Howard Hughes Holdings Inc is scored 36 for moat and 37 for management. The management score rests on a return on invested capital of 13.7% and a gross margin of 18.7% — figures that describe capital earning less than it costs to employ. Debt sits at 1.35x equity.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 15.0% a year, below the 16.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $148.20, a 10-CAP price of $131.86 and a payback time price of $208.16, with the value zone set at the highest of the three, $208.16. Today's price of $72.06 sits inside that zone.
The price sits inside the value zone, but the business scores 36 for moat and 37 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $72.06 |
| Market cap | $4.3B |
| P/E ratio | 14.6x |
| Return on invested capital | 13.7% |
| Gross margin | 18.7% |
| Debt to equity | 1.35x |
| Free cash flow yield | 9.8% |
| Growth rate used | 15.0% |
| Growth rate measured | 16.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| Colliers Intl Gr-Subord Vot (CIGI) | 69 | $100.17 |
| PotlatchDeltic Corp. (PCH) | 30 | $19.73 |
| Hilton Grand Vacations Inc (HGV) | 57 | $81.91 |
| Firstservice Corp (FSV) | 88 | $127.70 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Howard Hughes Holdings Inc rather than accepting ours.