Alexander’s (ALX) Net Profit Margin Miss Challenges Bullish Sentiment This Earnings Season

Alexander’s (ALX) latest results show earnings under pressure, with net profit margin at 17.1%, down from 22.1% in the previous year. Earnings have seen a 2.5% annualized decline over the last five years. Analysts now expect a further earnings contraction of 20.1% per year over the next three years, while revenue growth is forecast at just 0.7% per year, which is significantly below the US market's typical pace of 10.5%. With shares trading at $224.51, well above the estimated fair value of $140.62, and risks related to profit sustainability accumulating, investors are facing a challenging landscape this earnings season.

See our full analysis for Alexander's.

Next up, we will see how these results compare with the widely discussed narratives for Alexander’s and highlight where expectations might need to shift.

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Net Profit Margin Moves Below Sector Norms

• Alexander’s net profit margin is now 17.1%, down from last year’s 22.1%. While the margin remains solid, it is trending lower than many US Retail REIT peers.
• Prevailing analysis highlights a sharp multi-year shift, as profit margins have contracted at an average rate of 2.5% per year over the last five years.
  • This supports the view that, despite historical strength in high-quality earnings, ongoing sector pressures and operational headwinds are challenging Alexander’s ability to defend its margins.
  • The lower margin adds to concerns about tenant risk and economic sensitivity, especially in a competitive real estate market where tenant retention and stable cash flows are key for valuation support.

Analyst Projections Signal Prolonged Contraction

• Over the next three years, analysts expect Alexander’s earnings to decline by 20.1% annually, a steep drop compared to the industry’s typical trajectory.
• The prevailing perspective highlights a meaningful risk of continued shrinkage on both revenue and profit fronts, rather than a short-term dip.
  • Combined with just 0.7% expected annual revenue growth, well below the US market average of 10.5%, this forecast reinforces the concern that underlying business momentum remains structurally weak.
  • Such a prolonged earnings drop may limit the company’s options to cushion dividend payouts or reinvest for growth, underscoring why cautious investors are closely watching future outlooks around lease renewals and refinancing costs.

Premium Valuation Despite Fair Value Gap

• Shares are trading at $224.51, giving Alexander’s a price-to-earnings (P/E) ratio of 30.7x, significantly higher than both the US Retail REITs industry average of 26x and direct peers at 18.4x. This represents a wide premium over the DCF fair value of $140.62.
• The prevailing assessment warns that this sizable valuation premium does not align with recent profit trends or muted growth forecasts.
  • With risk factors like declining earnings and revenue growth now outpacing possible rewards, investors must consider whether Alexander’s can justify this valuation or if a correction toward intrinsic value is more likely.
  • This disconnect between price and financial fundamentals has become more pronounced as headwinds accumulate, making it a central watchpoint this season.

The lack of a clear bull or bear community narrative makes it even more important to dive deeper into the numbers before deciding where the next move lies. 📊 Read the full Alexander's Consensus Narrative.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Alexander's's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Alexander’s faces persistent earnings declines, sluggish revenue growth, and a wide valuation premium that outpaces its actual financial fundamentals.

If you want to avoid stocks priced above their fair value with shrinking profits, target better opportunities through these 842 undervalued stocks based on cash flows.

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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