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Linked here is a PDF copy of my detailed analysis of Entertainment Properties Trust (NYSE:EPR) (alt.1, alt.2). Below are some highlights from the above linked analysis:

Company Description: Entertainment Properties Trust, a real estate investment trust (REIT), develops and acquires entertainment and related properties.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

  1. Avg. High Yield Price
  2. 20-Year DCF Price
  3. Avg. P/E Price
  4. Graham Number
EPR is trading at a discount to all four valuations above. If I exclude the high and low valuations and average the remaining two, EPR is trading at a 37.6% discount. EPR earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
  1. Rolling 4-yr Div. > 15%
  2. Dividend Growth Rate
  3. Years of Div. Growth
  4. 1-Yr. > 5-Yr Growth
  5. Payout 15% of avg.
EPR earned one Star in this section for 3.) above. EPR has paid a cash dividend to shareholders every year since 1998 and has increased its dividend payments for 10 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account [MMA]? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
  1. NPV MMA Diff.
  2. Years to >MMA
EPR earned both of the available Stars in this section. The NPV MMA Diff. of the $138,683 is in excess of the $7,500 minimum I look for in a stock that has increased dividends as long as EPR has. EPR's current yield of 11.59% exceeds the 4.61% estimated 20-year average MMA rate.

Other: EPR generates stable cash flows from leased properties. It has a good geographic diversification, but a high reliance on a single customer within a mature industry (movie theaters). The company's investment in entertainment-related mortgage loans, wineries, and public charter schools adds to its risk profile. Risks include financial problems by tenants and defaults on the trust's portfolio of commercial mortgage loans.

Conclusion:
EPR earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned two Stars in the Dividend Income vs. MMA section for a net total of four Stars. This quantitatively ranks EPR as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price could increase to $76.82 for EPR's NPV MMA Differential to be around the $7,500 that I like to see. At that price the stock would yield 4.27%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the $7,500 NPV MMA Differential I'm looking for, the calculated rate is -6.8%. This dividend growth rate is significantly below the 7.9% used in this analysis.

The above tells me that the market does not believe EPR will perform as it has in the past and/or it expects the company to cut its dividend. This is not a stock that I would rush out to buy anytime soon.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in EPR (0.0% of my Income Portfolio) .

Source: Entertainment Properties Trust: One Stock I Wouldn't Rush to Buy