SmartCentres (TSX:SRU.UN): Is This Retail REIT Undervalued After Recent Share Price Momentum?

SmartCentres Real Estate Investment Trust (TSX:SRU.UN) has been drawing fresh attention lately as investors assess the stock’s recent performance. Shares have delivered steady gains this year, sparking discussion about its valuation and long-term outlook.

See our latest analysis for SmartCentres Real Estate Investment Trust.

SmartCentres’ share price has seen some positive momentum this year, with a year-to-date gain of 6.5%. When you look beyond the day-to-day moves, it is the 11.5% total shareholder return over the past year and over 50% across five years that really stands out, pointing to resilience and steady value creation for long-term holders.

If you are watching how established names like SmartCentres build momentum, this could be an ideal time to broaden your horizons and discover fast growing stocks with high insider ownership

The big question now is whether SmartCentres stock is still trading below its true value, or if the market has already factored in its growth prospects. This could mean there is little room for upside from here.

Price-to-Earnings of 14.5x: Is it justified?

SmartCentres Real Estate Investment Trust is currently trading at a price-to-earnings (P/E) ratio of 14.5x, notably lower than its industry peers. With the stock closing most recently at CA$26.18, this valuation suggests SmartCentres is priced well below the average for comparable retail REITs.

The price-to-earnings multiple is a common yardstick in the real estate sector. It reflects how much investors are willing to pay for each dollar of earnings. For SmartCentres, a P/E of 14.5x indicates investors are paying less for expected earnings compared to the broader industry. This may hint at either undervaluation or more muted growth expectations.

Compared to the North American Retail REITs industry average of 24.1x and a peer group average of 33.9x, SmartCentres stands out for its relative value. This discount could attract investors searching for bargains in the sector, especially if future earnings remain robust.

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

Result: Price-to-Earnings of 14.5x (UNDERVALUED)

However, slowing revenue growth and potential shifts in retail demand could challenge SmartCentres’ ability to maintain its recent momentum and attractive valuation.

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

Another View: Discounted Cash Flow Model

While the price-to-earnings ratio shows SmartCentres trading at a discount, our DCF model presents an even stronger perspective. It estimates fair value at CA$38.26, suggesting shares are deeply undervalued by around 32%. Could this signal a missed opportunity, or do risks remain?

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 SmartCentres 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 905 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 SmartCentres Real Estate Investment Trust Narrative

Keep in mind, if you want a different perspective or would rather dig into the numbers yourself, you can put together your own narrative quickly. This process often takes less than three minutes. Do it your way

A great starting point for your SmartCentres 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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