Morguard North American Residential Real Estate Investment Trust (TSX:MRG.UN) - Share price, News & Analysis

Q: What is the Fair Price of MRG.UN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MRG.UN (CA$16.38) is trading below our estimate of [[fair value]] (CA$36.61)

MRG.UN fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	5/6
Financial Health	1/6
Dividends	4/6

MRG.UN Stock Overview

The REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario.

Rewards

Trading at 55.3% below our estimate of its fair value

Earnings grew by 256.9% over the past year

Risk Analysis

Interest payments are not well covered by earnings

Dividend of 4.27% is not well covered by earnings

Large one-off items impacting financial results

Morguard North American Residential Real Estate Investment Trust Competitors

BSR Real Estate Investment Trust

TSX:HOM.UN

CA$1.1b

Minto Apartment Real Estate Investment Trust

TSX:MI.UN

CA$920.0m

Flagship Communities Real Estate Investment Trust

TSX:MHC.UN

CA$387.5m

Boardwalk Real Estate Investment Trust

TSX:BEI.UN

CA$2.1b

Price History & Performance

Summary of all time highs, changes and price drops for Morguard North American Residential Real Estate Investment Trust
Historical stock prices
Current Share Price	CA$16.38
52 Week High	CA$20.52
52 Week Low	CA$15.85
Beta	1.08
1 Month Change	-7.61%
3 Month Change	-17.31%
1 Year Change	-3.25%
3 Year Change	-11.03%
5 Year Change	7.98%
Change since IPO	55.70%

Shareholder Returns

	MRG.UN	CA REITs	CA Market
7D	-0.2%	-0.1%	-0.8%
1Y	-3.2%	-12.3%	-5.0%

Return vs Industry: MRG.UN exceeded the Canadian REITs industry which returned -12.3% over the past year.

Return vs Market: MRG.UN exceeded the Canadian Market which returned -5% over the past year.

Price Volatility

Is MRG.UN's price volatile compared to industry and market?
MRG.UN volatility
MRG.UN Average Weekly Movement	3.8%
REITs Industry Average Movement	3.8%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	17.4%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: MRG.UN is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: MRG.UN's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
n/a	n/a	Kuldip Sahi	https://www.morguard.com

The REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario. The Units of the REIT trade on the Toronto Stock Exchange under the ticker symbol MRG.UN. With a strategic focus on the acquisition of high-quality multi-suite residential properties in Canada and the United States, the REIT maximizes long-term Unit value through active asset and property management.

Morguard North American Residential Real Estate Investment Trust Fundamentals Summary

How do Morguard North American Residential Real Estate Investment Trust's earnings and revenue compare to its market cap?
MRG.UN fundamental statistics
Market Cap	CA$922.29m
Earnings (TTM)	CA$377.51m
Revenue (TTM)	CA$254.91m

1.7x

P/E Ratio

2.5x

P/S Ratio

Is MRG.UN overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MRG.UN income statement (TTM)
Revenue	CA$254.91m
Cost of Revenue	CA$118.77m
Gross Profit	CA$136.15m
Other Expenses	-CA$241.36m
Earnings	CA$377.51m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 26, 2022

Earnings per share (EPS)	9.66
Gross Margin	53.41%
Net Profit Margin	148.09%
Debt/Equity Ratio	97.0%

How did MRG.UN perform over the long term?

See historical performance and comparison

Dividends

4.3%

Current Dividend Yield

987%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MRG.UN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MRG.UN?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MRG.UN. This is calculated by dividing MRG.UN's market cap by their current preferred multiple.
What is MRG.UN's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$922.29m

MRG.UN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	9.3x
Enterprise Value/EBITDA	n/a
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does MRG.UN's PE Ratio compare to its peers?

MRG.UN PE Ratio vs Peers

The above table shows the PE ratio for MRG.UN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	3.4x
HOM.UN BSR Real Estate Investment Trust	2x	-95.7%	CA$1.1b
MI.UN Minto Apartment Real Estate Investment Trust	3.9x	n/a	CA$920.0m
MHC.UN Flagship Communities Real Estate Investment Trust	3.9x	n/a	CA$387.5m
BEI.UN Boardwalk Real Estate Investment Trust	4x	n/a	CA$2.1b
MRG.UN Morguard North American Residential Real Estate Investment Trust	1.7x	n/a	CA$922.3m

Forward PE

Price-To-Earnings vs Peers: MRG.UN is good value based on its Price-To-Earnings Ratio (1.7x) compared to the peer average (3.4x).

Price to Earnings Ratio vs Industry

How does MRG.UN's PE Ratio compare vs other companies in the CA REITs Industry?

Price-To-Earnings vs Industry: MRG.UN is good value based on its Price-To-Earnings Ratio (1.7x) compared to the Canadian REITs industry average (4.8x)

Price to Earnings Ratio vs Fair Ratio

What is MRG.UN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MRG.UN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	1.7x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate MRG.UN's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of MRG.UN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MRG.UN (CA$16.38) is trading below our estimate of fair value (CA$36.61)

Significantly Below Fair Value: MRG.UN is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate MRG.UN's PEG Ratio to determine if it is good value.

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Future Growth

How is Morguard North American Residential Real Estate Investment Trust forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

3.7%

Forecasted annual revenue growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if MRG.UN's forecast earnings growth is above the savings rate (1.6%).

Earnings vs Market: Insufficient data to determine if MRG.UN's earnings are forecast to grow faster than the Canadian market

High Growth Earnings: Insufficient data to determine if MRG.UN's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MRG.UN's revenue (3.7% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: MRG.UN's revenue (3.7% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if MRG.UN's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Morguard North American Residential Real Estate Investment Trust performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

11.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MRG.UN has a large one-off gain of CA$507.9M impacting its March 31 2022 financial results.

Growing Profit Margin: MRG.UN's current net profit margins are higher than last year (44.5%).

Past Earnings Growth Analysis

Earnings Trend: MRG.UN's earnings have grown by 11.6% per year over the past 5 years.

Accelerating Growth: MRG.UN's earnings growth over the past year (256.9%) exceeds its 5-year average (11.6% per year).

Earnings vs Industry: MRG.UN earnings growth over the past year (256.9%) exceeded the REITs industry 163.2%.

Return on Equity

High ROE: MRG.UN's Return on Equity (22.7%) is considered high.

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Financial Health

How is Morguard North American Residential Real Estate Investment Trust's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MRG.UN's short term assets (CA$239.5M) do not cover its short term liabilities (CA$316.9M).

Long Term Liabilities: MRG.UN's short term assets (CA$239.5M) do not cover its long term liabilities (CA$1.7B).

Debt to Equity History and Analysis

Debt Level: MRG.UN's net debt to equity ratio (95.2%) is considered high.

Reducing Debt: MRG.UN's debt to equity ratio has reduced from 191.7% to 97% over the past 5 years.

Debt Coverage: MRG.UN's debt is not well covered by operating cash flow (3.7%).

Interest Coverage: MRG.UN's interest payments on its debt are not well covered by EBIT (1.8x coverage).

Balance Sheet

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Dividend

What is Morguard North American Residential Real Estate Investment Trust current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.27%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MRG.UN's dividend (4.27%) is higher than the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: MRG.UN's dividend (4.27%) is low compared to the top 25% of dividend payers in the Canadian market (5.4%).

Stability and Growth of Payments

Stable Dividend: MRG.UN's dividends per share have been stable in the past 10 years.

Growing Dividend: MRG.UN's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (987.5%), MRG.UN's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (64.1%), MRG.UN's dividend payments are covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure

CEO

Kuldip Sahi (75 yo)

10.5yrs

Tenure

CA$514,062

Compensation

Mr. Kuldip Rai Sahi, FCA, FCPA, FCGA, has been the Chief Executive Officer of Morguard Real Estate Investment Trust since July 31, 2001 and has been its President since October 21, 2005 and has been its Tr...

CEO Compensation Analysis

Compensation vs Market: Kuldip's total compensation ($USD398.03K) is below average for companies of similar size in the Canadian market ($USD1.59M).

Compensation vs Earnings: Kuldip's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: MRG.UN's management team is considered experienced (4.5 years average tenure).

Board Members

Experienced Board: MRG.UN's board of directors are seasoned and experienced ( 10.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: MRG.UN insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31