Broadstone Net Lease (BNL) Profit Margin Drops to 22.1%, Raising Questions on Earnings Quality

Broadstone Net Lease (BNL) posted a net profit margin of 22.1% for the twelve months ending September 30, 2025, down from last year’s 36.6%, after absorbing a one-off loss of $42.2 million. Earnings have grown at an average annual rate of 16.3% over the past five years, but recent results show negative growth that does not match up with that longer-term trend. Looking ahead, earnings are projected to rise 8.93% annually, and revenue growth is expected at 4.4% per year. Both figures trail the broader US market’s averages. BNL is currently trading at $17.75, below an internal fair value estimate of $36.85. Its price-to-earnings ratio sits high at 34.4 times, well above peer and global REIT industry averages. Investors are weighing solid long-term growth rates and perceived value against the recent margin pressure and the impact of non-recurring items on reported earnings.

See our full analysis for Broadstone Net Lease.

The next section puts these latest numbers in context, comparing them with the most widely discussed market narratives to see which stories hold up and which ones may need a closer look.

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Margins Poised for Rebound by 2028

• Analysts expect profit margins to rise from 22.1% today to 28.6% in three years. This reflects confidence in BNL’s ability to reverse this year’s drop, even after a $42.2 million one-off loss highlighted in recent filings.
• According to the analysts' consensus narrative, stable occupancy rates above 99% and strong lease terms with built-in escalators are projected to offset margin pressure.
  • Consistent focus on industrial and essential retail properties underpins reliable rent growth, augmenting long-term net margin stability even if tenant risks such as bankruptcies materialize.
  • Portfolio management discipline, especially recycling capital into newer assets with above-market average base rent (ABR) growth, supports expectations for higher future earnings relative to most peers.
• Consensus narrative investors see rising occupancy and disciplined portfolio upgrades driving the anticipated margin recovery over the next few years. 📊 Read the full Broadstone Net Lease Consensus Narrative.

Acquisition-Driven Growth Faces Credit and Cost Risks

• Recent acquisition funding has contributed to higher leverage, with net debt reaching 5.2x and a willingness to approach 6x. This is a notable risk compared to historical levels.
• Consensus narrative highlights several threats to sustained earnings, most notably tenant bankruptcies and increased acquisition competition.
  • Exposure to credit-challenged tenants like At Home and Claire's means that unforeseen bankruptcies could hit near-term earnings and occupancy until replacement leases or better market rents are secured.
  • Rising prices for new property deals compress yields, making it harder for each acquisition to boost long-term return on investment and potentially pressuring net margins in a tightening market.

Valuation: Discounted Price vs Expensive Multiple

• While BNL trades at $17.75 per share, below a DCF fair value of $36.85, its 34.4x price-to-earnings ratio stands far above the global REIT industry average of 15.1x. This highlights a tension between perceived bargain value and the actual multiple paid for recent profits.
• Consensus narrative suggests that, although today's share price is 10.8% below the consensus analyst target of $19.91, BNL’s premium valuation only makes sense if margin expansion and reliable earnings growth materialize.
  • If future earnings do not ramp up as projected, the multiple may prove hard to justify, especially since the DCF fair value assigns significant weight to cash flow durability and growth.
  • Comparison with US and global REITs, which are trading at materially lower multiples, leaves little room for disappointment if sector-wide headwinds slow growth or pressure cash flows in coming years.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Broadstone Net Lease on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Looking at the data another way? Take a moment to share your interpretation and put your narrative together in just a few minutes. Do it your way.

A great starting point for your Broadstone Net Lease research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

See What Else Is Out There

BNL’s elevated leverage and exposure to credit-challenged tenants raise concerns about financial stability and the risks that can come with acquisition-driven growth.

If you’re looking to sidestep these balance sheet risks, discover companies built on stronger financial footing by starting your search with solid balance sheet and fundamentals stocks screener (1982 results).

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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