SmartStop Self Storage REIT (SMA): Reassessing Valuation After a Three-Month Share Price Pullback

SmartStop Self Storage REIT (SMA) has drifted lower over the past 3 months even as its revenue and net income growth trends look surprisingly healthy for a storage-focused REIT. That disconnect is where today’s conversation starts.

See our latest analysis for SmartStop Self Storage REIT.

The recent 90 day share price return of negative 11.6 percent suggests momentum has cooled, even though the year to date share price return is still slightly positive and supported by resilient fundamentals. This hints the market may be reassessing risk more than long term potential.

If this kind of mixed sentiment has you rethinking your watchlist, it could be worth scanning for fast growing stocks with high insider ownership as another source of ideas beyond storage focused REITs.

With shares lagging despite double digit revenue growth and a sizable discount to analyst targets and intrinsic value, is SmartStop Self Storage REIT quietly slipping into bargain territory, or is the market already pricing in all the growth ahead?

Price-to-Sales of 7.2x: Is it justified?

SmartStop Self Storage REIT currently trades on a price-to-sales ratio of 7.2x at a last close of $33, which screens as slightly expensive versus the US specialized REIT peer group, while still lining up closely with its direct peers.

The price-to-sales multiple compares the company’s market value to the revenue it generates, a common yardstick for REITs where reported earnings can be distorted by depreciation and financing structures. For a storage focused REIT with accelerating revenue and a path toward profitability, investors often look at this ratio to gauge how much future growth they are paying for today.

Against the broader US specialized REITs industry, SmartStop’s 7.2x sits just above the 7.1x average, implying the market is ascribing a modest premium to its growth profile rather than a deep discount. However, when measured against the SWS fair price-to-sales estimate of 4.7x, today's valuation looks significantly richer, highlighting how far the multiple could compress if sentiment or growth expectations soften. At the same time, compared with a peer average of 7.3x, SmartStop still appears reasonably aligned with similar names, suggesting the market is broadly pricing it in line with the sector’s current expectations.

Explore the SWS fair ratio for SmartStop Self Storage REIT

Result: Price-to-Sales of 7.2x (ABOUT RIGHT)

However, investors still face risks if revenue momentum stalls or financing costs rise, which could pressure margins and challenge the current growth premium.

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

Another View: What Does Our DCF Say?

While the current price to sales ratio makes SmartStop Self Storage REIT look only slightly expensive, our DCF model provides a very different perspective. With shares trading about 36 percent below our fair value estimate of $51.72, the stock appears meaningfully undervalued on a cash flow basis.

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 916 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 see things differently or simply want to dig into the numbers yourself, you can build a complete view in just a few minutes: Do it your way.

A great starting point for your SmartStop Self Storage REIT research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Do not stop with a single opportunity when you can quickly scan targeted shortlists that spotlight different edges in the market and uncover what others might be missing.

• Capitalize on neglected quality by reviewing these 916 undervalued stocks based on cash flows that the market may be pricing too pessimistically despite strong cash flow potential.
• Supercharge your growth focus by checking out these 25 AI penny stocks poised to benefit from the rapid expansion of artificial intelligence across industries.
• Strengthen your income stream by targeting these 14 dividend stocks with yields > 3% that can help support returns even when markets turn volatile.

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