Pennsylvania Real Estate Investment Trust’s (NYSE:PEI) Profit Outlook

Pennsylvania Real Estate Investment Trust’s (NYSE:PEI): PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets. The US$934.87m market-cap posted a loss in its most recent financial year of -US$61.66m and a latest trailing-twelve-month loss of -US$65.23m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is PEI’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for PEI.

View out our latest analysis for Pennsylvania Real Estate Investment Trust

PEI is bordering on breakeven, according to REITs analysts. They expect the company to post a final loss in -1, before turning a profit of US$0 in . Therefore, PEI is expected to breakeven roughly a couple of months from now! What rate will PEI have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 0.57%, which is fair. Should the business grow at a faster rate, it will become profitable at an earlier date than expected.

NYSE:PEI Past Future Earnings June 14th 18
NYSE:PEI Past Future Earnings June 14th 18

Underlying developments driving PEI’s growth isn’t the focus of this broad overview, however, bear in mind that generally periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with PEI is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PEI’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of PEI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PEI, take a look at PEI’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further examine:

  1. Valuation: What is PEI worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether PEI is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Pennsylvania Real Estate Investment Trust’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.