DEFAMA Deutsche Fachmarkt AG (MUN:DEF): How Much Growth Is Left In Real Estate?
DEFAMA Deutsche Fachmarkt AG (MUN:DEF), a €38.34M small-cap, is a real estate company operating in an industry which displays attractive investment characteristics relative to other sectors, especially over time. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the DE stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether DEFAMA Deutsche Fachmarkt is a laggard or leader relative to its real estate sector peers. View our latest analysis for DEFAMA Deutsche Fachmarkt
What’s the catalyst for DEFAMA Deutsche Fachmarkt’s sector growth?
Over the past couple of years, as yields for high quality real estate investments have become under pressure, investors have swung towards more niche and diversified buildings such as medical offices, student housing and data storage facilities. In the previous year, the industry saw growth in the twenties, beating the DE market growth of 12.59%. DEFAMA Deutsche Fachmarkt leads the pack with its impressive earnings growth of 35.91% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with DEFAMA Deutsche Fachmarkt poised to deliver a 61.10% growth over the next couple of years compared to the industry’s -5.06%.
Is DEFAMA Deutsche Fachmarkt and the sector relatively cheap?
The real estate sector’s PE is currently hovering around 9.65x, lower than the rest of the DE stock market PE of 18.86x. This illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry returned a similar 10.76% on equities compared to the market’s 11.05%. On the stock-level, DEFAMA Deutsche Fachmarkt is trading at a higher PE ratio of 30.94x, making it more expensive than the average real estate stock. In terms of returns, DEFAMA Deutsche Fachmarkt generated 10.91% in the past year, in-line with its industry average.
Next Steps:
DEFAMA Deutsche Fachmarkt’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If DEFAMA Deutsche Fachmarkt has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other real estate companies. However, before you make a decision on the stock, I suggest you look at DEFAMA Deutsche Fachmarkt’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has DEF’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DEFAMA Deutsche Fachmarkt? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
