EPR - Embedded Expectations Analysis - 2020 10 21
EPR Properties (EPR:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.3x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about their ability to improve rent collections, their ability to collect cash and deferral payments, and the new Master Lease structureSpecifically, management may lack confidence in their ability to mitigate declines in adjusted funds from operations (AFFO), continue improving rent collections, and collect cash from deferrals. Moreover, they may be concerned about the performance of their outdoor tenants and the low percentage of customers with no deferrals. Furthermore, they may be exaggerating the potential of the new Master Lease structure in reducing risk, and might be downplaying headwinds to the ski season related to the pandemic
EPR Properties is a self-administered real estate investment trust. The company's real estate portfolio consist of investments in its Experiential and Education reportable segments. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment includes the following property types: early childhood education centers and private schools.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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