In this article, let´s consider Ventas, Inc. (VTR), a $19.55 billion market cap, which has a trailing P/E ratio that indicates that the stock is relatively overvalued (PE 40.3x vs Industry Median 24.5x).The company is a real estate investment trust with a portfolio of seniors housing and healthcare properties in the United States and Canada.
So, in this article, let´s take a look at a model which is applicable to stable, mature, dividend-paying firms and try to find the intrinsic value of the stock. Although the model has a number of characteristics that make it useful and appropriate for many applications, it is by no means the be-all and end-all for valuation. The purpose is to force investors to evaluate different assumptions about growth and future prospects. Continue Reading »