DCF Studio

    HST · NMS · Real Estate

    Host Hotels & Resorts, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 13.56

    Market price

    USD 21.84

    Implied upside

    -37.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 13.56-37.9%
    Exit multiple
    USD 29.57+35.4%
    Market price
    USD 21.84

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.6bnUSD 7.1bnUSD 7.6bnUSD 8.2bnUSD 8.8bn+7.6%
    EBITUSD 930.2mUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+7.6%
    NOPATUSD 890.9mUSD 958.6mUSD 1.0bnUSD 1.1bnUSD 1.2bn+7.6%
    Add depreciation & amortisationUSD 872.8mUSD 939.2mUSD 1.0bnUSD 1.1bnUSD 1.2bn+7.6%
    Less capital expenditureUSD -700.8mUSD -754.1mUSD -811.5mUSD -873.2mUSD -939.6m+7.6%
    Less increase in working capitalUSD 90.8mUSD 97.8mUSD 105.2mUSD 113.2mUSD 121.8m-7.6%
    Free cashflow to firmUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bn+7.6%
    Discount factor0.95690.87610.80210.73440.6724-
    Present valueUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.0bn-1.5%
    Present Value Of The ForecastUSD 5.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.068Reported 1.101, pulled toward 1.0 (Blume)
    Cost of equity10.87%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 15.2bn72.9% of capital
    Total debtUSD 5.6bn27.1% of capital, book value as a proxy
    Tax rate4.2%Effective, capped at statutory
    WACC9.22%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 13.56

    62% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.2bn
    Less reinvestment at g/ROIC (27.1% of NOPAT)
    USD -323.8m
    Capitalised
    USD 870.6m
    ROIC (WACC floor)
    9.2%
    Terminal value, undiscounted
    USD 13.3bn
    Terminal value, discounted
    USD 8.9bn
    Enterprise value
    USD 14.3bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 9.4bn

    Exit at 12.3x EBITDA

    Value per shareUSD 29.57

    79% of EV

    Terminal value, undiscounted
    USD 29.8bn
    Terminal value, discounted
    USD 20.0bn
    Enterprise value
    USD 25.4bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 20.5bn

    Spread between methods: 74%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.22%18.7418.8218.9119.0019.09
    8.22%15.7715.8415.9115.9916.06
    9.22%13.4413.5013.5613.6213.69
    10.22%11.5611.6111.6711.7211.78
    11.22%10.0110.0610.1110.1510.20

    Outlined: this model. Green text: above today's price of 21.84. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year7.6%15.7%+8.1pp
    EBIT margin14.1%20.4%+6.2pp
    Discount rate9.2%6.5%-2.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.