Does Apple Hospitality REIT’s Recent Pullback Offer a Value Opportunity in 2025?

• Wondering if Apple Hospitality REIT is quietly turning into a value opportunity, or if the market is rightly cautious at these levels? Let us walk through what the numbers are really saying about the stock.
• The share price has been choppy lately, down 3.4% over the last week but still up 3.6% over the past month. Longer term returns remain negative year to date and over one year, which hints that sentiment is still in recovery mode.
• Recent headlines have focused on the broader lodging and travel recovery, including steady improvement in U.S. hotel occupancy and average daily room rates, as well as continued interest from income investors in hotel focused REITs as a way to play the reopening theme. At the same time, discussions around higher for longer interest rates and their impact on real estate financing keep casting a shadow over the sector. This helps explain why the stock has not fully rerated.
• On our valuation framework, Apple Hospitality REIT scores a 4/6, meaning it screens as undervalued on most, but not all, of our key checks. There is enough here to dig deeper into discounted cash flow, multiples, and asset based approaches, while also flagging an even more powerful way to think about valuation that we will circle back to at the end.

Find out why Apple Hospitality REIT's -21.6% return over the last year is lagging behind its peers.

Approach 1: Apple Hospitality REIT Discounted Cash Flow (DCF) Analysis

The DCF model for Apple Hospitality REIT projects its adjusted funds from operations into the future and then discounts those cash flows back to today to estimate what the business is worth in dollar terms right now.

Apple Hospitality REIT generated about $384.9 Million in free cash flow over the last twelve months. Based on analyst forecasts and further extrapolations, cash flows are expected to trend lower in the near term, with projected free cash flow of roughly $239.6 Million by 2035. Simply Wall St uses a 2 stage Free Cash Flow to Equity model, where the first stage relies on analyst estimates and the second stage extends those trends using conservative assumptions.

Adding up all these discounted cash flows results in an estimated intrinsic value of around $16.59 per share. Compared with the current market price, this implies the stock is trading at roughly a 30.3% discount, based on these particular cash flow assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Apple Hospitality REIT is undervalued by 30.3%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Apple Hospitality REIT.

Approach 2: Apple Hospitality REIT Price vs Earnings

For a profitable company like Apple Hospitality REIT, the price to earnings ratio is a practical way to judge whether investors are paying a reasonable price for each dollar of current earnings. In general, faster growing and lower risk businesses tend to justify higher PE ratios, while slower growth or higher uncertainty usually call for a lower, more conservative multiple.

Apple Hospitality REIT currently trades on a PE of about 15.6x, which is broadly in line with the Hotel and Resort REITs industry average of roughly 15.2x, but well below the wider peer group average of around 57.4x. To move beyond simple comparisons, Simply Wall St calculates a proprietary Fair Ratio, which estimates what a “normal” PE should be after accounting for factors such as earnings growth, profitability, industry characteristics, company size and key risks.

Because it incorporates these fundamentals, the Fair Ratio of 31.4x is a more tailored benchmark than raw industry or peer averages. Comparing this to Apple Hospitality REIT’s current 15.6x suggests the shares trade at a meaningful discount to where they might sit based on its underlying profile.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Apple Hospitality REIT Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you connect your view of Apple Hospitality REIT’s business to specific forecasts for revenue, earnings and margins. These then roll into a clear Fair Value you can compare with today’s share price to help inform whether you consider it a buy or a sell.

A Narrative is essentially your story behind the numbers. Because it links a company’s qualitative outlook to a quantitative forecast that automatically updates as new information like earnings or news arrives, it is a dynamic way to keep your valuation current rather than a one-off spreadsheet.

For example, one Apple Hospitality REIT Narrative on the platform might assume modest revenue growth of about 2.5%, an 11.8% profit margin and a future PE near 20.7x to support a Fair Value of roughly 13 dollars per share. A more cautious Narrative could lean toward the lower 12 dollar end of the current analyst range if you think travel headwinds and financing risks will be more significant than the market expects.

Do you think there's more to the story for Apple Hospitality REIT? Head over to our Community to see what others are saying!

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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