What Does Pennsylvania Real Estate Investment Trust's (NYSE:PEI) Share Price Indicate?

By
Simply Wall St
Published
December 24, 2019
NYSE:PEI

Pennsylvania Real Estate Investment Trust (NYSE:PEI), which is in the reits business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$6.39 at one point, and dropping to the lows of US$4.94. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Pennsylvania Real Estate Investment Trust's current trading price of US$5.18 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Pennsylvania Real Estate Investment Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Pennsylvania Real Estate Investment Trust

Is Pennsylvania Real Estate Investment Trust still cheap?

According to my valuation model, Pennsylvania Real Estate Investment Trust seems to be fairly priced at around 7.56% above my intrinsic value, which means if you buy Pennsylvania Real Estate Investment Trust today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $4.82, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Pennsylvania Real Estate Investment Trust’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Pennsylvania Real Estate Investment Trust?

NYSE:PEI Past and Future Earnings, December 24th 2019
NYSE:PEI Past and Future Earnings, December 24th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 51% over the next couple of years, the future seems bright for Pennsylvania Real Estate Investment Trust. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? PEI’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on PEI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Pennsylvania Real Estate Investment Trust. You can find everything you need to know about Pennsylvania Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in Pennsylvania Real Estate Investment Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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