What Should You Know About Prologis (PLD)?

Today we're going to take a closer look at large-cap Real Estate company Prologis, whose shares are currently trading at $103.48. 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:

Prologis, Inc. is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. 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, Prologis has a trailing 12 month P/E ratio of 33.0 and a P/B ratio of 1.78.

When we divide Prologis's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -5.68. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (MM) $2,804 $3,331 $4,439 $4,759 $5,974 $7,722
Operating Margins 67.0% 56.0% 48.0% 70.0% 62.0% 48.0%
Net Margins 65.0% 51.0% 36.0% 66.0% 60.0% 45.0%
Net Income (MM) $1,823 $1,702 $1,617 $3,149 $3,555 $3,467
Net Interest Expense (MM) $229 $240 $315 $266 $309 $471
Depreciation & Amort. (MM) $947 $1,140 $1,562 $1,578 $1,813 $2,218
Earnings Per Share $2.87 $2.46 $2.01 $3.94 $4.25 $3.8
Diluted Shares (MM) 590 655 754 765 812 1,183
Free Cash Flow (MM) -$150 $469 $1,017 $356 $1,008 $1,442
Capital Expenditures (MM) $1,953 $1,795 $1,920 $2,640 $3,118 $3,368
Net Current Assets (MM) -$5,011 -$12,176 -$16,608 -$17,098 -$25,082 -$29,424
Long Term Debt (MM) $11,090 $11,906 $16,849 $17,715 $23,876 $28,129
Net Debt / EBITDA 3.79 3.62 4.41 3.5 4.29 4.65

Prologis has growing revenues and increasing reinvestment in the business and decent operating margins with a negative growth trend. Additionally, the company's financial statements display positive EPS growth and generally positive cash flows. However, the firm has a highly leveraged balance sheet.

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.