A strong performer from today's morning trading session is Alexandria Real Estate Equities, whose shares rose 2.2% to $117.6 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
a Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 31.12 and an average price to book (P/B) ratio of 2.15. In contrast, Alexandria Real Estate Equities has a trailing 12 month P/E ratio of 145.2 and a P/B ratio of 1.11.
When we divide Alexandria Real Estate Equities's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -6.48. 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.
Increasing Revenues but Narrowing Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $1,327 | $1,531 | $1,886 | $2,114 | $2,589 | $2,886 |
| Net Margins | 28% | 24% | 41% | 27% | 20% | 4% |
| Net Income (M) | $379 | $363 | $771 | $571 | $522 | $104 |
| Net Interest Expense (M) | $157 | $174 | $172 | $142 | $94 | $74 |
| Depreciation & Amort. (M) | $478 | $545 | $698 | $821 | $1,002 | $1,093 |
| Diluted Shares (M) | 103 | 113 | 126 | 147 | 162 | 171 |
| Earnings Per Share | $3.52 | $3.12 | $6.01 | $3.82 | $3.18 | $0.54 |
| EPS Growth | n/a | -11.36% | 92.63% | -36.44% | -16.75% | -83.02% |
| Avg. Price | $107.33 | $129.49 | $146.61 | $176.47 | $172.63 | $117.6 |
| P/E Ratio | 30.41 | 41.37 | 24.31 | 46.08 | 54.29 | 217.78 |
| Free Cash Flow (M) | -$357 | -$541 | -$563 | -$1,080 | -$2,013 | -$1,788 |
| CAPEX (M) | $927 | $1,225 | $1,445 | $2,090 | $3,307 | $3,418 |
| Total Debt (M) | $5,478 | $6,777 | $7,563 | $8,792 | $10,160 | $11,316 |
