Picton Property Income (LSE:PCTN) - Share price, News & Analysis

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

PCTN (£0.85) is trading below our estimate of [[fair value]] (£1.08)

PCTN fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	5/6
Financial Health	4/6
Dividends	3/6

PCTN Stock Overview

Picton, established in 2005, is a UK REIT.

Rewards

Trading at 21% below our estimate of its fair value

Earnings grew by 334.9% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 40.5% per year for the next 3 years

Unstable dividend track record

Large one-off items impacting financial results

Picton Property Income Competitors

Custodian REIT

LSE:CREI

UK£440.9m

BMO Commercial Property Trust

LSE:BCPT

UK£799.1m

abrdn Property Income Trust

LSE:API

UK£309.1m

Schroder Real Estate Investment Trust

LSE:SREI

UK£259.3m

Price History & Performance

Summary of all time highs, changes and price drops for Picton Property Income
Historical stock prices
Current Share Price	UK£0.85
52 Week High	UK£1.07
52 Week Low	UK£0.85
Beta	0.45
1 Month Change	-12.59%
3 Month Change	-13.74%
1 Year Change	-3.83%
3 Year Change	-12.41%
5 Year Change	2.28%
Change since IPO	-15.86%

Shareholder Returns

	PCTN	GB REITs	GB Market
7D	-7.2%	-5.5%	-1.1%
1Y	-3.8%	-10.7%	-9.7%

Return vs Industry: PCTN exceeded the UK REITs industry which returned -10.7% over the past year.

Return vs Market: PCTN exceeded the UK Market which returned -9.7% over the past year.

Price Volatility

Is PCTN's price volatile compared to industry and market?
PCTN volatility
PCTN Average Weekly Movement	3.3%
REITs Industry Average Movement	3.5%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.6%
10% least volatile stocks in GB Market	2.8%

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

Volatility Over Time: PCTN's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2005	9	Michael Morris	https://www.picton.co.uk

Picton, established in 2005, is a UK REIT. It owns and actively manages a £665 million diversified UK commercial property portfolio, invested across 47 assets and with around 350 occupiers (as at 31 March 2020). Through an occupier focused, opportunity led approach to asset management, Picton aims to be one of the consistently best performing diversified UK focused property companies listed on the main market of the London Stock Exchange.

Picton Property Income Fundamentals Summary

How do Picton Property Income's earnings and revenue compare to its market cap?
PCTN fundamental statistics
Market Cap	UK£465.97m
Earnings (TTM)	UK£146.99m
Revenue (TTM)	UK£46.54m

3.2x

P/E Ratio

10.0x

P/S Ratio

Is PCTN overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
PCTN income statement (TTM)
Revenue	UK£46.54m
Cost of Revenue	UK£11.10m
Gross Profit	UK£35.45m
Other Expenses	-UK£111.54m
Earnings	UK£146.99m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.27
Gross Margin	76.16%
Net Profit Margin	315.81%
Debt/Equity Ratio	33.0%

How did PCTN perform over the long term?

See historical performance and comparison

Dividends

4.1%

Current Dividend Yield

92%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

5/6

Valuation Score 5/6

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 PCTN?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for PCTN. This is calculated by dividing PCTN's market cap by their current preferred multiple.
What is PCTN's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£465.97m

PCTN 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	13.9x
Enterprise Value/EBITDA	21.7x
PEG Ratio	-0.08x

Price to Earnings Ratio vs Peers

How does PCTN's PE Ratio compare to its peers?

PCTN PE Ratio vs Peers

The above table shows the PE ratio for PCTN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	3.8x
CREI Custodian REIT	3.6x	-65.7%	UK£440.9m
BCPT BMO Commercial Property Trust	5.1x	n/a	UK£799.1m
API abrdn Property Income Trust	3.6x	n/a	UK£309.1m
SREI Schroder Real Estate Investment Trust	2.9x	n/a	UK£259.3m
PCTN Picton Property Income	3.2x	-40.5%	UK£466.0m

Forward PE

Price-To-Earnings vs Peers: PCTN is good value based on its Price-To-Earnings Ratio (3.2x) compared to the peer average (3.8x).

Price to Earnings Ratio vs Industry

How does PCTN's PE Ratio compare vs other companies in the GB REITs Industry?

Price-To-Earnings vs Industry: PCTN is good value based on its Price-To-Earnings Ratio (3.2x) compared to the UK REITs industry average (7.6x)

Price to Earnings Ratio vs Fair Ratio

What is PCTN'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.

PCTN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	3.2x
Fair PE Ratio	7.1x

Price-To-Earnings vs Fair Ratio: PCTN is good value based on its Price-To-Earnings Ratio (3.2x) compared to the estimated Fair Price-To-Earnings Ratio (7.1x).

Share Price vs Fair Value

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

Below Fair Value: PCTN (£0.85) is trading below our estimate of fair value (£1.08)

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

Price to Earnings Growth Ratio

PEG Ratio: PCTN's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

Discover undervalued companies

Future Growth

How is Picton Property Income forecast to perform in the next 1 to 3 years based on estimates from 3 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

-40.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: PCTN's earnings are forecast to decline over the next 3 years (-40.5% per year).

Earnings vs Market: PCTN's earnings are forecast to decline over the next 3 years (-40.5% per year).

High Growth Earnings: PCTN's earnings are forecast to decline over the next 3 years.

Revenue vs Market: PCTN's revenue is expected to decline over the next 3 years (-4.5% per year).

High Growth Revenue: PCTN's revenue is forecast to decline over the next 3 years (-4.5% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

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

Discover growth companies

Past Performance

How has Picton Property Income 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

12.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PCTN has a large one-off gain of £125.8M impacting its March 31 2022 financial results.

Growing Profit Margin: PCTN's current net profit margins are higher than last year (78%).

Past Earnings Growth Analysis

Earnings Trend: PCTN's earnings have grown by 12.5% per year over the past 5 years.

Accelerating Growth: PCTN's earnings growth over the past year (334.9%) exceeds its 5-year average (12.5% per year).

Earnings vs Industry: PCTN earnings growth over the past year (334.9%) exceeded the REITs industry 113.5%.

Return on Equity

High ROE: PCTN's Return on Equity (22.4%) is considered high.

Discover strong past performing companies

Financial Health

How is Picton Property Income's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

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

Financial Position Analysis

Short Term Liabilities: PCTN's short term assets (£61.4M) exceed its short term liabilities (£20.3M).

Long Term Liabilities: PCTN's short term assets (£61.4M) do not cover its long term liabilities (£218.4M).

Debt to Equity History and Analysis

Debt Level: PCTN's net debt to equity ratio (27.1%) is considered satisfactory.

Reducing Debt: PCTN's debt to equity ratio has reduced from 45.5% to 33% over the past 5 years.

Debt Coverage: PCTN's debt is not well covered by operating cash flow (9.2%).

Interest Coverage: PCTN's interest payments on its debt are well covered by EBIT (3.5x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Picton Property Income 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
Cash Flow Coverage

4.10%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: PCTN's dividend (4.1%) is higher than the bottom 25% of dividend payers in the UK market (1.89%).

High Dividend: PCTN's dividend (4.1%) is low compared to the top 25% of dividend payers in the UK market (5.29%).

Stability and Growth of Payments

Stable Dividend: PCTN's dividend payments have been volatile in the past 10 years.

Growing Dividend: PCTN's dividend payments have fallen over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (92.1%), PCTN's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (95.4%), PCTN's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

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

3.8yrs

Average board tenure

CEO

Michael Morris (49 yo)

no data

Tenure

UK£830,000

Compensation

Mr. Michael Morris serves as Executive Director at Picton Property Income Ltd. since October 1, 2018 and serves as its Chief Executive since 2020. Mr. Morris serves as the Chief Executive of Picton Capital...

CEO Compensation Analysis

Compensation vs Market: Michael's total compensation ($USD1.01M) is about average for companies of similar size in the UK market ($USD1.06M).

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

Board Members

Experienced Board: PCTN's board of directors are considered experienced (3.8 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/07/04 00:00
End of Day Share Price	2022/07/04 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31