Today we're going to take a closer look at large-cap Real Estate company VICI Properties, whose shares are currently trading at $31.26. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
VICI Properties Inc. is an S&P 500 experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas, three of the most iconic entertainment facilities on the Las Vegas Strip. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, VICI Properties has a trailing 12 month P/E ratio of 21.7 and a P/B ratio of 1.35.
VICI Properties's PEG ratio is 1.85, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
An Exceptionally Strong Balance Sheet:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $895 | $1,226 | $1,510 | $2,601 |
| Operating Margins | 94.7% | 74.5% | 95.7% | 62.8% |
| Net Margins | 61.02% | 72.76% | 67.16% | 42.97% |
| Net Income (MM) | $546 | $892 | $1,014 | $1,118 |
| Net Interest Expense (MM) | -228 | -302 | -392 | -530 |
| Net Interest Expense (MM) | -$228 | -$302 | -$392 | -$530 |
| Depreciation & Amort. (MM) | -$4 | -$4 | -$3 | -$3 |
| Earnings Per Share | $1.24 | $1.75 | $1.76 | $1.44 |
| EPS Growth | n/a | 41.13% | 0.57% | -18.18% |
| Diluted Shares (MM) | 439 | 511 | 577 | 1,004 |
| Free Cash Flow (MM) | $679 | $881 | $894 | $1,942 |
| Capital Expenditures (MM) | -$3 | -$3 | -$3 | -$2 |
| Net Current Assets (MM) | -$4,055 | -$4,079 | -$1,528 | $2,567 |
| Current Ratio | 5.1 | 11.01 | 11.42 | 30.08 |
| Long Term Debt (MM) | $4,792 | $6,766 | $4,695 | $13,740 |
| Net Debt / EBITDA | 7.26 | 5.38 | 2.8 | 8.18 |
VICI Properties benefits from strong margins with a negative growth trend, a pattern of improving cash flows, and an excellent current ratio. The company's financial statements show growing revenues and decreasing reinvestment in the business and positive EPS growth. However, the firm has a highly leveraged balance sheet.
