SmartStop Self Storage REIT (SMA): Evaluating Valuation Following Recent Share Price Bounce

SmartStop Self Storage REIT (SMA) saw shares rise 2% today, outpacing sector peers. The move comes even as returns over the past month remain under pressure. This has sparked conversation around what might be next for the company.

See our latest analysis for SmartStop Self Storage REIT.

After a rocky month, SmartStop Self Storage REIT’s 1-day share price return gained some ground today. However, broader momentum remains in question given its 30-day share price return of -17.5%. The long-term view shows the stock has been under pressure in recent months, reflecting shifting sentiment around growth and risk for storage REITs.

If today’s move has you wondering what else is worth a look, now is the perfect opportunity to broaden your search and discover fast growing stocks with high insider ownership

This recent volatility raises the question for investors: does SmartStop Self Storage REIT represent a compelling value at current levels, or is the market already anticipating a turnaround in growth and pricing it in?

Price-to-Sales of 6.8x: Is it justified?

SmartStop Self Storage REIT trades at a price-to-sales (P/S) ratio of 6.8x, slightly below the peer average but above the estimated fair ratio benchmark. With a last close price of $31.20, the stock's valuation through this lens appears mixed in context.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of sales. For REITs and other companies not currently profitable, this metric is widely used to compare relative value since traditional earnings metrics may not be meaningful.

While SMA is considered good value against its peer average P/S ratio of 7.1x, the company looks expensive compared with the specialized REIT industry average of 6.7x and particularly when measured against the estimated fair P/S ratio of 4.5x. This signals the market may be assigning a premium to the company outside what the fundamentals may currently support, and there may be a risk of the multiple reverting closer to the fair level over time.

Explore the SWS fair ratio for SmartStop Self Storage REIT

Result: Price-to-Sales of 6.8x (ABOUT RIGHT)

However, slower revenue growth or persistent losses could challenge the case for a turnaround and may potentially weigh on future share performance.

Find out about the key risks to this SmartStop Self Storage REIT narrative.

Another View: Discounted Cash Flow Perspective

Looking at SmartStop Self Storage REIT through the lens of our DCF model offers a notably different perspective. The SWS DCF model suggests the shares may be trading at a significant discount to their intrinsic value, with the current price sitting well below the estimated fair value. Does this point to a hidden opportunity, or could there be a reason for the gap between models?

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 SmartStop Self Storage REIT 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 919 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 SmartStop Self Storage REIT Narrative

If you’d rather dig into the numbers and reach your own conclusions, SmartStop Self Storage REIT’s data is open for you to explore and assess for yourself. You can build your own narrative in minutes. Do it your way

A great starting point for your SmartStop Self Storage REIT research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Waiting could mean missing your next big winner. Skip the guesswork and put the Simply Wall Street Screener to work for you in seconds. Fresh opportunities are always just a click away.

• Uncover game-changers with their potential for explosive growth by checking out these 3605 penny stocks with strong financials and see which companies are emerging under the radar.
• Target steady income opportunities as you review these 17 dividend stocks with yields > 3% featuring stocks with robust yields above 3% and strong balance sheets.
• Spot big trends early and position yourself confidently with these 25 AI penny stocks that offer direct exposure to AI-powered innovation and future market leaders.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com