The calculations below outline how an intrinsic value for Secure Trust Bank is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
Note the calculations below are per share.
See our documentation to learn about this calculation.
Excess Returns = (Stable Return on equity – Cost of equity) (Book Value of Equity per share)
£0.90 = (14.29% – 8.3%) * £15.06)
Terminal Value of Excess Returns = Excess Returns / (Cost of Equity - Expected Growth Rate)
£13.26 = £0.90 / (8.3% - 1.49%)
Value of Equity = Book Value per share + Terminal Value of Excess Returns
£28.32 = £15.06 + £13.26Inputs used in model:
Stable EPS = Stable Book Value * Return on Equity
£2.15 = £15.06 * 14.29%
Source: Weighted future Return on Equity estimates from 6 analysts.
Book Value of Equity per Share: £15.06
Source: Weighted future Book Value estimates from 3 analysts.
Expected Growth Rate: 1.49%
Source: Risk Free Rate/ 10 year Government Bond Rate in GBP.
Value per share:
Current discount (share price of £16.65): 41.21%
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 = 8.3% = 1.49% + (0.8 * 8.51%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (£305,765,039).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.789 = 0.243 (1 + (1- 19%) (20.6%))
Levered Beta used in calculation = 0.8
This company is a bank or financial institution, which is analysed accordingly below.
Mr. Paul Anthony Lynam, ACIB, AMCT, Fifs, has been the Chief Executive of Secure Trust Bank Plc since September 13, 2010. Mr. Lynam served as the Managing Director of Banking at Royal Bank of Scotland Group. Previously, he served as the Chief Executive of UK Business Banking and Managing Director of Lombard North Central PLC. He serves as a Director at Secure Trust Bank Plc. He has been a Director of Arbuthnot Banking Group PLC since September 13, 2010. Mr. Lynam holds banking (ACIB) and treasury qualifications (AMCT) and is a Governor of the IFS School of Finance.
Average tenure of the Secure Trust Bank management team in years:
Average tenure and age of the Secure Trust Bank board of directors in years:
For Secure Trust Bank, its most recent earnings (trailing twelve month) is UK£19.60M, which, against the previous year's figure, has plunged by -7.55%. … Since these values may be fairly nearsighted, I’ve calculated an annualized five-year value for Secure Trust Bank's net income, which stands at UK£13.86M This suggests that even though earnings declined against the previous year, over the long run, Secure Trust Bank's earnings have been increasing on average. … Let's see if it is only owing to industry tailwinds, or if Secure Trust Bank has experienced some company-specific growth.Simply Wall St - – Full article
STB’s projected future profit growth is a robust 29.66%, with an underlying 93.26% growth from its revenues expected over the upcoming years. … Profit growth, coupled with top-line expansion, is a positive indication. … LSE:MTRO Future Profit Mar 15th 18 For more financially robust companies with high growth potential to enhance your portfolio, explore this interactive list of fast growing companies.Simply Wall St - – Full article
LSE:STB Historical Dividend Yield Mar 12th 18 Lookers plc (LSE:LOOK) Lookers plc engages in the sale, hire, and maintenance of motor vehicles and motorcycles in the United Kingdom and Ireland. … MER's dividend per share have been growing over the past 10 years, with a payout ratio of 56.85%, indicating earnings are able to cover the payments. … LSE:MER Historical Dividend Yield Mar 12th 18 For more mispriced dividend stocks to add to your portfolio, explore this interactive list of undervalued dividend payers.Simply Wall St - – Full article
I will take you through some useful measures of bad debt and liabilities in order to properly analyse Secure Trust Bank’s risk level before you invest in the stock. … See our latest analysis for Secure Trust Bank LSE:STB Historical Debt Mar 9th 18 Does Secure Trust Bank Understand Its Own Risks? … This may mean the bank is too cautious with its level of its safer form of borrowing and has plenty of headroom to take on risker forms of liability.Next Steps: Although Secure Trust Bank’s level of deposits to liabilities level is sufficient, it has taken on risk through high levels of bad debt and poor provisioning for their repayment.Simply Wall St - – Full article
Let’s take a look at Secure Trust Bank’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. … Great news for investors – Secure Trust Bank is still trading at a fairly cheap price. … Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price.Simply Wall St - – Full article
Stocks recently deemed undervalued include Secure Trust Bank and Connect Group, as they trade at a market price below their true valuations. … STB's stock is currently floating at around -34% less than its value of £27, at the market price of £17.73, according to my discounted cash flow model. … SYNC's stock is currently trading at -58% less than its actual worth of £5.04, at a price of £2.13, according to my discounted cash flow model.Simply Wall St - – Full article
LSE:STB Intrinsic Value Jan 9th 18 Deriving STB's Intrinsic Value The main belief for this model is, the value of the company is how much money it can generate from its current level of equity capital, in excess of the cost of that capital. … The returns above the cost of equity is known as excess returns: Excess Return Per Share = (Stable Return On Equity – Cost Of Equity) (Book Value Of Equity Per Share) = (14.45% – 8.72%) * £15.02 = £0.86 Excess Return Per Share is used to calculate the terminal value of STB, which is how much the business is expected to continue to generate over the upcoming years, in perpetuity. … This is a common component of discounted cash flow models: Terminal Value Per Share = Excess Return Per Share / (Cost of Equity – Expected Growth Rate) = £0.86 / (8.72% – 1.49%) = £11.9 Combining these components gives us STB's intrinsic value per share: Value Per Share = Book Value of Equity Per Share + Terminal Value Per Share = £15.02 + £11.9 = £26.92 Compared to the current share price of £18.45, STB is priced below its intrinsic value.Simply Wall St - – Full article
LSE:STB Historical Dividend Yield Oct 26th 17 Numis Corporation Plc (AIM:NUM) NUM has a good dividend yield of 3.94% and distributes 62.12% of its earnings to shareholders as dividends. … AIM:NUM Historical Dividend Yield Oct 26th 17 River and Mercantile Group PLC (LSE:RIV) RIV has a large dividend yield of 5.61% and the company has a payout ratio of 77.16% , and analysts are expecting a 86.47% payout ratio in the next three years. … LSE:RIV Historical Dividend Yield Oct 26th 17 For more solid dividend payers to add to your portfolio, you can use our free platform to explore our interactive list of top dividend payers.Simply Wall St - – Full article
Secure Trust Bank PLC provides retail banking products and services in the United Kingdom. It operates in six segments: Real Estate Finance, Asset Finance, Commercial Finance, Personal Lending, Motor Finance, and Retail Finance. The Real Estate Finance segment provides finance for commercial and residential real estate developments and investments, as well as for mixed development projects. The Asset Finance segment offers loans to acquire the commercial assets, such as commercial vehicles, and building and manufacturing equipment to small and medium sized enterprises (SMEs). The Commercial Finance segment provides invoice financing solutions, including invoice factoring and discounting services to SMEs. The Personal Lending segment offers unsecured consumer loans through broker aggregators and partners. The Motor Finance segment provides hire purchase agreements secured against the vehicle being financed. This segment distributes its motor finance products through motor dealers, brokers, and Internet introducers. The Retail Finance segment offers point of sale unsecured finance, such as finance for the purchase of sports and leisure equipment comprising cycles; furniture; and consumer electronics for in-store, mail order, and online retailers. This segment serves retailers of various industries, including cycle, music, furniture, outdoor/leisure, electronics, dental, jewelry, and football season tickets. It also provides savings products, including notice deposits, term deposits, and fee-based accounts, as well as deposit bonds; current accounts; OneBill, a household budgeting and payment product; Rentsmart; debt collection; and property rental and leasing services. The company was incorporated in 1954 and is headquartered in Solihull, the United Kingdom.
|Name:||Secure Trust Bank Plc|
Secure Trust Bank Plc
One Arleston Way,
West Midlands, B90 4LH,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|LSE||STB||Ordinary Shares||London Stock Exchange||GB||GBP||02. Nov 2011|
|Company Analysis updated:||2018/03/21 19:38|
|Last estimates confirmation:||2018/03/19|
|Last earnings update:||2017/06/30|
|Last annual earnings update:||2016/12/31|
All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.