Crombie Real Estate Investment Trust (TSX:CRR.UN): Assessing Valuation After a Year of Steady Total Return Gains

Crombie Real Estate Investment Trust (TSX:CRR.UN) has quietly delivered a steady climb this year, with the unit price up about 15% year to date and roughly 18% over the past year.

See our latest analysis for Crombie Real Estate Investment Trust.

That climb has come as investors steadily warm to Crombie’s mix of grocery anchored and mixed use properties, with the share price now at $15.34 and a solid one year total shareholder return, suggesting momentum is gradually building rather than fading.

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With a near 18% one year total return, modest revenue growth, and analysts still seeing some upside, is Crombie trading at an attractive discount to its intrinsic value, or is the market already pricing in its future development pipeline?

Price to earnings of 17.1x: Is it justified?

Crombie is currently trading on a price to earnings ratio of 17.1 times, which frames the CA$15.34 unit price as modestly valued relative to its earnings.

The price to earnings multiple compares what investors pay for each dollar of current earnings, a key yardstick for income oriented, mature REITs like Crombie. For a trust with slow but steady revenue growth and a focus on stable, grocery anchored assets, this multiple reflects how much the market is willing to pay for dependable cash flows today.

Against the broader North American Retail REITs industry, Crombie’s 17.1 times price to earnings ratio looks conservative given the sector average of 24 times, which suggests the market is not awarding it a premium relative to that group. However, when lined up against closer peers, that same multiple appears more expensive than the 15.3 times peer average, which suggests investors may already be paying somewhat more for Crombie’s reliability and development pipeline.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to earnings of 17.1x (ABOUT RIGHT)

However, investors should still weigh risks like higher interest costs pressuring development returns and softer consumer spending potentially impacting Crombie’s grocery anchored tenants.

Find out about the key risks to this Crombie Real Estate Investment Trust narrative.

Another view: DCF points to a deeper discount

While a 17.1 times earnings multiple suggests Crombie is roughly fairly priced, our DCF model paints a different picture, indicating fair value around CA$25.41, roughly 40% above today’s CA$15.34 unit price. Is the market underestimating long term cash flows or simply demanding a higher risk premium?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Crombie Real Estate Investment Trust for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Crombie Real Estate Investment Trust Narrative

If you see things differently, or simply want to dig into the numbers yourself, you can easily build a personal view in minutes: Do it your way.

A great starting point for your Crombie Real Estate Investment Trust research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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