Landmark Infrastructure Partners LP (NASDAQ:LMRK), a USD$406.83M small-cap, operates in the real estate 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 US stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether Landmark Infrastructure Partners is lagging or leading in the industry. See our latest analysis for Landmark Infrastructure Partners
What’s the catalyst for Landmark Infrastructure Partners’s sector growth?
Not every category of real estate is likely to be impacted the same by macroeconomic factors such as interest rate hikes, and not all locations are primed to grow. So, investors must remain cautiously optimistic and analyse the fundamentals of the underlying industry. Over the past year, the industry saw growth in the twenties, beating the US market growth of 10.79%. Landmark Infrastructure Partners leads the pack with its impressive earnings growth of over 100% last year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Landmark Infrastructure Partners poised to deliver a triple digit growth over the next couple of years.
Is Landmark Infrastructure Partners and the sector relatively cheap?
Real estate companies are typically trading at a PE of 12x, below the broader US stock market PE of 20x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry returned a similar 9.10% on equities compared to the market’s 10.45%. On the stock-level, Landmark Infrastructure Partners is trading at a higher PE ratio of 32x, making it more expensive than the average real estate stock. In terms of returns, Landmark Infrastructure Partners generated 8.59% in the past year, in-line with its industry average.
What this means for you:
Are you a shareholder? Landmark Infrastructure Partners’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 Landmark Infrastructure Partners’s high price, suggested by its higher PE ratio relative to its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Landmark Infrastructure Partners as part of your portfolio. However, if you’re relatively concentrated in real estate, the Landmark Infrastructure Partners’s high PE may signal the right time to sell.
Are you a potential investor? If Landmark Infrastructure Partners 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, that being said, its industry-beating growth prospects may be the reason for high relative valuation. I suggest you look at Landmark Infrastructure Partners’s future cash flows in order to assess whether the stock is trading at a reasonable price on this basis.
For a deeper dive into Landmark Infrastructure Partners’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other real estate stocks instead? Use our free playform to see my list of over 100 other real estate companies trading on the market.
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.