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National Storage REIT

ASX:NSR
Snowflake Description

Adequate balance sheet with moderate growth potential.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
NSR
ASX
$761M
Market Cap
Specialized REITs
Company description

National Storage REIT engages in the ownership and operation of self-storage centers in Australia and New Zealand. More info.


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SHARE PRICE
3 Month History
NSR
Industry
5yr Volatility vs Market
Competitors

Sorry, no analysis for National Storage REIT's competitors could be found in our database.

Value

 Is National Storage REIT undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of National Storage REIT to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

Dividends have been used for this discounted cash flow calculation, why is this?

Current Discount
Amount off the current price National Storage REIT is available for.
Intrinsic value
5%
Share price is $1.5 vs Future cash flow value of $1.59
Current Discount Checks
For National Storage REIT to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • National Storage REIT's share price is below the future cash flow value, but not at a significant discount (< 20%).
  • National Storage REIT's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for National Storage REIT's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are National Storage REIT's earnings available for a low price, and how does this compare to other companies in the same industry?
  • No earnings or negative earnings.
  • No earnings or negative earnings.
Price based on expected Growth
Does National Storage REIT's expected growth come at a high price?
  • No earnings or negative earnings.
Price based on value of assets
What value do investors place on National Storage REIT's assets?
  • Overvalued based on assets compared to the Real Estate industry average.
X
Value checks
We assess National Storage REIT's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Real Estate industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Real Estate industry average (and greater than 0)? (1 check)
  5. National Storage REIT has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (14327.14%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Dividend Discount Model)

The calculations below outline how an intrinsic value for National Storage REIT is arrived at by discounting future dividends to their present value. This approach is used for finance firms where free cash flow is difficult to estimate (e.g. Banks/ Insurance firms).

If the firm does not pay the majority of its earnings out as a dividend this method will often arrive at a value significantly lower than the share price.

See our documentation to learn about this calculation.



Value of the stock

Value = Expected dividends per share / (Discount Rate - Perpetual growth rate)
$1.59 = ($0.09 / (8.55% - 2.76%)

Value per share:
$1.59

Current discount (share price of $1.5): 5%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.55% = 2.76% + (0.8 * 7.24%)



Estimate of Bottom Up Beta

The Levered is used in the case of financial firms, but it is not adjusted for financial leverage like with non-finance firms. Therefore the average levered beta from comparable firms is used as the bottom-up beta. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Average Levered Beta from peers = 0.791

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.76% is from the 10 year government bond rate in AU.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is National Storage REIT expected to perform in the next 1 to 3 years based on estimates from 5 analysts?

    The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

    Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
    3 year growth
    Earnings are expected to become positive over 3 years.
    Future Earnings growth analysis
    Is National Storage REIT expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.

    Are National Storage REIT's annual earnings growth expected to exceed 4.1% over the next 3 years?

    • Expected to become positive in 1 year.
    • Expected to become positive over 3 years.
    Past and Future Earnings per Share
    The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
    Analysts growth expectations
    2 year growth check
    Super high growth metrics x1.5?

    Which of the these is expected to increase by over 50% in 2 year's time?

    • Revenue
    • Cash flow
    • National Storage REIT is expected to become profitable in 2 years.
    Performance in 3 years
    In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
    • National Storage REIT is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

    Improvement & Relative to industry
    • Expected to be less than the Real Estate industry average.
    • A decline in National Storage REIT's performance (ROE) is expected over the next 3 years.
    X
    Future performance checks
    We assess National Storage REIT's future performance by looking at:
    1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
    2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
    3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
    4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
    5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
    Some of the above checks will fail if the company is expected to be loss making in the relevant year.
    National Storage REIT has a total score of 3/6, see the detailed checks below.

    Note: If no +3 year data is available, +2.5 year data may be used.

    Note 2: We use GAAP per Share in all our calculations.

    Full details on the Future part of the Simply Wall St company analysis model.

    Past Performance

     How has National Storage REIT performed over the past 5 years?

    The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
    Past earnings growth
    Below we compare National Storage REIT's growth in the last year to its industry (Real Estate).
    Past Earnings growth analysis
    We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
    • National Storage REIT does not currently make a profit.
    Profit History
    National Storage REIT's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
    Performance last year
    We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
    • Poor return on shareholders funds (ROE) last year.
    • National Storage REIT performed above the Real Estate industry average based on return on assets (ROA) last year.
    • Performance based on revenue producing assets (ROCE) has been diminishing over 3 years.
    X
    Past performance checks
    We assess National Storage REIT's performance over the past 5 years by checking for:
    1. Has earnings per share (EPS) increased in past 5 years? (1 check)
    2. Has the EPS growth in the last year exceeded that of the Real Estate industry? (1 check)
    3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
    4. Is the Return on Equity (ROE) higher than 20%? (1 check)
    5. Is the Return on Assets (ROA) above industry average? (1 check)
    6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
    The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
    National Storage REIT has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations.

    Full details on the Past part of the Simply Wall St company analysis model.

    Health

     How is National Storage REIT's financial position? (This company is analysed differently as a bank or financial institution)

    This company is a bank or financial insitution.

    Fundamentally a bank's business is based upon borrowing and lending money, for this reason they typically have high levels of debt and we analyse them differently.
    Net Worth
        Balance sheet
        This treemap shows a more detailed breakdown of National Storage REIT's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
        Assets
        Liabilities and shares
        The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
            Historical Debt
            Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

            The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

            If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
                    BANK ANALYSIS

                    This company is a bank or financial institution, which is analysed accordingly below.

                    Below we check the amount of loans the bank has, how many of those are bad, and its ability to cover any bad loans.
                    • Acceptable proportion of non-loan assets held.
                    • Liabilities are made up of primarily higher risk sources of funding.
                    • Holds no customer deposits, loans are made up entirely of borrowed funds.
                    • The banks level of assets compared to its equity is low (i.e. an appropriate level of borrowing to fund lending).
                    • High level of bad loan coverage.
                    • Acceptable level of bad loan write offs (less than 2%).
                    X
                    Financial health checks (Bank)
                    We assess National Storage REIT's financial health as a bank by checking for:
                    1. Leverage (Assets to Equity > 20x)? (1 check)
                    2. Coverage of bad loans (Bad Loan Coverage > 100%)? (1 check)
                    3. Proportion of lower risk deposits compared to total funding (Deposits to Liabilities < 50%)? (1 check)
                    4. Proportion of higher risk assets compared to total assets (Loans to Assets > 110%)? (1 check)
                    5. Total loans compared to deposit funding (Loans to Deposits > 125%)? (1 check)
                    6. Level of bad loans (Net Charge Off Ratio > 3%)? (1 check)
                    7. National Storage REIT has a total score of 4/6, see the detailed checks below.


                    Full details on the Health part of the Simply Wall St company analysis model.

                    Dividends

                     What is National Storage REIT's current dividend yield, its reliability and sustainability?

                    Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
                    Annual Dividend Income
                    Dividend payments
                    6.14%
                    Current annual income from National Storage REIT dividends. Estimated to be 6.5% next year.
                    If you bought $2,000 of National Storage REIT shares you are expected to receive $123 in your first year as a dividend.
                    Dividend Amount
                    Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
                    • Paying above low risk savings rate. (3%)
                    • Paying above the markets top dividend payers. (4.92%)
                    Historical dividend yield
                    It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

                    We also check to see if the dividend has increased in the past 10 years.
                    • Whilst dividend payments have been stable, National Storage REIT has been paying a dividend for less than 10 years.
                    • Dividend payments have increased, but National Storage REIT only paid a dividend in the past 2 years.
                    Current Payout to shareholders
                    What portion of National Storage REIT's earnings are paid to the shareholders as a dividend.
                    • The company is paying a dividend however it is incurring a loss.
                    Future Payout to shareholders
                    • Dividends after 3 years are not well covered by net profit (1x coverage).
                    X
                    Income/ dividend checks
                    We assess National Storage REIT's dividend by checking for:
                    1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
                    2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
                    3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
                    4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
                    5. How sustainable is the dividend, can National Storage REIT afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
                    6. National Storage REIT has a total score of 2/6, see the detailed checks below.


                    Full details on the Dividends part of the Simply Wall St company analysis model.

                    Management

                     What is the CEO of National Storage REIT's salary, the management and board of directors tenure and is there insider trading?

                    Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
                    CEO
                    Andrew Catsoulis, image provided by Google.
                    Andrew Catsoulis
                    COMPENSATION$973,748
                    CEO Bio

                    Mr. Andrew Catsoulis serves as the Managing Director of National Storage Holdings Limited at National Storage REIT. Mr. Catsoulis serves as Company Secretary of Stowaway Self Storage Pty Ltd. He is a qualified finance, commercial and property lawyer who has worked for major law firm both in Australia and overseas. He is also a qualified project manager with considerable property development experience. He has over 18 years of specific self-storage industry expertise in areas of acquisition, development, integration and operation of 'greenfield' and developed self-storage centres. He was instrumen in the successful acquisition and integration of the original National Storage Group portfolio. He serves as Director at Stowaway Self Storage Pty Ltd, Storcat Pty Ltd., NS Saleco Pty Ltd and National Storage REIT. He has been a Director of National Storage Holdings Limited since November 1, 2013.

                    CEO Compensation
                    • CEO's compensation has increased whilst company is loss making.
                    • CEO's compensation appears reasonable.
                    Management Team

                    Andrew Catsoulis

                    TITLE
                    Managing Director of National Storage Holdings Limited and Director of National Storage Holdings Limited
                    COMPENSATION
                    $973,748

                    Stuart Owen

                    TITLE
                    Chief Financial Officer of National Storage Holdings Limited
                    COMPENSATION
                    $425,751

                    Peter Greer

                    TITLE
                    Chief Operating Officer of National Storage Holdings Limited
                    COMPENSATION
                    $877,350

                    Pat Rogers

                    TITLE
                    General Counsel of National Storage Holdings Limited and Company Secretary of National Storage Holdings Limited
                    COMPENSATION
                    $291,165

                    Makala Castelli

                    TITLE
                    General Manager of Marketing & Corporate - National Storage Holdings Limited

                    Claire Fidler

                    TITLE
                    Company Secretary of National Storage Holdings Limited
                    Board of Directors

                    Laurence Brindle

                    TITLE
                    Independent Non-Executive Chairman of National Storage Holdings Limited
                    COMPENSATION
                    $185,196

                    Andrew Catsoulis

                    TITLE
                    Managing Director of National Storage Holdings Limited and Director of National Storage Holdings Limited
                    COMPENSATION
                    $973,748

                    Anthony Keane

                    TITLE
                    Independent Non-Executive Director of National Storage Holdings Limited
                    COMPENSATION
                    $100,875

                    Howard Brenchley

                    TITLE
                    Independent Non-Executive Director of National Storage Holdings Limited
                    COMPENSATION
                    $89,000

                    Steve Leigh

                    TITLE
                    Independent Non-Executive Director of National Storage Holdings Limited
                    COMPENSATION
                    $90,010
                    Recent Insider Trading
                    • More shares have been bought than sold by National Storage REIT insiders in the past 3 months.
                    Who owns this company?
                    X
                    Management checks
                    We assess National Storage REIT's management by checking for:
                    1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
                    2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
                    3. Is the average tenure of the management team less than 2 years? (1 check)
                    4. Is the average tenure of the board of directors team less than 3 years? (1 check)
                    5. National Storage REIT has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


                    Note: We use the top 6 management executives and board members in our calculations.

                    Note 2: Insider trading include any internal stakeholders and these transactions.

                    Full details on the Management part of the Simply Wall St company analysis model.

                    Company News

                    Articles
                    Announcements

                    Company Info

                    Description

                    National Storage REIT engages in the ownership and operation of self-storage centers in Australia and New Zealand. The company owns and operates approximately 105 self-storage centers; and manages approximately of 59,200 storage units through 542,000 square meters of net lettable area. It offers business storage, records management, climate controlled wine storage, vehicle storage, vehicle and trailer hiring, packaging, insurance, and other value added services. The company provides its solutions to approximately 35,000 residential and commercial customers. National Storage REIT is headquartered in Brisbane, Australia.

                    Details
                    Name:National Storage REIT
                    Ticker:NSR
                    Exchange:ASX
                    Founded:
                    Market Cap:$761 million
                    Website:http://www.nationalstorageinvest.com.au
                    Listings
                    Map

                    10 Felix Street, Brisbane, 4000, Australia

                    Street

                    Industry
                    Industry:Specialized REITs
                    Sector:Real Estate