GNI  Great Northern Iron Ore Proper...

Exchange

NYSE

Sector

Basic Industries

Industry

Precious Metals

Market Cap.

12.15M

Vuru Grade

54.00/100

Current Price

$8.00
+0 (+0%)

Growth Price

$1.19
Overvalued by 85.17%

Stability Price

$0.04
Overvalued by 99.54%

Company Metrics

  • P/E 0.93
  • P/S 0.62
  • P/B 1.58
  • EPS 9
  • Cash ROIC -315.22%
  • Cash Ratio 0.18
  • Dividend 5 / 0%
  • Avg. Vol. 35,759.00
  • Shares 51.12M
  • Market Cap. 12.15M

Company Description

Great Northern Iron Ore Properties, a conventional nonvoting trust, owns and leases mineral and non-mineral lands on the Mesabi Iron Range in northeastern Minnesota. It owns mineral interests in 12,033 acres on the Mesabi Iron Range Formation, including approximately 7,443 acres that are wholly owned. The trust would dissolve in April 2015. The company was founded in 1906 and is based in Saint Pau... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Great Northern Iron Now Worth Less Than $21, Will Fall To $0 In 15 Months
Seeking Alpha - Jan 5, 2014
Great Northern Iron Ore (NYSE: GNI) is one of the most misunderstood stocks in America. Buyers are currently ... After that the shares expire worthless, and the trust's property and mineral rights pass to the reversioner, ConocoPhillips. In short, the ...
Great Northern Iron Ore: The Greatest Short Play You Can't Make
Seeking Alpha - Mar 1, 2012
This is an article on one of those opportunities, which, unfortunately, you cannot take advantage of. First, here's a little background information.
Great Northern Iron Ore Properties (GNI) Ex-Dividend Date Scheduled for March ...
Nasdaq - Mar 26, 2015
Great Northern Iron Ore Properties ( GNI ) will begin trading ex-dividend on March 27, 2015. A cash dividend payment of $1.3 per share is scheduled to be paid on April 30, 2015.
The iron empire: James J. Hill's Great Northern ore trust terminated
TwinCities.com-Pioneer Press - Apr 17, 2015
Instead, it's for his lesser-known role as an iron ore magnate. For decades, much of Minnesota's Mesabi Range was owned by a St. Paul-based trust that Hill and his partners created in 1906.
Hill's Great Northern ore trust terminated
Duluth News Tribune - Apr 19, 2015
The Great Northern Iron Ore Properties trust finally terminated on April 6, a century after Hill's death, and its shares stopped trading on the New York Stock Exchange.
WIRED Photo: mind-expanding views of science and technology
Wired.co.uk - Jun 9, 2016
Mike Lynn, Aero-Flite's head of flight operations, says the red colour - obtained by adding iron oxide - makes it clear to pilots which areas have already been covered: "It shows up against the green canopy of the trees.
James J. Hill's iron ore legacy has last day on NYSE
TwinCities.com-Pioneer Press - Apr 7, 2015
After 109 years in business, the Great Northern Iron Ore Properties Trust officially terminated Monday and its stock stopped trading on the New York Stock Exchange.
Minnesota iron ore trust dissolves after 108 years
MINING.com - Apr 10, 2015
The Great Northern Iron Ore Properties, set up by railroad pioneer James J. Hill in December 1906, was terminated on Monday, April 6. The trust agreement stated that the trust shall continue for twenty years after the death of the last survivor of ...
A Massive Dividend You'd Be Crazy to Buy
Motley Fool - Jan 5, 2011
Perhaps they are extremely bullish on iron ore prices and think that future distributions will be much higher than historical distributions.
Railroad tycoon's Minnesota trust sees final trading day after 109 years
INFORUM - Apr 12, 2015
After 109 years in business, the Great Northern Iron Ore Properties Trust officially terminated Monday and its stock stopped trading on the New York Stock Exchange.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for GNI to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate GNI's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$8.00 Current Price

$1.19 Growth Price (DCF)

Overvalued by 85.17%


Growth Rate Assumed by Market: 45.78%


Future Free Cash Flow Growth Rate: 0.1%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$0.04 Stability Price (EPV)

Overvalued by 99.54%


Discount Rate: 15.0%

$0.09 Book Price

Overvalued by 98.84%


Very Poor Cash Return on Invested Capital over the past 5 years

GNI has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

GNI has lost $315.22 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 21.38M 24.52M 14.64M 14.39M -635,958.00
divided by
Invested Capital 6.30M 2.07M 4.81M -388,053.00 -210,301.00
Cash ROIC 339.31% 1,185.44% 304.25% -3,707.51% 302.40%

Varying Return on Equity over the past 5 years

GNI has generated strong profits with money shareholders have invested. However, there is a substantial variation in their Return on Equity from year-to-year. This may reflect management's inability to generate consistent returns or may be caused by one-time events. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

GNI has generated $152.07 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 23.05M 20.07M 14.79M 13.12M -3.65M
divided by
Stockholders' Equity 10.31M 9.40M 10.75M 7.07M -404,655.00
Return on Equity 223.56% 213.52% 137.59% 185.68% -

Excellent Business Performance over the past 10 years

GNI has been able to maintain profitability in good times and bad. This could mean GNI has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

GNI has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 14.52M 16.45M 13.56M 15.63M 15.44M 21.38M 24.52M 14.64M 14.39M -635,958.00

Very Weak Balance Sheet

GNI is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of GNI's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 6.22M 5.98M 6.00M 4.89M 5.68M 5.86M 9.07M 6.18M 8.43M 210,301.00
Current Assets 10.67M 8.91M 13.01M 8.47M 11.73M 13.77M 13.14M 10.63M 11.40M 351,018.00
Total Assets 18.51M 17.53M 19.94M 16.70M 17.38M 20.91M 19.12M 15.06M 11.60M 596,217.00
Current Liabilities 5.03M 4.45M 6.85M 4.01M 5.74M 8.75M 7.98M 4.07M 3.56M 1.17M
Total Liabilities 6.35M 5.53M 8.87M 5.63M 7.27M 10.61M 9.72M 4.31M 4.54M 1.00M
Stockholder' Equity 12.16M 12.00M 11.07M 11.07M 10.12M 10.31M 9.40M 10.75M 7.07M -404,655.00
Current Ratio 2.12 2.00 1.90 2.11 2.04 1.57 1.65 2.61 3.20 0.30
TL-to-TA 0.34 0.32 0.44 0.34 0.42 0.51 0.51 0.29 0.39 1.68

Low or No Reinvestment of Profits over the past 10 years

GNI has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to GNI operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 14.13M 13.58M 13.66M 13.11M - - - - - -12.91M
Retained Earnings Growth - -3.88% 0.60% -4.04% -100.00% - - - - -

Varying Competitive Advantage over the past 10 years

GNI likely has a competitive advantage which prevents other companies from entering or competing in their industry. However, there is a substantial variation in their Net Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$73.44 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 14.77M 14.45M 17.63M 11.45M 17.47M 23.05M 20.07M 14.79M 13.12M -3.65M
divided by
Revenue 17.55M 17.20M 20.78M 14.83M 20.87M 26.74M 24.16M 18.95M 17.96M -
Net Profit Margin 84.15% 84.04% 84.87% 77.21% 83.72% 86.20% 83.08% 78.05% 73.07% -

Varying Pricing Power over the past 10 years

GNI has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$89.07 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 17.01M 16.64M 20.18M 14.82M 20.86M 26.74M 24.15M 18.95M 17.96M -
divided by
Revenue 17.55M 17.20M 20.78M 14.83M 20.87M 26.74M 24.16M 18.95M 17.96M -
Gross Margin 96.90% 96.78% 97.15% 99.97% 99.98% 100.00% 99.98% 99.98% 99.97% -

Low Capital Intensity over the past 10 years

GNI has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that GNI may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

0.17% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 39,340.00 - 31,798.00 17,200.00 38,695.00 18,685.00 29,990.00 23,206.00 - 4,575.00
divided by
Net Income 14.77M 14.45M 17.63M 11.45M 17.47M 23.05M 20.07M 14.79M 13.12M -3.65M
Capital Expenditure Ratio 0.27% - 0.18% 0.15% 0.22% 0.08% 0.15% 0.16% - -0.13%

Inconsistent Dividend History over the past 10 years

GNI has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid 15.00M 15.60M 15.15M 14.85M 16.65M 19.50M 21.75M - - -
divided by
Shares Outstanding 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 51.12M
Dividend Paid Per Share 10.00 10.39 10.10 9.90 11.10 13.00 14.50 - - -
Price at Year End 70.07 79.45 49.01 72.13 127.93 110.25 69.32 69.99 15.80 0.02
Dividend Yield 14.27% 13.08% 20.61% 13.73% 8.68% 11.79% 20.92% - - -

History of Stock Buybacks over the past 10 years

GNI has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 1.50M 51.12M
Stock Bought Back - -0.06% 0.05% - - - - - - -97.07%
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Discussion
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1
Posted by smg  (on December 8, 2014)
Is all analysis computer generated here? How can GNI have a growth price of $88? Everything (the trust) liquidates next April. With the anticipated company announced liquidation distribution of about $9 plus year-ens and quarterly distributions, the MAXIMUM valuation can only be about $22.00. Where it is now! This really makes me question the value of any information or analysis.
1
Posted by pbanik  (on December 9, 2014)
@smg That's Vuru should be only one of a number of financial and investing websites an investor should use to get information. Examples would be Seeking Alpha, Guru Focus, Zacks, Google Finance, Yahoo! Finance, Motley Fool, MSN Money, NASDAQ, Marketwatch, Trefis Morningstar, Bloomberg, RTTNews, StockTwits, The Street and others that I use but can't think of at the moment,

Description
Great Northern Iron Ore Properties (Great Northern), is the United States based mining company, which owns interests in fee, both mineral and nonmineral lands, on the Mesabi Iron Range in northeastern Minnesota, many of which are leased to the steel and mining companies that mine the mineral lands for taconite ore. The Company is a conventional nonvoting trust organized under the laws of the State of Michigan pursuant to a Trust Agreement dated December 7, 1906. The Company will cease to be a going concern and all shares will be cancelled, on April 6, 2015. The terms of Trust state that the Trust shall continue for twenty years after the death of the last survivor of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995, that being April 6, 2015.
Source: Google Finance
https://www.google.ca/finance?q=gni&ei=m3qGVPCqK5O_qQHr_4CIAg

I'm guess yield hungry investors and those who are naive would be buying this stock. It's not because iron ore prices are doing great. They're in a glut like crude oil. If you're an iron ore producer,
your stock price should be declining, not advancing, based on the fall in the price of iron ore. Look at what is happening to the share price of CLF and VALE if you want examples. Even though it operates as as investment trust, the shares are worthless after April 6, 2015.

Iron Ore Cut by JPMorgan on Glut as Producers’ Shares Tumble
http://www.bloomberg.com/news/2014-12-09/jpmorgan-cuts-iron-ore-outlook-as-growth-in-supply-beats-demand.html
1
Posted by frosted  (on March 26, 2013)
What possible justification is there for this stock to be priced where its at. NPV of future cash flows is closer to $36. This makes me question the validity of Vulu Grades.
1
Posted by pbanik  (on August 25, 2013)
Valuepro has calculated the intrinsic stock value of GNI at $237.47
http://valuepro.net/index.shtml could be possible reason.