RPT Realty (RPT, Financial) exhibited a significant daily gain of 19.02% and a three-month gain of 26.24%, with an Earnings Per Share (EPS) (EPS) of 0.73. However, the question remains: Is the stock modestly overvalued? This article delves into the valuation analysis to provide a comprehensive understanding of RPT Realty's intrinsic value.
Company Introduction
RPT Realty is a self-managed real estate investment trust that primarily invests in and manages retail properties. The company boasts a national portfolio of open-air shopping destinations, mainly located in top U.S. markets. As of August 28, 2023, RPT Realty's stock price stands at $11.39, while its GF Value, an estimation of fair value, is $10.26, suggesting that the stock might be modestly overvalued.
Understanding GF Value
The GF Value is a unique measure that calculates a stock's intrinsic value based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
RPT Realty's GF Value calculation indicates signs of being modestly overvalued. This means that the long-term return of RPT Realty's stock is likely to be lower than its business growth.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. RPT Realty's cash-to-debt ratio of 0.01 ranks worse than 86.79% of 719 companies in the REITs industry, indicating that the company's financial strength is poor.
Profitability and Growth
RPT Realty's profitability ranks 6 out of 10, indicating fair profitability. However, the company's growth ranks worse than 57.59% of 540 companies in the REITs industry, which might impact the company's valuation.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is a reliable method to determine its profitability. For the past 12 months, RPT Realty's ROIC is 1.54, and its WACC is 9.34, suggesting that the company is not creating value for shareholders.
Conclusion
In conclusion, RPT Realty's stock shows signs of being modestly overvalued. The company's financial condition is poor, and its profitability is fair. Its growth ranks worse than 57.59% of 540 companies in the REITs industry. For more detailed financial data on RPT Realty, you can check out its 30-Year Financials here.
For high-quality companies that may deliver above-average returns, check out GuruFocus High Quality Low Capex Screener.
