Intrinsic value of Sabra Healthcare REIT - SBRA

Previous Close

$17.76

  Intrinsic Value

$1.41

stock screener

  Rating & Target

str. sell

-92%

Previous close

$17.76

 
Intrinsic value

$1.41

 
Up/down potential

-92%

 
Rating

str. sell

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

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

We calculate the intrinsic value of SBRA 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  9.21
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  261
  418
  645
  965
  1,400
  1,975
  2,715
  3,645
  4,786
  6,158
  7,779
  9,659
  11,809
  14,234
  16,936
  19,914
  23,164
  26,683
  30,465
  34,503
  38,792
  43,325
  48,099
  53,109
  58,354
  63,831
  69,543
  75,492
  81,681
  88,116
  94,804
Variable operating expenses, $m
 
  283
  437
  654
  949
  1,339
  1,841
  2,471
  3,245
  4,175
  5,274
  6,549
  8,007
  9,651
  11,483
  13,501
  15,705
  18,091
  20,655
  23,393
  26,301
  29,375
  32,611
  36,008
  39,564
  43,278
  47,150
  51,183
  55,379
  59,742
  64,277
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
  195
  283
  437
  654
  949
  1,339
  1,841
  2,471
  3,245
  4,175
  5,274
  6,549
  8,007
  9,651
  11,483
  13,501
  15,705
  18,091
  20,655
  23,393
  26,301
  29,375
  32,611
  36,008
  39,564
  43,278
  47,150
  51,183
  55,379
  59,742
  64,277
Operating income, $m
  66
  134
  208
  311
  451
  636
  874
  1,174
  1,541
  1,983
  2,505
  3,110
  3,803
  4,583
  5,453
  6,412
  7,459
  8,592
  9,810
  11,110
  12,491
  13,951
  15,488
  17,101
  18,790
  20,554
  22,393
  24,308
  26,301
  28,373
  30,527
EBITDA, $m
  134
  243
  376
  562
  815
  1,150
  1,581
  2,122
  2,787
  3,586
  4,529
  5,625
  6,877
  8,289
  9,862
  11,596
  13,489
  15,538
  17,740
  20,091
  22,589
  25,228
  28,008
  30,926
  33,979
  37,169
  40,495
  43,959
  47,563
  51,310
  55,205
Interest expense (income), $m
  59
  56
  90
  140
  210
  305
  432
  594
  798
  1,048
  1,349
  1,705
  2,117
  2,589
  3,121
  3,714
  4,367
  5,080
  5,852
  6,682
  7,568
  8,509
  9,503
  10,550
  11,650
  12,800
  14,002
  15,255
  16,560
  17,918
  19,329
Earnings before tax, $m
  70
  79
  118
  171
  241
  331
  443
  580
  743
  935
  1,155
  1,406
  1,685
  1,994
  2,332
  2,699
  3,092
  3,512
  3,958
  4,428
  4,923
  5,442
  5,985
  6,551
  7,140
  7,754
  8,391
  9,053
  9,741
  10,456
  11,198
Tax expense, $m
  0
  21
  32
  46
  65
  89
  120
  157
  201
  252
  312
  380
  455
  538
  630
  729
  835
  948
  1,069
  1,196
  1,329
  1,469
  1,616
  1,769
  1,928
  2,093
  2,266
  2,444
  2,630
  2,823
  3,023
Net income, $m
  70
  57
  86
  125
  176
  241
  323
  423
  543
  682
  843
  1,026
  1,230
  1,456
  1,703
  1,970
  2,257
  2,564
  2,889
  3,233
  3,594
  3,973
  4,369
  4,782
  5,212
  5,660
  6,125
  6,609
  7,111
  7,633
  8,174

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  26
  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
  2,266
  3,569
  5,514
  8,247
  11,966
  16,882
  23,209
  31,153
  40,906
  52,636
  66,484
  82,558
  100,935
  121,660
  144,752
  170,202
  197,986
  228,063
  260,385
  294,900
  331,555
  370,303
  411,103
  453,925
  498,748
  545,566
  594,386
  645,227
  698,124
  753,125
  810,292
Adjusted assets (=assets-cash), $m
  2,240
  3,569
  5,514
  8,247
  11,966
  16,882
  23,209
  31,153
  40,906
  52,636
  66,484
  82,558
  100,935
  121,660
  144,752
  170,202
  197,986
  228,063
  260,385
  294,900
  331,555
  370,303
  411,103
  453,925
  498,748
  545,566
  594,386
  645,227
  698,124
  753,125
  810,292
Revenue / Adjusted assets
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
  0.117
Average production assets, $m
  2,025
  3,239
  5,005
  7,485
  10,860
  15,322
  21,064
  28,274
  37,125
  47,771
  60,339
  74,927
  91,605
  110,415
  131,372
  154,470
  179,686
  206,983
  236,318
  267,642
  300,909
  336,075
  373,104
  411,968
  452,648
  495,139
  539,446
  585,588
  633,596
  683,513
  735,396
Working capital, $m
  0
  -42
  -65
  -96
  -140
  -198
  -272
  -364
  -479
  -616
  -778
  -966
  -1,181
  -1,423
  -1,694
  -1,991
  -2,316
  -2,668
  -3,047
  -3,450
  -3,879
  -4,333
  -4,810
  -5,311
  -5,835
  -6,383
  -6,954
  -7,549
  -8,168
  -8,812
  -9,480
Total debt, $m
  1,211
  1,953
  3,038
  4,563
  6,638
  9,381
  12,912
  17,344
  22,787
  29,332
  37,059
  46,028
  56,283
  67,847
  80,732
  94,934
  110,437
  127,220
  145,256
  164,515
  184,969
  206,590
  229,357
  253,251
  278,262
  304,387
  331,628
  359,998
  389,514
  420,205
  452,104
Total liabilities, $m
  1,250
  1,992
  3,077
  4,602
  6,677
  9,420
  12,951
  17,383
  22,826
  29,371
  37,098
  46,067
  56,322
  67,886
  80,771
  94,973
  110,476
  127,259
  145,295
  164,554
  185,008
  206,629
  229,396
  253,290
  278,301
  304,426
  331,667
  360,037
  389,553
  420,244
  452,143
Total equity, $m
  1,016
  1,578
  2,437
  3,645
  5,289
  7,462
  10,258
  13,770
  18,080
  23,265
  29,386
  36,490
  44,613
  53,774
  63,980
  75,229
  87,510
  100,804
  115,090
  130,346
  146,547
  163,674
  181,708
  200,635
  220,447
  241,140
  262,719
  285,190
  308,571
  332,881
  358,149
Total liabilities and equity, $m
  2,266
  3,570
  5,514
  8,247
  11,966
  16,882
  23,209
  31,153
  40,906
  52,636
  66,484
  82,557
  100,935
  121,660
  144,751
  170,202
  197,986
  228,063
  260,385
  294,900
  331,555
  370,303
  411,104
  453,925
  498,748
  545,566
  594,386
  645,227
  698,124
  753,125
  810,292
Debt-to-equity ratio
  1.192
  1.240
  1.250
  1.250
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
  1.260
Adjusted equity ratio
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  70
  57
  86
  125
  176
  241
  323
  423
  543
  682
  843
  1,026
  1,230
  1,456
  1,703
  1,970
  2,257
  2,564
  2,889
  3,233
  3,594
  3,973
  4,369
  4,782
  5,212
  5,660
  6,125
  6,609
  7,111
  7,633
  8,174
Depreciation, amort., depletion, $m
  68
  109
  168
  251
  364
  514
  707
  949
  1,246
  1,603
  2,025
  2,514
  3,074
  3,705
  4,408
  5,184
  6,030
  6,946
  7,930
  8,981
  10,098
  11,278
  12,520
  13,824
  15,190
  16,615
  18,102
  19,651
  21,262
  22,937
  24,678
Funds from operations, $m
  183
  166
  254
  376
  540
  756
  1,030
  1,372
  1,788
  2,285
  2,868
  3,540
  4,304
  5,161
  6,111
  7,153
  8,287
  9,509
  10,819
  12,214
  13,692
  15,251
  16,889
  18,606
  20,402
  22,276
  24,228
  26,260
  28,373
  30,569
  32,852
Change in working capital, $m
  6
  -16
  -23
  -32
  -44
  -58
  -74
  -93
  -114
  -137
  -162
  -188
  -215
  -242
  -270
  -298
  -325
  -352
  -378
  -404
  -429
  -453
  -477
  -501
  -524
  -548
  -571
  -595
  -619
  -644
  -669
Cash from operations, $m
  177
  182
  277
  408
  584
  813
  1,104
  1,465
  1,902
  2,423
  3,030
  3,728
  4,519
  5,404
  6,381
  7,451
  8,612
  9,861
  11,197
  12,618
  14,120
  15,704
  17,367
  19,107
  20,926
  22,823
  24,799
  26,854
  28,992
  31,213
  33,521
Maintenance CAPEX, $m
  0
  -68
  -109
  -168
  -251
  -364
  -514
  -707
  -949
  -1,246
  -1,603
  -2,025
  -2,514
  -3,074
  -3,705
  -4,408
  -5,184
  -6,030
  -6,946
  -7,930
  -8,981
  -10,098
  -11,278
  -12,520
  -13,824
  -15,190
  -16,615
  -18,102
  -19,651
  -21,262
  -22,937
New CAPEX, $m
  -1
  -1,215
  -1,765
  -2,480
  -3,375
  -4,462
  -5,742
  -7,210
  -8,851
  -10,646
  -12,568
  -14,588
  -16,678
  -18,810
  -20,957
  -23,098
  -25,216
  -27,297
  -29,335
  -31,324
  -33,267
  -35,166
  -37,029
  -38,863
  -40,680
  -42,491
  -44,307
  -46,142
  -48,008
  -49,917
  -51,883
Cash from investing activities, $m
  142
  -1,283
  -1,874
  -2,648
  -3,626
  -4,826
  -6,256
  -7,917
  -9,800
  -11,892
  -14,171
  -16,613
  -19,192
  -21,884
  -24,662
  -27,506
  -30,400
  -33,327
  -36,281
  -39,254
  -42,248
  -45,264
  -48,307
  -51,383
  -54,504
  -57,681
  -60,922
  -64,244
  -67,659
  -71,179
  -74,820
Free cash flow, $m
  319
  -1,101
  -1,597
  -2,240
  -3,043
  -4,013
  -5,152
  -6,452
  -7,898
  -9,469
  -11,140
  -12,885
  -14,673
  -16,480
  -18,281
  -20,055
  -21,787
  -23,466
  -25,083
  -26,637
  -28,128
  -29,560
  -30,940
  -32,276
  -33,578
  -34,857
  -36,124
  -37,390
  -38,667
  -39,966
  -41,299
Issuance/(repayment) of debt, $m
  -174
  742
  1,085
  1,525
  2,075
  2,743
  3,530
  4,433
  5,442
  6,545
  7,727
  8,969
  10,254
  11,565
  12,885
  14,201
  15,503
  16,783
  18,036
  19,259
  20,454
  21,621
  22,766
  23,894
  25,011
  26,125
  27,241
  28,369
  29,517
  30,691
  31,899
Issuance/(repurchase) of shares, $m
  -1
  530
  774
  1,083
  1,468
  1,932
  2,473
  3,088
  3,768
  4,502
  5,277
  6,079
  6,892
  7,705
  8,504
  9,279
  10,023
  10,730
  11,397
  12,023
  12,608
  13,154
  13,665
  14,145
  14,599
  15,034
  15,453
  15,863
  16,269
  16,678
  17,093
Cash from financing (excl. dividends), $m  
  -182
  1,272
  1,859
  2,608
  3,543
  4,675
  6,003
  7,521
  9,210
  11,047
  13,004
  15,048
  17,146
  19,270
  21,389
  23,480
  25,526
  27,513
  29,433
  31,282
  33,062
  34,775
  36,431
  38,039
  39,610
  41,159
  42,694
  44,232
  45,786
  47,369
  48,992
Total cash flow (excl. dividends), $m
  137
  171
  262
  368
  501
  662
  852
  1,069
  1,313
  1,579
  1,864
  2,163
  2,473
  2,789
  3,108
  3,425
  3,739
  4,048
  4,350
  4,645
  4,933
  5,215
  5,491
  5,763
  6,033
  6,301
  6,570
  6,843
  7,119
  7,402
  7,694
Retained Cash Flow (-), $m
  38
  -588
  -860
  -1,208
  -1,644
  -2,173
  -2,796
  -3,511
  -4,311
  -5,185
  -6,121
  -7,105
  -8,123
  -9,161
  -10,206
  -11,249
  -12,280
  -13,294
  -14,286
  -15,255
  -16,202
  -17,127
  -18,034
  -18,927
  -19,812
  -20,694
  -21,578
  -22,472
  -23,381
  -24,310
  -25,268
Prev. year cash balance distribution, $m
 
  26
  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
 
  -391
  -598
  -840
  -1,143
  -1,511
  -1,945
  -2,442
  -2,998
  -3,606
  -4,257
  -4,941
  -5,649
  -6,371
  -7,099
  -7,824
  -8,541
  -9,246
  -9,936
  -10,610
  -11,268
  -11,912
  -12,543
  -13,164
  -13,779
  -14,393
  -15,008
  -15,629
  -16,261
  -16,908
  -17,574
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  -359
  -502
  -638
  -779
  -914
  -1,034
  -1,129
  -1,190
  -1,214
  -1,200
  -1,150
  -1,069
  -965
  -846
  -721
  -597
  -481
  -377
  -286
  -212
  -152
  -106
  -72
  -47
  -30
  -18
  -11
  -6
  -3
  -2
Current shareholders' claim on cash, %
  100
  85.5
  74.0
  64.9
  57.5
  51.6
  46.7
  42.6
  39.2
  36.3
  33.9
  31.8
  30.0
  28.5
  27.1
  25.9
  24.9
  23.9
  23.1
  22.4
  21.7
  21.1
  20.6
  20.1
  19.6
  19.2
  18.8
  18.5
  18.1
  17.8
  17.5

Sabra Health Care REIT, Inc. is a real estate investment trust. The Company, through its subsidiaries, owns and invests in real estate serving the healthcare industry. The Company's segment includes investments in healthcare-related real estate properties. The Company's primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. As of December 31, 2016, the Company's investment portfolio consisted of 183 real estate properties held for investment (consisting of 97 skilled nursing/transitional care facilities, 85 senior housing facilities, and one acute care hospital); 10 investments in loans receivable (consisting of four mortgage loans, one construction loan, one mezzanine loan, three pre-development loans and one debtor-in-possession (DIP) loan) and 12 preferred equity investments. It has properties located in New Hampshire, Texas, Florida, Kentucky, Ohio, Maryland and Nebraska, among others.

FINANCIAL RATIOS  of  Sabra Healthcare REIT (SBRA)

Valuation Ratios
P/E Ratio 16.6
Price to Sales 4.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 6.6
Price to Free Cash Flow 6.6
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -75%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 119.2%
Total Debt to Equity 119.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.2%
Return On Equity 6.8%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 97.7%
Gross Margin - 3 Yr. Avg. 98.5%
EBITDA Margin 75.5%
EBITDA Margin - 3 Yr. Avg. 75%
Operating Margin 25.3%
Oper. Margin - 3 Yr. Avg. 26.8%
Pre-Tax Margin 26.8%
Pre-Tax Margin - 3 Yr. Avg. 28.5%
Net Profit Margin 26.8%
Net Profit Margin - 3 Yr. Avg. 28.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 170%

SBRA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SBRA stock intrinsic value calculation we used $261 million for the last fiscal year's total revenue generated by Sabra Healthcare REIT. The default revenue input number comes from 2016 income statement of Sabra Healthcare REIT. 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 SBRA stock valuation model: a) initial revenue growth rate of 60% 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 8.7%, whose default value for SBRA is calculated based on our internal credit rating of Sabra Healthcare REIT, 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 Sabra Healthcare REIT.
    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 SBRA stock the variable cost ratio is equal to 67.8%.

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 SBRA 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 4.6% for Sabra Healthcare REIT.

Corporate tax rate of 27% is the nominal tax rate for Sabra Healthcare REIT. 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 SBRA 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 SBRA are equal to 775.7%.

Life of production assets of 29.8 years is the average useful life of capital assets used in Sabra Healthcare REIT 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 SBRA is equal to -10%. 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 - $1016 million for Sabra Healthcare REIT - 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 180.607 million for Sabra Healthcare REIT 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 Sabra Healthcare REIT at the current share price and the inputted number of shares is $3.2 billion.

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COMPANY NEWS

▶ Signature Healthcare tries to avoid court with debt restructuring   [Nov-06-17 03:05PM  American City Business Journals]
▶ Should You Buy Sabra Health Care REIT Inc (SBRA) At $21.66?   [Sep-29-17 07:22PM  Simply Wall St.]
▶ Sabra and Care Capital Properties Complete Merger   [Aug-17-17 08:30AM  GlobeNewswire]
▶ [$$] Sabra Health Care Shareholders OK Deal With Care Capital Properties   [Aug-15-17 06:20PM  The Wall Street Journal]
▶ Sabra reports 2Q results   [10:10AM  Associated Press]
▶ Sabra Health Care REIT Files Investor Presentation   [Jul-28-17 06:00AM  GlobeNewswire]
▶ 3 Value Stocks for Wise Investors   [Jul-27-17 07:32PM  Motley Fool]
▶ Activists Can Be Deal-Breakers, Too   [Jul-25-17 07:30AM  Bloomberg]
▶ 3 Top Dividend Stocks in Assisted Living   [Jun-01-17 10:41AM  Motley Fool]
▶ Plots & Ploys   [May-09-17 10:59PM  The Wall Street Journal]
▶ Sabra reports 1Q results   [05:56PM  Associated Press]
▶ Sabra Health Care, Care Capital Properties merge in $7.4 billion deal   [03:55PM  American City Business Journals]
▶ 3 Recession-Proof REITs With Yields Up To 7.6%   [Mar-22-17 04:01PM  Forbes]
Financial statements of SBRA
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