Today we’re going to take a look at the well-established Alexandria Real Estate Equities, Inc. (NYSE:ARE). The company’s stock received a lot of attention from a substantial price increase on the NYSE over the last few months. As a large-cap stock, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Alexandria Real Estate Equities’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is Alexandria Real Estate Equities worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16% below my intrinsic value, which means if you buy Alexandria Real Estate Equities today, you’d be paying a fair price for it. And if you believe the company’s true value is $175.71, then there’s not much of an upside to gain from mispricing. What’s more, Alexandria Real Estate Equities’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will Alexandria Real Estate Equities generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Alexandria Real Estate Equities, it is expected to deliver a relatively unexciting earnings growth of 7.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? ARE’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on ARE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Alexandria Real Estate Equities. You can find everything you need to know about Alexandria Real Estate Equities in the latest infographic research report. If you are no longer interested in Alexandria Real Estate Equities, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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