Is American Assets Trust (AAT) Undervalued After Recent Share Price Decline?

American Assets Trust (AAT) shares have shown muted performance lately, with the stock down 4% over the past month and nearly 27% over the past year. Investors may be weighing ongoing sector headwinds as they evaluate the company’s steady revenue growth.

See our latest analysis for American Assets Trust.

After a rough 12 months, American Assets Trust’s share price has seen momentum fade. Its year-to-date price return sits at -26.4% and the one-year total shareholder return is -27.5%. This performance echoes recent sector pressures and suggests investors remain watchful despite consistent revenue growth.

If you’re keeping an eye on how trends are shifting, now is the perfect moment to widen your perspective and discover fast growing stocks with high insider ownership.

With shares lagging despite steady revenue, is American Assets Trust an overlooked bargain, or is the market already factoring in a cautious outlook for future growth? Could there still be a buying opportunity here?

Price-to-Earnings of 19.1x: Is it justified?

American Assets Trust trades at a price-to-earnings ratio of 19.1x, a figure that puts it above the sector average but below similar peers. With the last close at $19.17, this raises questions about whether the current valuation fairly reflects company prospects or if the stock commands a premium.

The price-to-earnings ratio (P/E) compares a company’s current share price to its per-share earnings, serving as a gauge of how much investors are willing to pay for a dollar of earnings. In real estate investment trusts (REITs), P/E can highlight expectations for growth, stability, and risk. These are key elements in evaluating market sentiment and future returns.

AAT’s 19.1x ratio stands out as more expensive than the global REITs industry average of 15.8x. However, it looks attractive when placed against the peer average of 29.3x. Compared to its estimated fair price-to-earnings ratio of just 3.3x, the current market price appears significantly higher than what underlying fundamentals may support. This discrepancy suggests that investors might be overpaying relative to the company’s recent earnings growth profile.

Explore the SWS fair ratio for American Assets Trust

Result: Price-to-Earnings of 19.1x (OVERVALUED)

However, persistent declines in net income and lackluster multi-year returns could weigh on sentiment and challenge any case for upside.

Find out about the key risks to this American Assets Trust narrative.

Another View: Discounted Cash Flow Perspective

Looking at American Assets Trust through the lens of our DCF model offers a different angle. The SWS DCF model puts fair value at $20.98, which is notably above the current price of $19.17. This suggests the stock may actually be undervalued based on future cash flow estimates, even with the high price-to-earnings ratio.

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 American Assets 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 927 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 American Assets Trust Narrative

If you see things differently or want a deeper dive into the numbers, you can craft your own perspective on American Assets Trust in just a few minutes. Do it your way

A great starting point for your American Assets Trust research is our analysis highlighting 2 key rewards and 4 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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