Has Allied Properties REIT’s 28.7% Rally in 2025 Gone Too Far?

If you're watching Allied Properties Real Estate Investment Trust and wondering whether now is the right time to buy, hold, or sell, you're not alone. In the past month alone, the stock has climbed 14.9%, adding to what has become a remarkable 28.7% gain since the start of the year. Even looking at the past week, the stock rose 6.6%, which has caught the attention of both cautious and opportunistic investors alike. These moves suggest the market is responding to changes in the broader commercial property sector and renewed optimism in urban office space valuations.

Of course, while excitement over recent performance is understandable, especially after a long-term slide of 9.3% over five years, many readers are asking an even more important question: Is Allied Properties REIT currently undervalued, or has the stock simply bounced back to a fair price? By our measures, the company scores a 2 out of 6 on our valuation checks, indicating it is undervalued on two of the six key metrics we use.

In the next section, I'll break down what those six checks are and where Allied Properties stands according to traditional valuation methods. And if you're interested in going beyond the basics, stay tuned, because there's an even more practical way to assess value that many investors overlook, which I'll share at the end.

Allied Properties Real Estate Investment Trust scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Allied Properties Real Estate Investment Trust Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by forecasting its future adjusted funds from operations, then discounting those future cash flows back to their present value. For Allied Properties Real Estate Investment Trust, this approach uses two stages and focuses on expected free cash flow to equity in millions of CA$.

Currently, the company's last twelve months of free cash flow stands at CA$273.43 million. Analysts project these cash flows to remain relatively stable in the coming years, expecting CA$252.5 million by 2027. The next five years are based on analyst consensus, and projections further out to 2035 are extrapolated, reaching around CA$277.11 million. All values are considered in today's CA$ after adjusting for the time value of money.

By aggregating these future cash flows and discounting them back, the DCF model calculates an intrinsic value per share of CA$28.63. Given the current share price, this implies the stock is trading at a 22.2% discount to its estimated fair value, which suggests it is undervalued at present.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Allied Properties Real Estate Investment Trust.

Our Discounted Cash Flow (DCF) analysis suggests Allied Properties Real Estate Investment Trust is undervalued by 22.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Allied Properties Real Estate Investment Trust Price vs Sales

The Price-to-Sales (P/S) ratio is commonly used to value companies like Allied Properties Real Estate Investment Trust, especially in sectors where earnings can be affected by accounting treatments or short-term volatility. For profitable companies such as Allied Properties, this metric provides a clear view of how the market values each dollar of revenue. This makes it a suitable comparison across peers within the REIT space.

Growth expectations and risk play a major role in what is considered a "normal" or "fair" P/S ratio. If a company is growing quickly with stable or improving profitability, investors are often willing to pay a higher multiple. Conversely, higher risk or stagnating growth usually means the norm is lower.

Currently, Allied Properties Real Estate Investment Trust is trading at a P/S ratio of 5.20x. This is above the Office REITs industry average of 4.83x and also higher than the peer average of 3.56x. However, relying solely on these benchmarks can be misleading, as they do not capture the company's unique growth profile, risk factors, or profitability.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio, calculated at 3.46x for Allied Properties, incorporates the company’s expected growth, profit margins, risk profile, market cap, and the typical multiples seen for similar companies. It provides a more nuanced and forward-looking benchmark than a simple industry or peer comparison.

Comparing the current P/S ratio of 5.20x against the Fair Ratio of 3.46x suggests the stock is trading above what would be considered fair value based on its fundamentals and outlook.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Allied Properties Real Estate Investment Trust Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story—your perspective on where a company is headed—linked directly to numbers like fair value, future revenue, earnings, and margins. Instead of relying only on static metrics, Narratives connect your outlook with a dynamic financial forecast, making it easy to see how your views translate into a specific fair value for Allied Properties Real Estate Investment Trust. On Simply Wall St’s Community page, Narratives are intuitive and accessible, used by millions of investors to tailor buy or sell decisions with clear, real-time comparisons between Fair Value and the current share price. Because Narratives update automatically whenever fresh information arises, your analysis stays relevant without extra effort. For example, one investor may be optimistic and forecast Allied’s growth at a high rate, leading to a much higher Fair Value, while another may take a cautious approach, assuming slower growth and a correspondingly lower estimate. Narratives make it simple to see, share, and refine your investment thesis as the story changes.

Do you think there's more to the story for Allied Properties Real Estate Investment Trust? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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