Maui Land & Pineapple Company Inc (NYSE:MLP), a USD$264.67M 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, a relatively muted growth of 5.15% in the upcoming year , and a massive growth of 62.59% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether MLP is a laggard or leader relative to its real estate sector peers. Check out our latest analysis for Maui Land & Pineapple Company
What’s the catalyst for MLP’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. In the past year, the industry delivered negative growth of -0.63%, underperforming the US market growth of 10.30%. MLP leads the pack with its impressive earnings growth of 42.53% over the past year. This proven growth may make MLP a more expensive stock relative to its peers.
Is MLP and the sector relatively cheap?
Real estate companies are typically trading at a PE of 29x, above the broader US stock market PE of 22x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a lower 7.75% compared to the market’s 10.06%, which may be indicative of past headwinds. On the stock-level, MLP is trading at a lower PE ratio of 14x, making it cheaper than the average real estate stock. In terms of returns, MLP generated 107.04% in the past year, which is 99.29% over the real estate sector.
What this means for you:
Are you a shareholder? MLP recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. In addition to this, its PE is below its real estate peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market isn’t as bullish of the growth going forward. If your investment thesis of the company hasn’t changed, now may be the right time to accumulate more of MLP, if you’re not already highly concentrated in the stock.
Are you a potential investor? If MLP has been on your watchlist for a while, now may be the best time to enter into the stock. Its industry-beating growth delivered have not been fully accounted for in its shares given its lower PE ratio relative to its peers. Before you make the decision to buy, I recommend you look at other fundamentals factors and see whether there is a reason why the stock may be trading at a discount in the real estate sector.
For a deeper dive into Maui Land & Pineapple Company’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.