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Is Now An Opportune Moment To Examine Automotive Properties Real Estate Investment Trust (TSE:APR.UN)?

Simply Wall St

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Automotive Properties Real Estate Investment Trust (TSE:APR.UN), which is in the reits business, and is based in Canada, maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$10.43 to CA$10.8. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Automotive Properties Real Estate Investment Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Automotive Properties Real Estate Investment Trust

What is Automotive Properties Real Estate Investment Trust worth?

Automotive Properties Real Estate Investment Trust appears to be overvalued according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Automotive Properties Real Estate Investment Trust’s ratio of 34.58x is above its peer average of 9.87x, which suggests the stock is overvalued compared to the REITs industry. Another thing to keep in mind is that Automotive Properties Real Estate Investment Trust’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Automotive Properties Real Estate Investment Trust look like?

TSX:APR.UN Past and Future Earnings, June 6th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by a double-digit 27% in the upcoming year, the outlook is positive for Automotive Properties Real Estate Investment Trust. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in APR.UN’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe APR.UN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on APR.UN for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for APR.UN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Automotive Properties Real Estate Investment Trust. You can find everything you need to know about Automotive Properties Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in Automotive Properties Real Estate Investment Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.