Unveiling NNN REIT (NNN)'s Value: Is It Really Priced Right? A Comprehensive Guide
With a daily loss of -0.99%, a 3-month loss of -17.13%, and Earnings Per Share (EPS) of 2.04, the question arises: is NNN REIT Inc (NYSE:NNN) stock modestly undervalued? This article provides a comprehensive valuation analysis of NNN REIT, underlining its financial strength, profitability, and growth prospects. Read on to gain a clearer understanding of NNN REIT's intrinsic value.
A Snapshot of NNN REIT Inc (NYSE:NNN)
NNN REIT Inc is a real estate investment trust that invests in and develops properties throughout the United States. The company generates revenue from leasing properties to tenants, including convenience stores, automotive services, fitness centers, theatres, restaurants, and banks. The majority of the company's properties are located in the South and Southeast of the United States.
Comparing the stock price of $34.85 with the GF Value of $47.31, it appears that NNN REIT's stock is modestly undervalued. This assessment paves the way for a more profound exploration of the company's value.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of business performance. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
The stock of NNN REIT appears to be modestly undervalued according to GuruFocus' valuation method. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if the share price is significantly below the GF Value Line, the stock may be undervalued and have higher future returns. Because NNN REIT is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
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Assessing NNN REIT's Financial Strength
It is crucial to evaluate the financial strength of a company before investing in its stock. Companies with poor financial strength pose a higher risk of permanent loss. NNN REIT's cash-to-debt ratio of 0 is worse than 0% of 724 companies in the REITs industry, indicating that its financial strength is poor.
NNN REIT's Profitability and Growth
Investing in profitable companies carries less risk. Companies with high profit margins typically offer better performance potential. NNN REIT has been profitable 10 years over the past 10 years, with an operating margin of 61.75% better than 66.47% of 686 companies in the REITs industry. The profitability of NNN REIT is strong.
Long-term stock performance is closely correlated with growth. Companies that grow faster create more value for shareholders. NNN REIT's average annual revenue growth is2.4%, which ranks better than 58.23% of 632 companies in the REITs industry.
ROIC vs WACC
A company's profitability can also be evaluated by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). If the ROIC exceeds the WACC, the company is likely creating value for its shareholders. NNN REIT's ROIC is 6 while its WACC is 8.19.
Conclusion
In conclusion, the stock of NNN REIT (NYSE:NNN) appears to be modestly undervalued. The company's financial condition is poor, but its profitability is strong. Its growth ranks better than 53.47% of 533 companies in the REITs industry. To learn more about NNN REIT stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
