Should You Think About Buying CT Real Estate Investment Trust (TSE:CRT.UN) Now?

CT Real Estate Investment Trust (TSE:CRT.UN), which is in the reits business, and is based in Canada, saw a significant share price rise of over 20% in the past couple of months on the TSX. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at CT Real Estate Investment Trust’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for CT Real Estate Investment Trust

What is CT Real Estate Investment Trust worth?

CT Real Estate Investment Trust appears to be expensive according to my price multiple model, which makes a comparison between the company’s price-to-earnings ratio and the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 19.4x is currently well-above the industry average of 7.47x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that CT Real Estate Investment Trust’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of CT Real Estate Investment Trust look like?

TSX:CRT.UN Past and Future Earnings May 5th 2020
TSX:CRT.UN Past and Future Earnings May 5th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a relatively muted revenue growth of 4.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for CT Real Estate Investment Trust, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in CRT.UN’s outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe CRT.UN should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CRT.UN for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors 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 CT Real Estate Investment Trust. You can find everything you need to know about CT Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in CT Real Estate Investment Trust, 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 editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.