Simon Property shares fell by -1.8% during the day's afternoon session, and are now trading at a price of $114.92. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales. 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, Simon Property has a trailing 12 month P/E ratio of 17.1 and a P/B ratio of 12.88.
Simon Property's PEG ratio is 2.04, 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.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $5,645 | $5,755 | $4,608 | $5,117 | $5,291 | $5,436 |
| Operating Margins | 52.0% | 51.0% | 43.0% | 47.0% | 49.0% | 49.0% |
| Net Margins | 50.0% | 42.0% | 28.0% | 50.0% | 46.0% | 45.0% |
| Net Income (MM) | $2,822 | $2,423 | $1,277 | $2,569 | $2,452 | $2,471 |
| Net Interest Expense (MM) | $816 | $804 | $784 | $822 | $763 | $806 |
| Depreciation & Amort. (MM) | $1,282 | $1,341 | $1,318 | $1,263 | $1,227 | $1,246 |
| Free Cash Flow (MM) | $2,969 | $2,932 | $1,843 | $3,109 | $3,117 | $3,104 |
| Capital Expenditures (MM) | $782 | $876 | $484 | $528 | $650 | $728 |
| Net Current Assets (MM) | -$23,675 | -$25,538 | -$28,215 | -$28,396 | -$28,312 | -$28,503 |
| Long Term Debt (MM) | $23,306 | $24,163 | $26,723 | $25,321 | $24,960 | $24,990 |
| Net Debt / EBITDA | 5.42 | 5.52 | 7.82 | 6.74 | 6.39 | 6.19 |
