Discounted Cash Flow Calculation for NYSE:RC using Excess Returns Model Model
The calculations below outline how an intrinsic value for Ready Capital 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.
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Ready Capital's share price is below the future cash flow value, but not at a moderate discount (< 20%).
Ready Capital'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 Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Ready Capital's earnings available for a low price, and how does
this compare to other companies in the same industry?
Ready Capital's earnings are expected to grow by 7.1% yearly, however this is not considered high growth (20% yearly).
Ready Capital's revenue is expected to grow by 3.1% yearly, however this is not considered high growth (20% yearly).
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 occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Ready Capital's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
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.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
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.
TENURE AS CEO
Mr. Thomas Edward Capasse, also known as Tom, is a Manager and Co-Founder of Waterfall Asset Management, LLC (“Manager”). Mr. Capasse also serves as Chairman of board of directors and Chief Executive Officer at Sutherland Asset Mgmt Corp. Mr. Capasse managed the principal finance groups at Greenwich Capital from 1995 until 1997, Nomura Securities from 1997 until 2001, and Macquarie Securities from 2001 until 2004. Mr. Capasse has significant and long standing experience in the securitization market as a Founding Member of Merrill Lynch's ABS Group (1983-1994) with a focus on MBS transactions (including the initial Subprime Mortgage and Manufactured Housing ABS) and experience in many other ABS sectors. Mr. Capasse began his career as a Fixed Income Analyst at Dean Witter and Bank of Boston. Mr. Capasse received a Bachelor of Arts degree in Economics from Bowdoin College in 1979.
Insufficient data for Tom to compare compensation growth.
Insufficient data for Tom to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Ready Capital management team is about average.
CFO & Secretary
Chairman & CEO
President & Director
Chief Investment Officer
Director of Finance Division
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Ready Capital board of directors is less than 3 years, this suggests a new board.
What Kind Of Shareholders Own Ready Capital Corporation (NYSE:RC)?
Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. … Companies that used to be publicly owned tend to have lower insider ownership. … Ready Capital is a smaller company with a market capitalization of US$500m, so it may still be flying under the radar of many institutional investors.
Have Insiders Been Buying Ready Capital Corporation (NYSE:RC) Shares This Year?
So before you buy or sell Ready Capital Corporation (NYSE:RC), you may well want to know whether insiders have been buying or selling. … But logic dictates you should pay some attention to whether insiders are buying or selling shares. … Ready Capital Insider Transactions Over The Last Year.
Ready Capital Corporation operates as a real estate finance company in the United States. The company originates, acquires, finances, and services small balance commercial (SBC) loans, small business administration (SBA) loans, and residential mortgage loans, as well as mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments. It operates through four segments: Loan Acquisitions; SBC Originations; SBA Originations, Acquisitions and Servicing; and Residential Mortgage Banking. The Loan Acquisitions segment acquires performing and non-performing SBC loans. The SBC Originations segment originates SBC loans secured by stabilized or transitional investor properties using various loan origination channels; and originates and services multi-family loan products. The SBA Originations, Acquisitions and Servicing segment acquires, originates, and services owner-occupied loans guaranteed by the SBA. The Residential Mortgage Banking segment originates residential mortgage loans through retail, correspondent, and broker channels. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.