Kilroy Realty (KRC): Assessing Valuation After 19% Three-Month Share Price Rally

Kilroy Realty (KRC) shares have climbed about 19% over the past three months, drawing attention from investors curious about what is driving renewed momentum in this real estate stock. The company’s recent performance raises questions about underlying fundamentals and future prospects.

See our latest analysis for Kilroy Realty.

Momentum has clearly been picking up for Kilroy Realty, with a 19% share price return over the past three months reflecting a shift in market sentiment. However, the 1-year total shareholder return of 19% suggests that this recent surge is helping to turn the tide after a more muted long-term run.

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Still, the key question remains: Is Kilroy Realty trading below its true value after this surge, or has the market already factored in all the future growth ahead, leaving little room for further upside?

Most Popular Narrative: Fairly Valued

With the narrative's fair value of $40.93 almost matching Kilroy Realty's recent close at $42.15, the market appears nearly balanced with current expectations. The price reflects analyst projections and cautious sentiment after recent gains.

"Anticipated weakness in long-term office demand due to the persistent adoption of remote and hybrid work models is likely to keep Kilroy's occupancy rates and rent growth below historical averages, pressuring future revenues and NOI despite current leasing momentum."

Read the complete narrative.

Want to know which key figures drive this balanced valuation? Hints: there are sharp declines forecast in both profits and margins. But what bold assumptions lie beneath these projections? Find out how ambitious or cautious these financial expectations are by exploring the complete narrative.

Result: Fair Value of $40.93 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, strong leasing momentum in San Francisco or successful repositioning into life sciences could quickly challenge current assumptions and support renewed growth for Kilroy Realty.

Find out about the key risks to this Kilroy Realty narrative.

Another View: Contrasting the Valuation

Looking at our DCF model, Kilroy Realty's current share price actually appears to sit slightly below its calculated fair value. This suggests the recent rally may be supported by long-term cash flow assumptions that are more optimistic than traditional earnings-based ratios imply. Should investors dig deeper into cash flows for hidden upside, or is the current market already too hopeful?

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 Kilroy Realty 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 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 Kilroy Realty Narrative

For those who have a different perspective or want to dive deeper into the numbers themselves, you can quickly build your own take on Kilroy Realty’s outlook in just a few minutes. Do it your way.

A great starting point for your Kilroy Realty research is our analysis highlighting 3 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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