Green REIT plc (ISE:GN1) is a €1.05B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that originated in the US and has since been taken on board globally. 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 IE stock market as a whole. Today, I’ll take you through the real estate sector outlook, as well as evaluate whether Green REIT is lagging or leading in the industry. Check out our latest analysis for Green REIT
What’s the catalyst for Green REIT’s sector growth?
Issues around rate hikes and yield changes have made investors sceptical of REITs. The capacity for these investment vehicles to absorb a rate hike should be considered, hence, factors such as lease durations and pricing power in the market would require a deeper dive. Over the past year, the industry saw growth of 9.11%, though still underperforming the wider IE stock market. Green REIT leads the pack with its impressive earnings growth of 12.83% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at -22.01% over the next couple of years.
Is Green REIT and the sector relatively cheap?
The REIT sector’s PE is currently hovering around 15.27x, relatively similar to the rest of the IE stock market PE of 15.95x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 8.33% compared to the market’s 12.10%, potentially indicative of past headwinds. On the stock-level, Green REIT is trading at a lower PE ratio of 7.48x, making it cheaper than the average REIT stock. In terms of returns, Green REIT generated 11.89% in the past year, which is 3.56% over the REIT sector.
Next Steps:
Green REIT’s future growth prospect aligns with that of the broader market and its PE is below its real estate peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market hasn’t fully accounted for the growth, meaning now may be the right time to accumulate more of, or to enter into, the stock. However, before you make a decision on the stock, I suggest you look at Green REIT’s fundamentals in order to build a holistic investment thesis.
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Historical Track Record: What has GN1’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Green REIT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.