Do Analysts Know Something We Don't About Prologis (PLD)?

Prologis may be overvalued with strong growth indicators, but the 21 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $125.0 to $193.0 per share, for an average of $142.24. At today's price of $117.03, Prologis is trading -17.72% away from its average target price, suggesting there is an analyst consensus of some upside potential.

Prologis, Inc. is a real estate investment trust headquartered in San Francisco, California that invests in logistics facilities, with a focus on the consumption side of the global supply chain. The large-cap Real Estate company is based in San Francisco, CA. Prologis has offered a 3.05% dividend yield over the last 12 months.

Prologis has a trailing twelve month P/E ratio of 26.9, compared to an average of 24.81 for the Real Estate sector. Based on its EPS guidance of 2.85, the company has a forward P/E ratio of 41.06. Based on the 8.8% average annual growth rate of Prologis's historical and projected earnings per share, the company's PEG ratio is 3.06. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 13.05%, which gives us a PEG ratio of 2.06. This suggests that these shares are overvalued.

Furthermore, Prologis is likely overvalued compared to its book value, since its P/B ratio of 3.048 is higher than the sector average of 2.24. The company's shares are currently trading 89.28% above their Graham number, implying that they are overvalued in terms of earnings and book value.

If analysts are giving the stock a good rating, it's likely that they are looking beyond simple valuation metrics and attempting to forecast the company's growth potential. For example, Prologis has wide margins as you can see in the financial summary below.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $3,331 $4,439 $4,759 $5,974
Revenue Growth n/a 33.27% 7.23% 25.51%
Operating Margins 55.54% 47.74% 67.38% 58.05%
Operating Margins Growth n/a -14.04% 41.14% -13.85%
Earnings Per Share $2.49 $2.0 $3.97 $3.65
EPS Growth n/a -19.68% 98.5% -8.06%
Diluted Shares (MM) 632 739 740 923
Free Cash Flow (MM) -$537 -$222 -$1,964 -$1,484
FCF Growth n/a 58.62% -783.83% 24.45%
Capital Expenditures (MM) $2,801 $3,159 $4,960 $5,610
Net Debt / EBITDA 3.63 4.71 3.56 4.47
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.