A Look at CPI Property Group’s (XTRA:O5G) Valuation Following Debt Redemption Plans

CPI Property Group (XTRA:O5G) has confirmed it has met the key financing condition required to redeem all outstanding EUR 750 million Senior Notes due May 2026. This proactive move highlights the company’s approach to capital management and debt reduction.

See our latest analysis for CPI Property Group.

The backdrop for this move has been a gradual but persistent softening in CPI Property Group’s share price, which slipped by 4.4% over the past month and is now down 3.1% for the year. While the share price has struggled to gain momentum in the near term, the latest debt reduction signals management’s commitment to balance-sheet strength. This could alter investor sentiment and set the stage for a longer-term recovery. Over the past five years, the total shareholder return stands at 5.5%, reflecting a modest but positive trajectory amid a turbulent property market.

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So with shares under pressure in recent months, but management making clear progress on reducing debt, is CPI Property Group being overlooked as a potential bargain? Or is the market already pricing in any future rebound?

Price-to-Sales of 4.2x: Is it justified?

CPI Property Group is trading at a price-to-sales (P/S) ratio of 4.2x, which places it at a premium compared to both the German real estate industry average of 3.6x and the peer average of 3x. With a last close price of €0.77, the stock’s valuation appears elevated through this lens and suggests investors are paying more for each euro of sales than is typical in the sector.

The price-to-sales ratio indicates how much investors are willing to pay for a company’s sales and is a commonly used metric when companies are either unprofitable or have volatile earnings. In real estate, where earnings can fluctuate due to property revaluations and cyclical factors, the P/S ratio helps gauge how the market values the underlying revenues regardless of current profitability.

With CPI Property Group’s ratio above both its industry and peer averages, the market may be anticipating a future turnaround in sales or is pricing in other positive company-specific factors despite ongoing losses. Such a valuation premium needs to be weighed against the reality that the business has experienced significant earnings declines and remains unprofitable.

Investors should also note that the company is currently deemed expensive on the P/S measure. This could point to limited upside unless fundamentals improve or sector trends shift decisively in its favor.

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

Result: Price-to-Sales of 4.2x (OVERVALUED)

However, risks remain, including ongoing losses and declining long-term returns. Either of these factors could limit a sustained recovery for CPI Property Group.

Find out about the key risks to this CPI Property Group narrative.

Another View: DCF Suggests a Slight Discount

While the price-to-sales ratio indicates that CPI Property Group appears expensive, our DCF model finds that shares currently trade at a slight 3.7% discount to estimated fair value (€0.77 versus €0.8). Could this difference signal a hidden value overlooked by more traditional multiples?

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 CPI Property Group 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 897 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 CPI Property Group Narrative

If you see the numbers differently or want to chart your own course, you can build a personal perspective on the data in just a few minutes, and Do it your way.

A great starting point for your CPI Property Group research is our analysis highlighting 1 key reward 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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