Recurring Revenue And Global Cold Chain Expansion Will Secure Value

Key Takeaways

• Long-term contracts and strategic international partnerships drive stable, recurring cash flows, positioning the company for revenue growth and diversification.
  
• Investments in technology, automation, and labor efficiency boost service margins, enhance pricing power, and strengthen competitive positioning amid industry supply constraints.
  
• Heightened competition, shifting customer behavior, and industry changes threaten Americold's pricing power, occupancy, earnings growth, and long-term demand for temperature-controlled logistics.

Catalysts

Americold is a global leader in temperature-controlled logistics real estate and value added services.

• The company is securing an increasing percentage of revenues (now at 60%, up from under 40% three years ago) from long-term, fixed commitment contracts with large food retailers, ensuring stable, recurring cash flows and improved revenue visibility, which is poised to support more consistent earnings and protect against cyclical softness.
  
• Investments in automation and technology platforms such as Project Orion, as well as improved labor efficiency (perm-to-temp labor ratio at record highs and declining turnover), are driving higher service margins (expected to reach over 12% for 2025), pointing to continued gains in net margin over time.
  
• Americold's strategic pipeline of expansions and international developments-especially through partnerships with logistics giants like DP World and CPKC-positions the company to capitalize on global trends toward increasingly sophisticated and professionally managed cold chain solutions, which are expected to expand future revenue streams and diversify earnings sources.
  
• The ongoing structural shift toward online grocery shopping, direct-to-consumer models, and the requirement for higher food safety and traceability standards is driving customers to seek turnkey, reliable cold storage solutions, favoring Americold's scale, quality of service, and breadth of value-added services, supporting above-market rent growth and improved pricing power.
  
• Industry-wide supply constraints resulting from high development costs and regulatory hurdles, combined with Americold's disciplined approach to deploying capital into low-risk, expansionary, and customer-dedicated projects, limit new competitive supply and fuel stronger occupancy, sustained rent growth, and resilient NOI-key drivers of long-term AFFO and cash flow growth.

Americold Realty Trust Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Americold Realty Trust's revenue will grow by 6.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from -4.6% today to 4.1% in 3 years time.
• Analysts expect earnings to reach $126.8 million (and earnings per share of $0.34) by about July 2028, up from $-120.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $170.9 million in earnings, and the most bearish expecting $73 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 64.8x on those 2028 earnings, up from -40.0x today. This future PE is greater than the current PE for the US Industrial REITs industry at 28.2x.
• Analysts expect the number of shares outstanding to grow by 0.2% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.86%, as per the Simply Wall St company report.

Americold Realty Trust Future Earnings Per Share Growth

Risks

• Intensifying competitive pricing pressures-driven by competitors lowering prices to win business-could limit Americold's ability to maintain or grow pricing, impacting long-term revenue growth and compressing net margins.
  
• Sustained weakness in consumer confidence and demand, exacerbated by ongoing trade disputes, inflation fears, and tariff changes, has led customers to reduce inventory levels and delay expansion decisions, which may suppress Americold's occupancy rates and throughput volumes, ultimately reducing revenue and earnings growth.
  
• The company's relatively high leverage (net debt to EBITDA of 5.9x) and increased interest expense from recent acquisitions and bond offerings make Americold more vulnerable to rising interest rates or tighter credit conditions, risking pressure on net margins and potential constraints on future earnings.
  
• There is a risk that advances in food preservation technology or changes in supply chain practices (such as further inventory optimization or nearshoring/onshoring trends reducing cold storage needs) could gradually erode long-term demand for temperature-controlled logistics, constraining revenue growth and occupancy levels.
  
• The growing gap between physical and economic occupancy-amid caution by customers to maintain flex space rather than fill contracted capacity-raises the long-term risk that contract renewals may be reset at lower committed levels in a softer environment, potentially reducing fixed revenue visibility and pressuring earnings over time.

Valuation

• The analysts have a consensus price target of $22.267 for Americold Realty Trust based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $31.0, and the most bearish reporting a price target of just $18.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $126.8 million, and it would be trading on a PE ratio of 64.8x, assuming you use a discount rate of 8.9%.
• Given the current share price of $16.94, the analyst price target of $22.27 is 23.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.