Should Investors Revisit Prologis After Strong Warehouse Demand Drives 12% Jump in 2025?

If you have ever wondered what to do with Prologis stock, you are not alone. After all, with a share price that has climbed 12.3% year-to-date and logged a 2.5% gain just in the past week, it is no surprise this logistics giant is on your radar. Over the long haul, returns have been convincing, too, up more than 30% over the past three years. Recent months have seen steady momentum, partially fueled by upbeat sentiment around the continued surge in e-commerce and warehouse demand. As the market adapts to shifting supply chain priorities, risk perceptions have swung, sometimes giving Prologis a boost as investors look for stability and growth in commercial real estate.

Yet, price movements only tell part of the story. If you are serious about evaluating whether now is a smart time to buy, hold or sell, you need to get curious about valuation. According to our standardized checks, Prologis is undervalued in just 2 out of 6 categories, resulting in a valuation score of 2. That gives us clues, but not the complete answer. Next, let us break down what those valuation methods actually mean, and later on, I will let you in on the angle most investors overlook when sizing up stock value.

Prologis scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Prologis Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a method of estimating the true value of Prologis by projecting the company’s expected cash flows, in this case using adjusted funds from operations, and then discounting those future cash flows back to today’s value. For Prologis, the reported free cash flow over the last twelve months was $5.80 billion, with analysts projecting steady growth over the coming decade. External analysts provide cash flow estimates up to 2029, showing an expected free cash flow of $6.28 billion that year. Longer-term projections are extrapolated for nine more years by Simply Wall St.

According to this two-stage DCF model, the estimated intrinsic value of Prologis shares is $124.78. This suggests the stock currently trades at a 6.1% discount to its calculated fair value, classifying it as modestly undervalued by this approach.

In summary, while Prologis appears slightly undervalued based on the DCF model, the margin is not large enough to be a screaming bargain.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Prologis.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Prologis's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Prologis Price vs Earnings

For profitable companies like Prologis, the Price-to-Earnings (PE) ratio is often the go-to valuation metric. It tells us how much investors are willing to pay for each dollar of earnings, making it useful for assessing whether a stock is expensive or reasonable compared to its profits.

Of course, what counts as a “normal” or “fair” PE ratio depends on several factors. Companies with higher growth prospects or lower risk typically command higher PE ratios, while those with slower growth or greater uncertainty tend to trade at lower multiples.

Right now, Prologis trades at a PE ratio of 31.6x. That is very close to the average PE of its direct peers at 31.3x, but significantly higher than the broader Industrial REIT industry average of 16.4x. At first glance, Prologis looks like it is priced at a premium. However, that premium could be justified if the company’s growth and returns are higher than average.

This is where Simply Wall St’s Fair Ratio comes in. The Fair Ratio, calculated at 36.8x for Prologis, incorporates factors such as expected earnings growth, profit margins, company size, risks, and industry characteristics. Unlike a simple comparison to sector or peers, the Fair Ratio is a more holistic and forward-looking way to judge valuation.

Comparing the Fair Ratio (36.8x) against Prologis’s current PE (31.6x), there is only a small gap between the two. This suggests Prologis is trading at just about what you would expect, given all known factors. It is neither notably cheap nor overly expensive at this time.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Prologis Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your personalized story or point of view on a company, combining your own expectations for key financial metrics, such as future revenue, margins, and earnings, into a forecast that leads to your version of fair value.

This approach goes beyond traditional ratios by linking the company’s unique story and business drivers directly to the numbers, helping you connect what is happening in the real world to the estimates you see on the screen. Narratives are easy to use and accessible for all investors on Simply Wall St’s Community page, where millions of others share and compare their outlooks.

Narratives guide your decision on when to buy or sell by automatically comparing your calculated Fair Value (based on your assumptions) to the current share price, so you can act on your convictions, not just historical averages. Best of all, your Narrative updates dynamically whenever key news or earnings are released, keeping your thesis current without extra effort.

For example, some investors view recent record leasing activity and e-commerce momentum as reasons to forecast robust expansion and set a Fair Value above $140, while others focus on macro uncertainty and risk, landing closer to $95. Your Narrative is your advantage.

Do you think there's more to the story for Prologis? Create your own Narrative to let the Community know!

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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