Apollo Commercial Real (ARI:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Apollo Commercial Real(ARI:NYS)

Real Estate:REIT-Diversified

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$17.90 (USD) 14/02/2019

Weighted Valuation
$18.56 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 3.7%

Valuation Models Analyst Consensus: $19.25 (USD)
(in order of importance) Adjusted Book Value: $17.17 (USD)
Discounted Cash Flow: $19.30 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (ARI:NYS USD)

Price 17.90
Range 17.80 – 18.22
52 week 16.66 – 19.52
Open 18.05
Vol / Avg. 2.52M/981702
Mkt cap 2.4B
P/E 12.09
Div/yield 1.84/0.10
EPS 1.48
Shares 134.29M
Beta 0.63

Company Description

Apollo Commercial Real Estate Finance Inc is a real estate investment trust that primarily originates, invests in, acquires, and manages commercial first-mortgage loans, subordinate financings, commercial mortgage-backed securities, and other real estate-related debt investments. The subordinate loans and first-mortgage loans account for the vast majority of the portfolio on a cost basis. Property types include residential, retail, healthcare, office, mixed-use, hotel, industrial, multifamily, securities, and other, with residential properties and hotels representing the highest property value. More than a third of the properties are located in New York City, with the other properties located across other regions of the United States, as well as other countries.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ARI:NYS

Using a discounted cash flow model we generated an intrinsic value of $19.30 (USD) for ARI:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ARI:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $19.30 1% 5% 1% 5%
WACC (or Ke) 8.79 $23.29 $16.49
Terminal Growth Rate 3.00 $16.78 $22.87
Tax Rate 0.31 $20.70 $17.90
Cash Flow 234,364,869 $18.33 $20.26
Capital Expenditures 0 $19.30 $19.30
Long Term Debt 0 $19.30 $19.30

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $11.78 (USD) for ARI:NYS. We also generated a valuation of $20.68 (USD) using other metrics and comparables.
The comparable companies were Arbor Realty Trust (ABR:NYS), Ladder Capital (LADR:NYS), PotlatchDeltic (PCH:NAS), Redwood Trust (RWT:NYS) and Urban Edge Props (UE:NYS).

Company ARI:NYS End Date Value
Earnings/Share $1.48 (USD)
Book Value/Share $18.81 (USD)
Sales/Share $1.71 (USD)
Cash Flow/Share $1.88 (USD)
EBITDA/Share $2.18 (USD)
Price Based on Comps Adjustment Factor (%)
$21.40 (USD) -69.3
$32.39 (USD) -54.3
$8.31 (USD) 0.0
$6.65 (USD) -23.3
$0.00 (USD) -81.2
ARI:NYS Ratios Used Average Values ABR:NYS LADR:NYS PCH:NAS RWT:NYS UE:NYS
12.55 PE Ratio 14.46 8.67 8.66 15.97 9.84 29.17
0.97 PB Ratio 1.72 1.46 1.49 2.11 1.01 2.54
10.63 PS Ratio 4.85 3.63 5.40 2.17 7.20 5.85
9.70 PCF Ratio 12.10 0.00 6.88 11.16 0.00 18.25
0.00 EV to EBITDA 13.26 0.00 0.00 10.69 0.00 15.84

Multiples

Using a multiples approach we generated a valuation of  $18.85 (USD) for ARI:NYS

Company ARI:NYS End Date Value
Earnings/Share $1.48 (USD)
Book Value/Share $18.81 (USD)
Sales/Share $1.71 (USD)
Cash Flow/Share $1.88 (USD)
EBITDA/Share $2.18 (USD)
Price Based on Comps Adjustment Factor
$16.08 (USD) 0
$17.16 (USD) 0
$12.82 (USD) 0
$20.89 (USD) 0
$27.33 (USD) 0
Ratios Ratio Average
PE Ratio 10.87
PB Ratio 0.91
PS Ratio 7.48
PCF Ratio 11.13
EV to EBITDA 12.56

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ARI:NYS for the last 9 years was  0.92

We ran the Adjusted Book Value for  ARI:NYS and generated a book value of  $18.75 (USD)
By multiplying these we get an adjusted valuation of  $17.17 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for ARI:NYS. The 1 analysts have a concensus valuation for ARI:NYS for 2019 of $19.25 (USD).

ARI:NYS Apollo Commercial Real

No analyst recommendation
Current Price: not available

No analyst consensus

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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