  33,994
  37,640
  41,442
  45,402
  49,522
  53,807
  58,260
  62,888
  67,697
  72,696
  77,892
  83,295
  88,916
  94,766
  100,857
  107,203
  113,816
  120,713
  127,908
  135,418
  143,261
  151,454
  160,016
Total liabilities, $m
  15,259
  17,591
  20,101
  22,784
  25,634
  28,648
  31,822
  35,155
  38,645
  42,291
  46,093
  50,053
  54,173
  58,458
  62,911
  67,539
  72,348
  77,347
  82,543
  87,946
  93,567
  99,417
  105,508
  111,854
  118,467
  125,364
  132,559
  140,069
  147,912
  156,105
  164,667
Total equity, $m
  14,991
  16,369
  18,704
  21,200
  23,852
  26,657
  29,611
  32,712
  35,959
  39,351
  42,889
  46,574
  50,408
  54,395
  58,539
  62,845
  67,320
  71,971
  76,806
  81,834
  87,064
  92,507
  98,175
  104,080
  110,234
  116,651
  123,347
  130,335
  137,632
  145,256
  153,223
Total liabilities and equity, $m
  30,250
  33,960
  38,805
  43,984
  49,486
  55,305
  61,433
  67,867
  74,604
  81,642
  88,982
  96,627
  104,581
  112,853
  121,450
  130,384
  139,668
  149,318
  159,349
  169,780
  180,631
  191,924
  203,683
  215,934
  228,701
  242,015
  255,906
  270,404
  285,544
  301,361
  317,890
Debt-to-equity ratio
  0.708
  0.790
  0.830
  0.860
  0.880
  0.900
  0.920
  0.930
  0.950
  0.960
  0.970
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.010
  1.010
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
Adjusted equity ratio
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,210
  15
  -6
  -34
  -64
  -97
  -132
  -169
  -208
  -249
  -292
  -337
  -384
  -433
  -484
  -537
  -592
  -649
  -708
  -770
  -834
  -900
  -970
  -1,042
  -1,117
  -1,195
  -1,276
  -1,361
  -1,449
  -1,541
  -1,638
Depreciation, amort., depletion, $m
  931
  1,072
  1,225
  1,389
  1,562
  1,746
  1,940
  2,143
  2,355
  2,578
  2,809
  3,051
  3,302
  3,563
  3,834
  4,116
  4,410
  4,714
  5,031
  5,360
  5,703
  6,059
  6,431
  6,817
  7,220
  7,641
  8,079
  8,537
  9,015
  9,514
  10,036
Funds from operations, $m
  1,624
  1,087
  1,219
  1,355
  1,498
  1,649
  1,808
  1,974
  2,147
  2,329
  2,517
  2,714
  2,918
  3,130
  3,351
  3,580
  3,818
  4,066
  4,323
  4,591
  4,869
  5,159
  5,461
  5,776
  6,104
  6,446
  6,803
  7,176
  7,566
  7,973
  8,399
Change in working capital, $m
  207
  -124
  -133
  -142
  -151
  -160
  -168
  -177
  -185
  -193
  -201
  -210
  -218
  -227
  -236
  -245
  -255
  -265
  -275
  -286
  -298
  -310
  -323
  -336
  -350
  -365
  -381
  -398
  -415
  -434
  -453
Cash from operations, $m
  1,417
  1,210
  1,352
  1,497
  1,649
  1,809
  1,976
  2,150
  2,332
  2,522
  2,719
  2,923
  3,136
  3,357
  3,587
  3,825
  4,073
  4,330
  4,598
  4,877
  5,167
  5,469
  5,784
  6,112
  6,454
  6,811
  7,184
  7,574
  7,981
  8,407
  8,852
Maintenance CAPEX, $m
  0
  -930
  -1,072
  -1,225
  -1,389
  -1,562
  -1,746
  -1,940
  -2,143
  -2,355
  -2,578
  -2,809
  -3,051
  -3,302
  -3,563
  -3,834
  -4,116
  -4,410
  -4,714
  -5,031
  -5,360
  -5,703
  -6,059
  -6,431
  -6,817
  -7,220
  -7,641
  -8,079
  -8,537
  -9,015
  -9,514
New CAPEX, $m
  -2,202
  -3,643
  -3,917
  -4,185
  -4,447
  -4,703
  -4,953
  -5,200
  -5,445
  -5,688
  -5,932
  -6,179
  -6,429
  -6,685
  -6,949
  -7,221
  -7,504
  -7,799
  -8,107
  -8,431
  -8,770
  -9,128
  -9,504
  -9,901
  -10,319
  -10,761
  -11,227
  -11,718
  -12,236
  -12,783
  -13,360
Cash from investing activities, $m
  1,252
  -4,573
  -4,989
  -5,410
  -5,836
  -6,265
  -6,699
  -7,140
  -7,588
  -8,043
  -8,510
  -8,988
  -9,480
  -9,987
  -10,512
  -11,055
  -11,620
  -12,209
  -12,821
  -13,462
  -14,130
  -14,831
  -15,563
  -16,332
  -17,136
  -17,981
  -18,868
  -19,797
  -20,773
  -21,798
  -22,874
Free cash flow, $m
  2,669
  -3,363
  -3,636
  -3,913
  -4,186
  -4,456
  -4,724
  -4,990
  -5,255
  -5,522
  -5,791
  -6,065
  -6,344
  -6,630
  -6,925
  -7,230
  -7,548
  -7,878
  -8,223
  -8,585
  -8,964
  -9,362
  -9,780
  -10,220
  -10,683
  -11,170
  -11,683
  -12,223
  -12,792
  -13,391
  -14,022
Issuance/(repayment) of debt, $m
  -898
  2,332
  2,510
  2,682
  2,850
  3,014
  3,175
  3,333
  3,490
  3,646
  3,802
  3,960
  4,120
  4,285
  4,453
  4,628
  4,809
  4,998
  5,196
  5,403
  5,621
  5,850
  6,091
  6,346
  6,614
  6,897
  7,195
  7,510
  7,842
  8,193
  8,563
Issuance/(repurchase) of shares, $m
  31
  2,170
  2,342
  2,530
  2,716
  2,902
  3,086
  3,270
  3,455
  3,641
  3,830
  4,022
  4,218
  4,420
  4,628
  4,843
  5,067
  5,300
  5,543
  5,797
  6,064
  6,344
  6,637
  6,946
  7,271
  7,612
  7,971
  8,349
  8,746
  9,165
  9,605
Cash from financing (excl. dividends), $m  
  -1,232
  4,502
  4,852
  5,212
  5,566
  5,916
  6,261
  6,603
  6,945
  7,287
  7,632
  7,982
  8,338
  8,705
  9,081
  9,471
  9,876
  10,298
  10,739
  11,200
  11,685
  12,194
  12,728
  13,292
  13,885
  14,509
  15,166
  15,859
  16,588
  17,358
  18,168
Total cash flow (excl. dividends), $m
  1,436
  1,139
  1,215
  1,298
  1,380
  1,459
  1,537
  1,614
  1,689
  1,765
  1,841
  1,917
  1,995
  2,074
  2,156
  2,241
  2,328
  2,420
  2,515
  2,616
  2,721
  2,832
  2,949
  3,072
  3,202
  3,339
  3,483
  3,636
  3,797
  3,966
  4,145
Retained Cash Flow (-), $m
  -323
  -2,185
  -2,342
  -2,530
  -2,716
  -2,902
  -3,086
  -3,270
  -3,455
  -3,641
  -3,830
  -4,022
  -4,218
  -4,420
  -4,628
  -4,843
  -5,067
  -5,300
  -5,543
  -5,797
  -6,064
  -6,344
  -6,637
  -6,946
  -7,271
  -7,612
  -7,971
  -8,349
  -8,746
  -9,165
  -9,605
Prev. year cash balance distribution, $m
 
  807
  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
 
  -238
  -1,126
  -1,231
  -1,337
  -1,442
  -1,549
  -1,657
  -1,766
  -1,876
  -1,989
  -2,105
  -2,223
  -2,345
  -2,472
  -2,602
  -2,738
  -2,880
  -3,027
  -3,182
  -3,343
  -3,512
  -3,689
  -3,874
  -4,069
  -4,273
  -4,488
  -4,713
  -4,950
  -5,198
  -5,460
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  -221
  -964
  -964
  -950
  -922
  -883
  -833
  -775
  -711
  -644
  -574
  -504
  -435
  -370
  -310
  -254
  -205
  -162
  -126
  -95
  -71
  -51
  -36
  -25
  -17
  -11
  -7
  -4
  -2
  -1
Current shareholders' claim on cash, %
  100
  93.8
  88.3
  83.4
  79.0
  75.0
  71.4
  68.1
  65.1
  62.4
  59.8
  57.5
  55.3
  53.3
  51.4
  49.6
  47.9
  46.3
  44.8
  43.4
  42.0
  40.7
  39.5
  38.3
  37.2
  36.1
  35.1
  34.1
  33.1
  32.2
  31.3

Prologis, Inc. is a real estate investment trust (REIT) company. The Company is engaged in logistics real estate business. The Company's segments include Real Estate Operations and Strategic Capital. The Real estate operations segment consists of rental operations and development. The Company's strategic capital segment includes asset management services, as well as services performed for unconsolidated co-investment ventures. Its strategic capital segment gives the Company access to third-party capital, both private and public. As of December 31, 2016, the Company owned or had investments in, on an owned basis or through co-investment ventures, properties and development projects across 676 million square feet (63 million square meters) in 20 countries spanning four continents.

FINANCIAL RATIOS  of  Prologis (PLD)

Valuation Ratios
P/E Ratio 28.2
Price to Sales 13.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 24
Price to Free Cash Flow -43.4
Growth Rates
Sales Growth Rate 15.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.8%
Cap. Spend. - 3 Yr. Gr. Rate 8.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 70.8%
Total Debt to Equity 70.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 8.2%
Return On Equity - 3 Yr. Avg. 6.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 72.5%
Gross Margin - 3 Yr. Avg. 71.3%
EBITDA Margin 89.9%
EBITDA Margin - 3 Yr. Avg. 83.4%
Operating Margin 26.5%
Oper. Margin - 3 Yr. Avg. 16.2%
Pre-Tax Margin 53.2%
Pre-Tax Margin - 3 Yr. Avg. 45.6%
Net Profit Margin 47.8%
Net Profit Margin - 3 Yr. Avg. 41.1%
Effective Tax Rate 4%
Eff/ Tax Rate - 3 Yr. Avg. 1%
Payout Ratio 73.8%

PLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PLD stock intrinsic value calculation we used $2533 million for the last fiscal year's total revenue generated by Prologis. The default revenue input number comes from 2016 income statement of Prologis. 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 PLD stock valuation model: a) initial revenue growth rate of 15.3% 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 7.7%, whose default value for PLD is calculated based on our internal credit rating of Prologis, 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 Prologis.
    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 PLD stock the variable cost ratio is equal to 86.6%.

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 PLD 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 3.5% for Prologis.

Corporate tax rate of 27% is the nominal tax rate for Prologis. 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 PLD 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 PLD are equal to 939.8%.

Life of production assets of 25.6 years is the average useful life of capital assets used in Prologis 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 PLD is equal to -31.9%. 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 - $14991 million for Prologis - 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 534.516 million for Prologis 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 Prologis at the current share price and the inputted number of shares is $34.4 billion.

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COMPANY NEWS

▶ Forget Rate Tantrums, Bet on REIT ETFs   [Oct-17-17 04:45PM  Zacks]
▶ Prologis reports 3Q results   [08:08AM  Associated Press]
▶ Like Dividends? I Bet You'll Love These 2 Stocks   [Oct-09-17 08:21AM  Motley Fool]
▶ [$$] Warehouses Hoist Rents   [12:24AM  The Wall Street Journal]
▶ [$$] Three REITs Worth an Upgrade   [Sep-26-17 02:56PM  Barrons.com]
▶ [$$] E-Commerce Mania Spreads To Warehouse Market   [07:00AM  The Wall Street Journal]
▶ Why Prologis Has a Downward Sloping Dividend Yield Curve   [Sep-20-17 11:09AM  Market Realist]
▶ Prologis and Simon Property Are Top REIT Picks   [Sep-12-17 03:26PM  Barrons.com]
▶ 2 Stocks Warren Buffett Should Buy Now   [Sep-02-17 10:37AM  Motley Fool]
▶ Prologis Acquires Partner's Interest in Brazil Portfolio   [Aug-16-17 11:26AM  PR Newswire]
▶ Nippon Prologis REIT Prices New Investment Units   [Jul-31-17 08:00AM  PR Newswire]
▶ How Prologis Stacks Up against Peers after 2Q17 Earnings   [Jul-25-17 09:07AM  Market Realist]
▶ How Prologis Improved Its Balance Sheet   [07:38AM  Market Realist]
▶ How Prologis Boosted Top-Line Growth in 2Q17   [Jul-24-17 10:39AM  Market Realist]
▶ Where Does Prologis Stand after 2Q Earnings?   [Jul-21-17 03:53PM  Market Realist]
▶ Prologis reports 2Q results   [06:10PM  Associated Press]
▶ Story Stocks from Briefing.com   [08:12AM  Briefing.com]
▶ 2 REITs that Can Benefit from 'Omnichannel' Retail Trend   [Jul-17-17 11:40AM  Barrons.com]
▶ 5 Finance Stocks Poised To Beat Q2 Earnings   [Jul-13-17 06:27PM  Zacks]
▶ Where Does Prologis Stand among Its Peers?   [07:36AM  Market Realist]
▶ Will Prologis Be Able to Turn Macro Issues to Its Advantage?   [Jul-12-17 10:37AM  Market Realist]
▶ Prologiss Main Revenue Drivers in 2Q17   [Jul-11-17 04:05PM  Market Realist]
▶ Whats in Store for Prologis in 2Q17?   [12:46PM  Market Realist]
Financial statements of PLD
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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