Parkway Life Real Estate Inves

The Parkway Life Real Estate Investment Trust (SGX: C2PU, 30-year financial data) gives every indication that it is slightly overvalued, according to the GuruFocus Value calculation. The GuruFocus Value is GuruFocus’ estimate of the fair value at which the stock should be traded. The calculation is based on the historical multiples at which the share traded, past business growth and analyst estimates of future business development. If a stock’s price is well above the GF value line, it is overvalued and its future return is likely to be poor. On the other hand, if it is well below the GF value line, its future return will likely be higher. With a current price of S $ 4.29 per share and a market capitalization of S $ 2.5 billion, the Parkway Life Real Estate Investment Trust’s share is estimated to be slightly overvalued. The GF value for the Parkway Life Real Estate Investment Trust is shown in the table below.

Parkway Life Real Estate Investment Trust GF value table

With Parkway Life Real Estate Investment Trust being relatively overvalued, long-term returns on its stocks are likely to be below business growth, which averaged 3.2% over the past five years.

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Investing in companies with low financial strength carries a higher risk of permanent loss of capital. Therefore, it is important to carefully consider a company’s financial strength before deciding whether to buy stocks. Looking at the cash-to-debt ratio and interest coverage is a good starting point for understanding a company’s financial strength. The Parkway Life Real Estate Investment Trust has a cash-to-debt ratio of 0.08, which is in the middle of the range for companies in the REIT industry. GuruFocus rates the financial strength of the Parkway Life Real Estate Investment Trust as 4 out of 10, which indicates that the financial strength of the Parkway Life Real Estate Investment Trust is poor. This is the Parkway Life Real Estate Investment Trust’s debt and money over the past few years:

Debt and cash

It is less risky to invest in profitable companies, especially those with long-term profitability. A company with high profit margins is usually a safer investment than one with low profit margins. The Parkway Life Real Estate Investment Trust has been profitable 10 over the past 10 years. For the past twelve months, the company had sales of S $ 121 million and earnings of S $ 0.154 per share. The operating margin is 80.04%, which is over 93% of companies in the REIT industry. Overall, the Parkway Life Real Estate Investment Trust’s profitability ranks 7th out of 10, which indicates fair profitability. These are the Revenue and Net Income of the Parkway Life Real Estate Investment Trust over the past few years:

Sales and net income

Growth is probably the most important factor in evaluating a company. Research by GuruFocus has shown that growth is closely related to the long-term performance of a company’s stocks. The faster a company grows, the more likely it is to create value for shareholders, especially if the growth is profitable. The Parkway Life Real Estate Investment Trust’s average annual sales growth rate for 3 years is 3.2%, which is above 67% of companies in the REIT industry. The average 3-year EBITDA growth rate is -4.7% and is therefore in the middle of the range for companies in the REIT sector.

Another way to determine a company’s profitability is to compare its return on investment to its weighted average cost of capital. Return on Invested Capital (ROIC) measures how well a company generates cash flow in relation to the capital it has invested in its business. The weighted average cost of capital (WACC) is the average rate that a company is expected to pay to all securityholders to fund its assets. When the ROIC is higher than the WACC, it means the company is creating value for shareholders. For the past 12 months, the Parkway Life Real Estate Investment Trust’s return on investment was 4.01 and its cost of capital was 2.24. The Parkway Life Real Estate Investment Trust’s historical comparison of ROIC and WACC is provided below:

ROIC versus WACC

In summary, the Parkway Life Real Estate Investment Trust (SGX: C2PU, 30-year financial data) stock is assumed to be slightly overvalued. The company’s financial situation is poor and profitability is fair. The growth is in the middle range of companies in the REIT sector. To learn more about the Parkway Life Real Estate Investment Trust’s stocks, please view 30 year financials here.

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