company background image
NNN

National Retail Properties NYSE:NNN Stock Report

Last Price

US$48.12

Market Cap

US$8.5b

7D

4.4%

1Y

0.3%

Updated

12 Aug, 2022

Data

Company Financials +
NNN fundamental analysis
Snowflake Score
Valuation4/6
Future Growth1/6
Past Performance4/6
Financial Health2/6
Dividends6/6

NNN Stock Overview

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.

National Retail Properties Competitors

Price History & Performance

Summary of all time highs, changes and price drops for National Retail Properties
Historical stock prices
Current Share PriceUS$48.12
52 Week HighUS$48.90
52 Week LowUS$39.12
Beta0.82
1 Month Change10.67%
3 Month Change10.67%
1 Year Change0.33%
3 Year Change-12.32%
5 Year Change18.14%
Change since IPO501.50%

Recent News & Updates

Aug 02

Better Buy: National Retail Properties' 4.5% Yield Or Realty Income's 3.9%

National Retail Properties and Realty Income are both triple net lease REITs with very stable cash-flowing business models. While NNN's yield is ~60 basis points greater than O's, O boasts a higher credit rating, implying a lower risk profile. We compare the business models, balance sheets, growth potential, and valuation to determine which is the better buy today. National Retail Properties (NNN) and Realty Income (O) are both triple net lease REITs with very stable cash-flowing business models. While NNN's yield is ~60 basis points greater than O's, O boasts a higher credit rating, implying a lower risk profile. In this article, we will compare the business models, balance sheets, growth potential, and valuation of these two REITs side-by-side to determine which is the better buy today. National Retail vs. Realty Income: Business Models Both businesses have very recession resistant business models thanks to deriving virtually all of their revenue from broadly diversified real estate portfolios with triple net leases. While we like both business models and each has its unique strengths and weaknesses, O is the winner here as it has vastly superior scale and a lower cost of capital. O owns nearly 11,300 properties spread across more than 1,000 clients across 70 industries. Moreover, the fact that 43% of its revenue comes from investment grade tenants makes its already conservatively structured cash flow stream even more dependable. O boast a 26-year dividend growth streak through good times and bad, combining with its phenomenal total return track record to make it a great investment for dividend growth investors: O Total Return Price data by YCharts Meanwhile, NNN has a solid - if less impressive - portfolio and track record. It owns 3,271 properties with over 370 customers with its top 25 tenants making up 55% of total annual rent. NNN focuses on non-investment grade tenants in order to get higher cap rates and better rent escalator terms. Meanwhile, tenant credit status can be fleeting as it often improves or degrades over the course of the lease (while the terms remain constant). This strategy has worked very well for NNN as its 19-year occupancy low is still quite impressive at 96.4%. The portfolio is also well-positioned to face a potentially prolonged economic downturn as only 3.7% of its leases are set to expire through 2023 and its current occupancy level is 99.2%. This has enabled NNN to grow its dividend every year for 32 consecutive years, delivering outstanding total returns in the process: NNN Total Return Price data by YCharts National Retail vs. Realty Income: Balance Sheets Both businesses' balance sheets are very strong, with NNN's achieving a BBB+ (stable outlook) credit rating and O getting an A- (stable outlook) credit rating from S&P. O has a 6.4 year weighted average debt maturity term, has a 93% unsecured debt to total debt ratio, and has a 5.6x fixed charge coverage ratio. Its weighted average interest rate is very low at 3.12%. NNN's approach to balance sheet management is long-term in that it does all it can to never need to depend on the capital markets to keep the business running while also maintaining sufficient liquidity to respond opportunistic to economic storms. Management is also obsessively focused on reducing its cost of capital as it realizes this is a key component of successfully generating outsized returns in the triple net lease space. 99.8% of its assets are unencumbered and it boasts a very lengthy 14.5 year weighted average debt maturity term. This is especially valuable given that interest rates have materially increased over the past year. It only has very small debt maturities in 2022 and 2023 at interest rates of 5.2%, so it should be able to easily either pay these off with excess cash or refinance them at similar interest rates. Its more significantly debt maturities do not begin until 2024 and then continue through 2028. These maturities have interest rates ranging from 3.6% to 4.3%, so management will likely wait a while to refinance them in hopes that interest rates subside again. A major strength for the company is that it has three fairly large tranches of debt ($1.2 billion in total) at a weighted average interest rate of 3.21% that does not expire until 2050 or later. Being able to lock in so much capital at such a low interest rate for so long will provide NNN with a cost of capital competitive advantage for decades to come. Both its interest coverage and fixed charge coverage ratios remain very conservative as well at 4.7x. While NNN has a much longer weighted average maturity term and has a higher percentage of unsecured debt vs secured debt than O does, O's fixed charge coverage ratio is significantly greater than NNN's. It also has a lower weighted average interest rate. As a result, we give O a very slight edge on this metric, though both businesses have very strong balance sheets. National Retail vs. Realty Income: Growth Potential Both NNN and O continue to invest in opportunistic acquisitions which combines with solid organic growth due to built-in contractual rent escalators to drive mid-single digit annualized AFFO per share growth. While O has the advantage of having a lower cost of capital, NNN generally invests in higher cap rate properties with better rent escalators due to its focus on non-investment grade tenants. However, analysts are more bullish on O's ability to grow AFFO per share through 2026, assigning a 5.2% expected AFFO per share CAGR through 2026 compared to a meager 2.1% AFFO per share CAGR through 2026 for NNN. At the same time, NNN is expected to grow its dividend per share at a 6.5% CAGR through 2026 whereas O is expected to grow its dividend at a 5.9% CAGR over that same time span. As a result, we give O a slight edge here. National Retail vs. Realty Income: Stock Valuation NNN's main advantage over O is that its dividend yield is meaningfully higher and its P/AFFO multiple is meaningfully lower. Furthermore, when we look at the EV/EBITDA and P/NAV multiples, we see a similarly widespread in valuations.

Jul 15

National Retail Properties raises dividend by 3.8% to $0.55

National Retail Properties (NYSE:NNN) declares $0.55/share quarterly dividend, 3.8% increase from prior dividend of $0.53. Forward yield 5.12% Payable Aug. 15; for shareholders of record July 29; ex-div July 28. See NNN Dividend Scorecard, Yield Chart, & Dividend Growth.

Shareholder Returns

NNNUS REITsUS Market
7D4.4%2.9%1.3%
1Y0.3%-4.6%-11.7%

Return vs Industry: NNN exceeded the US REITs industry which returned -4.6% over the past year.

Return vs Market: NNN exceeded the US Market which returned -11.7% over the past year.

Price Volatility

Is NNN's price volatile compared to industry and market?
NNN volatility
NNN Average Weekly Movement3.6%
REITs Industry Average Movement4.3%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: NNN is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: NNN's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
198472Steve Hornhttps://www.nnnreit.com

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of September 30, 2020, the company owned 3,114 properties in 48 states with a gross leasable area of approximately 32.4 million square feet and with a weighted average remaining lease term of 10.7 years.

National Retail Properties Fundamentals Summary

How do National Retail Properties's earnings and revenue compare to its market cap?
NNN fundamental statistics
Market CapUS$8.52b
Earnings (TTM)US$298.44m
Revenue (TTM)US$748.68m

28.6x

P/E Ratio

11.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
NNN income statement (TTM)
RevenueUS$748.68m
Cost of RevenueUS$27.41m
Gross ProfitUS$721.27m
Other ExpensesUS$422.83m
EarningsUS$298.44m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.69
Gross Margin96.34%
Net Profit Margin39.86%
Debt/Equity Ratio96.7%

How did NNN perform over the long term?

See historical performance and comparison

Dividends

4.6%

Current Dividend Yield

67%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is NNN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for NNN?

Other financial metrics that can be useful for relative valuation.

NNN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue16.4x
Enterprise Value/EBITDA18.1x
PEG Ratio4.4x

Price to Earnings Ratio vs Peers

How does NNN's PE Ratio compare to its peers?

NNN PE Ratio vs Peers
The above table shows the PE ratio for NNN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average27.5x
FRT Federal Realty Investment Trust
33.3x7.9%US$9.0b
BRX Brixmor Property Group
24.6x1.9%US$7.2b
REG Regency Centers
23.4x-6.6%US$11.4b
SRC Spirit Realty Capital
28.6x6.2%US$6.1b
NNN National Retail Properties
28.6x6.5%US$8.5b

Price-To-Earnings vs Peers: NNN is expensive based on its Price-To-Earnings Ratio (28.6x) compared to the peer average (27.5x).


Price to Earnings Ratio vs Industry

How does NNN's PE Ratio compare vs other companies in the US REITs Industry?

Price-To-Earnings vs Industry: NNN is good value based on its Price-To-Earnings Ratio (28.6x) compared to the US REITs industry average (32.2x)


Price to Earnings Ratio vs Fair Ratio

What is NNN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

NNN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio28.6x
Fair PE Ratio39.1x

Price-To-Earnings vs Fair Ratio: NNN is good value based on its Price-To-Earnings Ratio (28.6x) compared to the estimated Fair Price-To-Earnings Ratio (39.1x).


Share Price vs Fair Value

What is the Fair Price of NNN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: NNN ($48.12) is trading below our estimate of fair value ($98.84)

Significantly Below Fair Value: NNN is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


Discover undervalued companies

Future Growth

How is National Retail Properties forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


6.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NNN's forecast earnings growth (6.5% per year) is above the savings rate (1.9%).

Earnings vs Market: NNN's earnings (6.5% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: NNN's earnings are forecast to grow, but not significantly.

Revenue vs Market: NNN's revenue (4.8% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: NNN's revenue (4.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NNN's Return on Equity is forecast to be low in 3 years time (8.2%).


Discover growth companies

Past Performance

How has National Retail Properties performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


2.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: NNN has high quality earnings.

Growing Profit Margin: NNN's current net profit margins (39.9%) are higher than last year (33.5%).


Past Earnings Growth Analysis

Earnings Trend: NNN's earnings have grown by 2.4% per year over the past 5 years.

Accelerating Growth: NNN's earnings growth over the past year (30.7%) exceeds its 5-year average (2.4% per year).

Earnings vs Industry: NNN earnings growth over the past year (30.7%) underperformed the REITs industry 52.3%.


Return on Equity

High ROE: NNN's Return on Equity (8.1%) is considered low.


Discover strong past performing companies

Financial Health

How is National Retail Properties's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: NNN's short term assets ($41.9M) exceed its short term liabilities ($23.2M).

Long Term Liabilities: NNN's short term assets ($41.9M) do not cover its long term liabilities ($3.9B).


Debt to Equity History and Analysis

Debt Level: NNN's net debt to equity ratio (96.7%) is considered high.

Reducing Debt: NNN's debt to equity ratio has increased from 68.6% to 96.7% over the past 5 years.

Debt Coverage: NNN's debt is not well covered by operating cash flow (14.9%).

Interest Coverage: NNN's interest payments on its debt are well covered by EBIT (3.2x coverage).


Balance Sheet


Discover healthy companies

Dividend

What is National Retail Properties's current dividend yield, its reliability and sustainability?

Dividend Score

6/6

Dividend Score 6/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


4.57%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: NNN's dividend (4.57%) is higher than the bottom 25% of dividend payers in the US market (1.49%).

High Dividend: NNN's dividend (4.57%) is in the top 25% of dividend payers in the US market (4%)


Stability and Growth of Payments

Stable Dividend: NNN's dividends per share have been stable in the past 10 years.

Growing Dividend: NNN's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (67%), NNN's dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (69.2%), NNN's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

11.5yrs

Average management tenure


CEO

Steve Horn (50 yo)

0.33

Tenure

US$3,189,194

Compensation

Mr. Stephen A. Horn, Jr. also known as Steve, serves as President and Chief Executive Officer of National Retail Properties, Inc. since April 2022. He served as Chief Operating Officer at National Retail P...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD3.19M) is below average for companies of similar size in the US market ($USD8.25M).

Compensation vs Earnings: Steve's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: NNN's management team is seasoned and experienced (11.5 years average tenure).


Board Members

Experienced Board: NNN's board of directors are considered experienced (6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

National Retail Properties, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: National Retail Properties, Inc.
  • Ticker: NNN
  • Exchange: NYSE
  • Founded: 1984
  • Industry: Retail REITs
  • Sector: Real Estate
  • Implied Market Cap: US$8.523b
  • Shares outstanding: 177.11m
  • Website: https://www.nnnreit.com

Number of Employees


Location

  • National Retail Properties, Inc.
  • 450 South Orange Avenue
  • Suite 900
  • Orlando
  • Florida
  • 32801
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.