Blue Square Real Estate (TASE:BLSR): Reassessing Valuation After Sharp Q3 Profitability Growth

Blue Square Real Estate (TASE:BLSR) just posted a jump in third quarter profitability, with net income and earnings per share climbing sharply versus last year. This puts the spotlight firmly on how this landlord is monetizing its portfolio.

See our latest analysis for Blue Square Real Estate.

That profit jump has not gone unnoticed. The share price is at ₪389.6, and a solid year to date share price return of 13.6 percent is feeding into a 25.4 percent one year total shareholder return that signals momentum is still building rather than fading.

If Blue Square Real Estate's improving profitability has you reassessing opportunities in real assets, it might be worth exploring fast growing stocks with high insider ownership as a way to spot other potential standout names.

Yet with the shares already delivering strong multi year gains and trading close to estimated intrinsic value, investors now face a key question: Is Blue Square Real Estate still undervalued, or is future growth already priced in?

Price-to-Earnings of 5.5x: Is it justified?

On a last close of ₪389.6, Blue Square Real Estate trades at a 5.5x price to earnings ratio, a level that screens as markedly cheap versus peers.

The price to earnings multiple compares the current share price with the company’s earnings. It is a direct gauge of how much investors are paying for each unit of profit. For a landlord with steady rental income and a history of profit growth, this lens is particularly relevant because earnings are a core driver of long term value.

Here, the low 5.5x multiple sits alongside solid fundamentals, including earnings growth of 16.8 percent over the past year and 19.5 percent per year over five years. That combination suggests the market may be underpricing the company’s ability to keep generating profits, especially given that Blue Square Real Estate is judged good value on this same multiple versus the wider Israeli market.

The discount becomes even clearer when comparing with benchmarks. Blue Square Real Estate’s 5.5x price to earnings ratio is well below both the Israeli market average of 15.3x and the Israeli real estate industry average of 14.8x. Such a steep gap implies investors are paying a fraction of the going rate for similar earnings streams in the sector.

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

Result: Price-to-Earnings of 5.5x (UNDERVALUED)

However, risks remain, including a cyclical slowdown in Israeli retail property demand and project execution setbacks that could compress rents and temper earnings momentum.

Find out about the key risks to this Blue Square Real Estate narrative.

Another View: DCF Points to Modest Overvaluation

Our DCF model paints a less generous picture, suggesting Blue Square Real Estate is trading slightly above its estimated fair value of ₪372.35 at today’s ₪389.6 share price. If cash flows are already fully priced in, how much upside is really left from here?

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 Blue Square Real Estate 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 919 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 Blue Square Real Estate Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in minutes with Do it your way.

A great starting point for your Blue Square Real Estate research is our analysis highlighting 2 key rewards and 3 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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