Intrinsic value of Simon Property Group - SPG

Previous Close

$164.72

  Intrinsic Value

$34.16

stock screener

  Rating & Target

str. sell

-79%

  Value-price divergence*

+23%

Previous close

$164.72

 
Intrinsic value

$34.16

 
Up/down potential

-79%

 
Rating

str. sell

 
Value-price divergence*

+23%

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

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

We calculate the intrinsic value of SPG 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 52.0

 

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, %
  3.21
  3.60
  3.74
  3.87
  3.98
  4.08
  4.17
  4.26
  4.33
  4.40
  4.46
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
Revenue, $m
  5,435
  5,631
  5,841
  6,067
  6,309
  6,566
  6,840
  7,131
  7,440
  7,767
  8,113
  8,479
  8,866
  9,274
  9,705
  10,159
  10,638
  11,142
  11,673
  12,232
  12,821
  13,440
  14,092
  14,777
  15,497
  16,255
  17,051
  17,888
  18,768
  19,693
  20,664
Variable operating expenses, $m
 
  2,641
  2,739
  2,845
  2,958
  3,079
  3,207
  3,344
  3,489
  3,642
  3,804
  3,974
  4,155
  4,346
  4,548
  4,761
  4,985
  5,222
  5,470
  5,732
  6,008
  6,298
  6,604
  6,925
  7,262
  7,617
  7,991
  8,383
  8,795
  9,229
  9,684
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
  2,767
  2,641
  2,739
  2,845
  2,958
  3,079
  3,207
  3,344
  3,489
  3,642
  3,804
  3,974
  4,155
  4,346
  4,548
  4,761
  4,985
  5,222
  5,470
  5,732
  6,008
  6,298
  6,604
  6,925
  7,262
  7,617
  7,991
  8,383
  8,795
  9,229
  9,684
Operating income, $m
  2,669
  2,990
  3,102
  3,222
  3,350
  3,487
  3,633
  3,787
  3,951
  4,125
  4,309
  4,506
  4,711
  4,928
  5,157
  5,398
  5,653
  5,921
  6,203
  6,500
  6,813
  7,142
  7,488
  7,852
  8,235
  8,637
  9,060
  9,505
  9,973
  10,464
  10,980
EBITDA, $m
  3,997
  4,370
  4,534
  4,709
  4,896
  5,096
  5,309
  5,535
  5,774
  6,028
  6,297
  6,581
  6,881
  7,198
  7,533
  7,885
  8,257
  8,648
  9,060
  9,494
  9,951
  10,432
  10,937
  11,469
  12,028
  12,616
  13,234
  13,884
  14,567
  15,285
  16,039
Interest expense (income), $m
  887
  896
  933
  974
  1,017
  1,063
  1,113
  1,165
  1,221
  1,281
  1,344
  1,410
  1,480
  1,555
  1,633
  1,716
  1,803
  1,895
  1,992
  2,094
  2,202
  2,315
  2,434
  2,559
  2,691
  2,829
  2,975
  3,128
  3,288
  3,457
  3,635
Earnings before tax, $m
  2,135
  2,094
  2,169
  2,248
  2,333
  2,424
  2,520
  2,622
  2,730
  2,844
  2,966
  3,096
  3,231
  3,373
  3,524
  3,682
  3,849
  4,025
  4,211
  4,406
  4,611
  4,827
  5,054
  5,293
  5,544
  5,808
  6,086
  6,378
  6,684
  7,007
  7,345
Tax expense, $m
  0
  565
  586
  607
  630
  654
  680
  708
  737
  768
  801
  836
  872
  911
  951
  994
  1,039
  1,087
  1,137
  1,190
  1,245
  1,303
  1,365
  1,429
  1,497
  1,568
  1,643
  1,722
  1,805
  1,892
  1,983
Net income, $m
  1,839
  1,529
  1,583
  1,641
  1,703
  1,769
  1,839
  1,914
  1,993
  2,076
  2,165
  2,260
  2,358
  2,463
  2,572
  2,688
  2,810
  2,939
  3,074
  3,216
  3,366
  3,524
  3,690
  3,864
  4,047
  4,240
  4,443
  4,656
  4,880
  5,115
  5,362

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  560
  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
  31,104
  31,633
  32,816
  34,085
  35,441
  36,888
  38,427
  40,062
  41,797
  43,635
  45,580
  47,637
  49,809
  52,103
  54,523
  57,074
  59,763
  62,596
  65,580
  68,721
  72,027
  75,506
  79,166
  83,015
  87,063
  91,319
  95,793
  100,496
  105,439
  110,634
  116,092
Adjusted assets (=assets-cash), $m
  30,544
  31,633
  32,816
  34,085
  35,441
  36,888
  38,427
  40,062
  41,797
  43,635
  45,580
  47,637
  49,809
  52,103
  54,523
  57,074
  59,763
  62,596
  65,580
  68,721
  72,027
  75,506
  79,166
  83,015
  87,063
  91,319
  95,793
  100,496
  105,439
  110,634
  116,092
Revenue / Adjusted assets
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
Average production assets, $m
  24,215
  25,085
  26,023
  27,029
  28,104
  29,251
  30,472
  31,769
  33,145
  34,602
  36,145
  37,776
  39,498
  41,317
  43,236
  45,259
  47,392
  49,638
  52,004
  54,495
  57,117
  59,876
  62,778
  65,830
  69,040
  72,415
  75,963
  79,692
  83,612
  87,731
  92,060
Working capital, $m
  0
  -580
  -602
  -625
  -650
  -676
  -705
  -735
  -766
  -800
  -836
  -873
  -913
  -955
  -1,000
  -1,046
  -1,096
  -1,148
  -1,202
  -1,260
  -1,321
  -1,384
  -1,451
  -1,522
  -1,596
  -1,674
  -1,756
  -1,842
  -1,933
  -2,028
  -2,128
Total debt, $m
  22,977
  23,925
  24,963
  26,075
  27,265
  28,533
  29,883
  31,318
  32,839
  34,451
  36,157
  37,961
  39,866
  41,877
  43,999
  46,237
  48,595
  51,080
  53,697
  56,452
  59,351
  62,402
  65,611
  68,987
  72,537
  76,270
  80,193
  84,318
  88,653
  93,209
  97,996
Total liabilities, $m
  26,793
  27,742
  28,780
  29,892
  31,082
  32,350
  33,700
  35,135
  36,656
  38,268
  39,974
  41,778
  43,683
  45,694
  47,816
  50,054
  52,412
  54,897
  57,514
  60,269
  63,168
  66,219
  69,428
  72,804
  76,354
  80,087
  84,010
  88,135
  92,470
  97,026
  101,813
Total equity, $m
  4,310
  3,891
  4,036
  4,192
  4,359
  4,537
  4,727
  4,928
  5,141
  5,367
  5,606
  5,859
  6,127
  6,409
  6,706
  7,020
  7,351
  7,699
  8,066
  8,453
  8,859
  9,287
  9,737
  10,211
  10,709
  11,232
  11,783
  12,361
  12,969
  13,608
  14,279
Total liabilities and equity, $m
  31,103
  31,633
  32,816
  34,084
  35,441
  36,887
  38,427
  40,063
  41,797
  43,635
  45,580
  47,637
  49,810
  52,103
  54,522
  57,074
  59,763
  62,596
  65,580
  68,722
  72,027
  75,506
  79,165
  83,015
  87,063
  91,319
  95,793
  100,496
  105,439
  110,634
  116,092
Debt-to-equity ratio
  5.331
  6.150
  6.180
  6.220
  6.250
  6.290
  6.320
  6.360
  6.390
  6.420
  6.450
  6.480
  6.510
  6.530
  6.560
  6.590
  6.610
  6.630
  6.660
  6.680
  6.700
  6.720
  6.740
  6.760
  6.770
  6.790
  6.810
  6.820
  6.840
  6.850
  6.860
Adjusted equity ratio
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,839
  1,529
  1,583
  1,641
  1,703
  1,769
  1,839
  1,914
  1,993
  2,076
  2,165
  2,260
  2,358
  2,463
  2,572
  2,688
  2,810
  2,939
  3,074
  3,216
  3,366
  3,524
  3,690
  3,864
  4,047
  4,240
  4,443
  4,656
  4,880
  5,115
  5,362
Depreciation, amort., depletion, $m
  1,328
  1,380
  1,432
  1,487
  1,546
  1,609
  1,676
  1,748
  1,823
  1,903
  1,988
  2,076
  2,170
  2,270
  2,376
  2,487
  2,604
  2,727
  2,857
  2,994
  3,138
  3,290
  3,449
  3,617
  3,793
  3,979
  4,174
  4,379
  4,594
  4,820
  5,058
Funds from operations, $m
  3,268
  2,909
  3,015
  3,128
  3,249
  3,378
  3,516
  3,661
  3,816
  3,980
  4,153
  4,335
  4,529
  4,733
  4,948
  5,175
  5,414
  5,666
  5,931
  6,210
  6,504
  6,814
  7,139
  7,481
  7,841
  8,219
  8,616
  9,034
  9,474
  9,935
  10,420
Change in working capital, $m
  -105
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -91
  -95
  -100
Cash from operations, $m
  3,373
  2,929
  3,037
  3,152
  3,274
  3,405
  3,544
  3,691
  3,848
  4,013
  4,188
  4,373
  4,568
  4,775
  4,992
  5,222
  5,463
  5,718
  5,986
  6,268
  6,565
  6,877
  7,206
  7,552
  7,915
  8,297
  8,699
  9,121
  9,564
  10,030
  10,520
Maintenance CAPEX, $m
  0
  -1,330
  -1,378
  -1,430
  -1,485
  -1,544
  -1,607
  -1,674
  -1,746
  -1,821
  -1,901
  -1,986
  -2,076
  -2,170
  -2,270
  -2,376
  -2,487
  -2,604
  -2,727
  -2,857
  -2,994
  -3,138
  -3,290
  -3,449
  -3,617
  -3,793
  -3,979
  -4,174
  -4,379
  -4,594
  -4,820
New CAPEX, $m
  -798
  -870
  -938
  -1,006
  -1,076
  -1,147
  -1,221
  -1,297
  -1,376
  -1,457
  -1,542
  -1,631
  -1,723
  -1,819
  -1,919
  -2,023
  -2,133
  -2,247
  -2,366
  -2,491
  -2,622
  -2,759
  -2,902
  -3,052
  -3,210
  -3,375
  -3,548
  -3,729
  -3,920
  -4,119
  -4,329
Cash from investing activities, $m
  -969
  -2,200
  -2,316
  -2,436
  -2,561
  -2,691
  -2,828
  -2,971
  -3,122
  -3,278
  -3,443
  -3,617
  -3,799
  -3,989
  -4,189
  -4,399
  -4,620
  -4,851
  -5,093
  -5,348
  -5,616
  -5,897
  -6,192
  -6,501
  -6,827
  -7,168
  -7,527
  -7,903
  -8,299
  -8,713
  -9,149
Free cash flow, $m
  2,404
  728
  720
  716
  714
  714
  716
  720
  727
  735
  745
  756
  770
  786
  803
  823
  844
  867
  892
  920
  949
  980
  1,014
  1,050
  1,088
  1,129
  1,172
  1,217
  1,266
  1,317
  1,371
Issuance/(repayment) of debt, $m
  216
  948
  1,038
  1,113
  1,190
  1,269
  1,350
  1,434
  1,521
  1,612
  1,706
  1,804
  1,905
  2,011
  2,122
  2,238
  2,358
  2,485
  2,617
  2,755
  2,899
  3,051
  3,210
  3,376
  3,550
  3,732
  3,924
  4,125
  4,335
  4,556
  4,787
Issuance/(repurchase) of shares, $m
  -256
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -507
  948
  1,038
  1,113
  1,190
  1,269
  1,350
  1,434
  1,521
  1,612
  1,706
  1,804
  1,905
  2,011
  2,122
  2,238
  2,358
  2,485
  2,617
  2,755
  2,899
  3,051
  3,210
  3,376
  3,550
  3,732
  3,924
  4,125
  4,335
  4,556
  4,787
Total cash flow (excl. dividends), $m
  1,897
  1,676
  1,758
  1,828
  1,903
  1,982
  2,066
  2,155
  2,248
  2,347
  2,451
  2,560
  2,675
  2,797
  2,925
  3,060
  3,202
  3,352
  3,509
  3,675
  3,848
  4,031
  4,223
  4,426
  4,638
  4,861
  5,096
  5,342
  5,601
  5,873
  6,159
Retained Cash Flow (-), $m
  161
  -141
  -146
  -156
  -167
  -178
  -189
  -201
  -213
  -226
  -239
  -253
  -267
  -282
  -298
  -314
  -331
  -348
  -367
  -386
  -407
  -428
  -450
  -473
  -498
  -523
  -550
  -578
  -608
  -639
  -671
Prev. year cash balance distribution, $m
 
  560
  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
 
  2,096
  1,612
  1,672
  1,736
  1,804
  1,877
  1,953
  2,035
  2,121
  2,211
  2,307
  2,408
  2,515
  2,628
  2,747
  2,872
  3,003
  3,142
  3,288
  3,442
  3,603
  3,773
  3,952
  4,140
  4,338
  4,545
  4,763
  4,993
  5,234
  5,487
Discount rate, %
 
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
 
  1,878
  1,281
  1,166
  1,049
  933
  820
  710
  607
  511
  423
  344
  274
  215
  165
  124
  91
  65
  45
  31
  20
  13
  8
  5
  3
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Simon Property Group, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company's partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development.

FINANCIAL RATIOS  of  Simon Property Group (SPG)

Valuation Ratios
P/E Ratio 28
Price to Sales 9.5
Price to Book 12
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow 20
Growth Rates
Sales Growth Rate 3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.8%
Cap. Spend. - 3 Yr. Gr. Rate -1%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 533.1%
Total Debt to Equity 533.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 41.9%
Return On Equity - 3 Yr. Avg. 35.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 82.1%
Gross Margin - 3 Yr. Avg. 81.9%
EBITDA Margin 80%
EBITDA Margin - 3 Yr. Avg. 80.9%
Operating Margin 49.1%
Oper. Margin - 3 Yr. Avg. 50.6%
Pre-Tax Margin 39.3%
Pre-Tax Margin - 3 Yr. Avg. 37.7%
Net Profit Margin 33.8%
Net Profit Margin - 3 Yr. Avg. 32.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 110.8%

SPG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SPG stock intrinsic value calculation we used $5435 million for the last fiscal year's total revenue generated by Simon Property Group. The default revenue input number comes from 2016 income statement of Simon Property Group. 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 SPG stock valuation model: a) initial revenue growth rate of 3.6% 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 11.6%, whose default value for SPG is calculated based on our internal credit rating of Simon Property Group, 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 Simon Property Group.
    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 SPG stock the variable cost ratio is equal to 46.9%.

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 SPG 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 3.9% for Simon Property Group.

Corporate tax rate of 27% is the nominal tax rate for Simon Property Group. 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 SPG 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 SPG are equal to 445.5%.

Life of production assets of 18.2 years is the average useful life of capital assets used in Simon Property Group 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 SPG is equal to -10.3%. 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 - $4310 million for Simon Property Group - 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 315.581 million for Simon Property Group 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 Simon Property Group at the current share price and the inputted number of shares is $52.0 billion.

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COMPANY NEWS

▶ Forget Rate Tantrums, Bet on REIT ETFs   [Oct-17-17 04:45PM  Zacks]
▶ Is This the Future of America's Malls?   [09:28AM  Motley Fool]
▶ Is Now the Time to Invest in Real Estate Stocks?   [Oct-13-17 11:57AM  GuruFocus.com]
▶ Simon Property Stands Out in a Malled Sector   [Oct-12-17 03:00PM  Barrons.com]
▶ Colorado Mills: More exterior stores open at hail-damaged mall in Lakewood   [Oct-09-17 01:35PM  American City Business Journals]
▶ Simon Breaks Ground On Denver Premium Outlets®   [Oct-05-17 02:00PM  PR Newswire]
▶ 3 Hot Stocks to Buy in September   [Sep-19-17 07:37AM  Motley Fool]
▶ Whats Boosted Simon Property Groups Dividend Yield   [Sep-18-17 11:15AM  Market Realist]
▶ Where Trump sees carnage, jobs are springing up   [Sep-13-17 10:19AM  Yahoo Finance Video]
▶ Prologis and Simon Property Are Top REIT Picks   [Sep-12-17 03:26PM  Barrons.com]
▶ Reading The Tea Leaves: Simon Says Sue   [Aug-31-17 11:57AM  Forbes]
▶ [$$] Simon Sues Starbucks Over Planned Teavana Closures   [Aug-30-17 05:24PM  The Wall Street Journal]
▶ New retail casualty: See who filed for bankruptcy and is closing stores   [Aug-28-17 02:30PM  American City Business Journals]
▶ Woodbury Common Premium Outlets   [04:19PM  PR Newswire]
▶ High-profile Galleria restaurants to cost $11M to build   [04:05PM  American City Business Journals]
▶ Stocks That Fell to 3-Year Lows in the Week of August 11   [Aug-13-17 12:49PM  GuruFocus.com]
▶ [$$] Mall Owners Wave a Finger: Were Not Dead Yet   [Aug-09-17 12:49AM  The Wall Street Journal]
▶ Simon Property Compared to Its Peers after 2Q17   [Aug-08-17 08:07AM  Market Realist]
▶ [$$] Big Mall Operators Defy Industry's Gloom   [07:37AM  The Wall Street Journal]
▶ Did Simon Property Reward Stockholders Generously in 2Q17?   [Aug-07-17 10:37AM  Market Realist]
▶ What's changed at the Folsom Premium Outlets   [Aug-04-17 06:15PM  American City Business Journals]
▶ Realty Income Corp (O) Stock Isnt Convincing   [Aug-02-17 01:19PM  InvestorPlace]
▶ Simon Property reports 2Q results   [Aug-01-17 09:36PM  Associated Press]
▶ What Analysts Think of Simon Property ahead of 2Q17   [Jul-28-17 09:06AM  Market Realist]
Financial statements of SPG
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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