Step D — Five-model valuation ?
Five conservative, fully-inspectable models per name, screened across the three most-beaten sectors this week (Real Estate, Utilities, Energy - Utilities displaces Industrials from the last five weeks; US c-corps and equity REITs, yield 4-12%, cap over $1B; mortgage REITs, MLPs, royalty trusts, and this week also preferred-stock/junior-subordinated-note series excluded by design - Utilities' raw screener was heavily populated by preferred/hybrid-note tickers issued under regulated-utility-subsidiary names (DTE Energy, Southern Company, Ameren Illinois, Union Electric, Entergy Louisiana) that price off coupon and par rather than earnings; these were filtered out beyond the standard exclusion list, leaving 15 genuine common-stock candidates out of 90 raw records. Provider black-box DCFs are reference-only and never enter the average. Outliers (over 2x or under 0.5x the valid median, or non-positive) are excluded. This week's pick is again VICI, a fourth consecutive week: price $23.52, fair-value average $34.15 on the real 5-year growth basis, discount 31.1% - the lowest of three defensible growth bases, all of which clear 25%. Two new names also crossed the 25% buy-zone bar this week - AES (36.3%) and SR (26.4%) - and both join the watchlist, but neither displaces VICI: AES has negative free cash flow in every one of the last five fiscal years and was leveraged as high as 9.14x LT debt/equity in FY2023 (since improved to 3.79x); SR is cleaner on leverage (~1.0x, stable) but negative on free cash flow in 4 of the last 5 years and offers materially slower underlying growth. VICI remains the only finalist with five straight years of rising free cash flow, the lowest leverage of the group, and an unbroken dividend-raise streak since its 2018 listing - the final judgment favoured balance-sheet coherence over the single highest headline discount, per the methodology's explicit rule. EIX, MRP, ALX, CBL and KNTK were evaluated and excluded from the watchlist despite headline discounts in some cases - see rows and candidate notes.
| Name | EPS-DCF | Dividend | Graham № | Hist. P/E | Analyst tgt | Average | Discount |
|---|
| VICI | $36.08 | $31.37 | $39.37 | $35.03 | $28.90 | $34.15 | 31.1% |
| AES | $22.46 | $12.20 | $32.91 | $30.45 | $18.75 | $23.35 | 36.3% |
| SR | $96.29 | $57.20 | $112.76 | $163.10 | $94.83 | $104.84 | 26.4% |
| GLPI | $45.21 | $55.47 | $38.73 | $66.04 | $47.89 | $50.67 | 23.4% |
| LPG | $63.50 | $33.50 | $70.33 | $53.41 | $55.00 | $55.15 | 3.1% |
VICI: IN THE ZONE - PICK, FOURTH CONSECUTIVE WEEK. All five models valid, none flagged, clustered $28.90-$39.37. The engine's raw 10-year growth rate (89.2%) is rejected again - anchored on a 2016 pre-IPO base of $0.008/share; scored at the real 5-year growth of 8.2% the discount is 31.1%, at the 7-year 8.98% it is 31.9%, at the engine's raw 10%-capped reading it is 32.9% - every basis clears 25%, lowest published. Free cash flow positive and rising all five years, $894m to $2,509m, covering the dividend every year; LT debt 0.60x equity, the lowest of any finalist this week; dividend raised every year since the 2018 listing, no cuts. No dilution shelf filing this quarter; 8-Ks routine (Q2 earnings, a financing agreement, an officer appointment).
AES: NEW - IN ZONE, BUT NOT THE PICK. 36.3% discount, the highest headline number this week, but free cash flow negative every one of the last five fiscal years (-$214m to -$4.69bn, improved to -$1.62bn in FY2025) and LT debt/equity as high as 9.14x in FY2023, since nearly halved to 3.79x. Dividend grown steadily (4.19%/yr, no cuts in 9 years) on a low 26.3% payout, funded alongside growth capex rather than free cash flow. No dilution shelf filing; one 8-K (2026-07-27) reported a change in certifying accountant (Item 4.01) - not dilution or M&A, but flagged. Kept on the watchlist with this caveat rather than promoted to pick.
SR: NEW - IN ZONE. 26.4% discount, no models flagged. Second-cleanest balance sheet of this week's finalists: LT debt/equity a stable ~1.0x across five years (vs AES's 3.79x-9.14x), dividend raised every year for at least 9 years (4.78%/yr, no cuts), payout a conservative 35.5%. Free cash flow negative in 4 of the last 5 fiscal years (-$375m to -$344m, one positive year +$51m FY2024) - typical of the regulated rate-base capex model rather than a going-concern signal, but noted for comparability with VICI's and GLPI's FCF-funded dividends. No dilution shelf filing; 8-Ks routine.
GLPI: Not yet in the zone. All five models valid. 23.4% discount. Dividend 5-year CAGR of 15.5% is still measured off the 2020 cut-year base ($1.508 vs $2.42-3.15 in surrounding years) and continues to overstate underlying growth - the same caveat as prior weeks.
LPG: CYCLICAL AT AN ACCELERATING PEAK - BUY RUNG UNRELIABLE, REPEAT. TTM EPS $7.56 vs a 5-year average of $4.08 (fiscal years to March). Price fell from $58.15 to $53.43 this week, improving the peak-basis discount to 3.1% (still short of 25%) and the normalized (5y-avg-EPS) discount to -31.4% (from -43.0% last week) - directionally better but still deeply negative on the basis that strips out the cycle. Balance sheet keeps improving (0.40x leverage, 7.09x coverage).
Model assumptions (fully inspectable): EPS-DCF: 10y at historical EPS growth (capped 0-10%) + 10y terminal at 4%, discounted at 11%; for VICI the real 5-year EPS growth (8.2%) is substituted for the engine's raw 89.2% reading, anchored on a 2016 pre-IPO base of $0.008/share (the lowest of three defensible bases - 5y 31.1%, 7y 31.9%, engine raw-but-10%-capped 32.9% - is published). Dividend model: DPS x (1+g)/(10% - g), g = min(5y dividend CAGR, 4%), on the annual-sum rate, dropping the current partial year. Graham Number: sqrt(22.5 x EPS x BVPS). Historical-PE: EPS x own 10-year median P/E. Analyst: consensus price target. Cyclical rule: LPG's TTM EPS ($7.56) sits at an accelerating cycle peak against a 5-year average of $4.08; peak-basis discount (3.1%, improved from -5.4% as price fell to $53.43) is shown alongside the normalized 5-year-average-EPS basis (-31.4%, improved from -43.0%), BUY rung declared unreliable. One-off rule: KNTK (a $416.7m one-off gain in the 2025-12-31 quarter, TTM EPS field 6.34 vs the last four quarterly filings summing to 2.79, a fourth consecutive week) and EIX (a $1.845bn / $4.80-EPS Q4-2025 that is nearly 3x any other of the last eight quarters and drives roughly 38% of TTM EPS) are both excluded on this basis - EIX independently also has chronic negative free cash flow. Spinoff/reorg-without-history rule: MRP (Feb-2025 spinoff, only 4 fiscal years, 3 of 5 models computable) and CBL (emerged from Chapter 11 in Nov 2021, only 3 comparable post-emergence fiscal years, 4 of 5 models n/a or flagged) are excluded regardless of headline discount. One-off-quarter rule (repeat): ALX's EPS x own median PE ($831.31) is a >2x outlier from a single property-sale-driven quarter; overvalued (-16.4%) on the remaining models regardless, with LT debt/equity climbing to 7.6x from 3.0x in 2016.