Trinity Place Holdings Inc (AMEX:TPHS), a USD$217.33M small-cap, is a real estate company operating in an industry which remains the single largest sector globally, and has continued to play a key role in investor portfolios. 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’ll take you through the real estate sector outlook, as well as evaluate whether Trinity Place Holdings is lagging or leading in the industry. Check out our latest analysis for Trinity Place Holdings
What’s the catalyst for Trinity Place Holdings’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. Over the past year, the industry saw growth in the teens, beating the US market growth of 10.76%. Trinity Place Holdings lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Trinity Place Holdings may be trading cheaper than its peers.
Is Trinity Place Holdings and the sector relatively cheap?
The real estate industry is trading at a PE ratio of 13x, 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 8.99% on equities compared to the market’s 10.46%. Since Trinity Place Holdings’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Trinity Place Holdings’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Trinity Place Holdings recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Trinity Place Holdings as part of your portfolio. However, if you’re relatively concentrated in real estate, you may want to value Trinity Place Holdings based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If Trinity Place Holdings has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the real estate industry. Before you make a decision on the stock, take a look at Trinity Place Holdings’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Trinity Place Holdings’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.