Terreno Realty (TRNO): Assessing Valuation as Expansion Continues With New Pre-Leased Facility in Hialeah

Terreno Realty has kicked off construction of Building 36, a 214,000-square-foot industrial facility that is already 51% pre-leased, at Countyline Corporate Park Phase IV in Hialeah, Florida. This move comes right after fully leasing Building 34 and underscores the company’s momentum in expanding its modern, sustainable portfolio across U.S. markets.

See our latest analysis for Terreno Realty.

Terreno Realty’s proactive approach, marked by major moves like the full leasing of Building 34 and its expansion into strategic coastal markets, has caught investors’ attention, but the stock’s 1-year total shareholder return sits just below flat. Momentum has shown signs of stabilizing thanks to portfolio growth and higher dividends, setting the stage for investors to watch for the next leg of performance.

If you’re eager to spot other real estate companies riding similar growth waves, now’s the perfect moment to discover fast growing stocks with high insider ownership.

With shares still trading about 8% below the average analyst target and fundamentals mixed, is Terreno Realty quietly undervalued after a muted year, or is the market already pricing in every bit of future growth?

Price-to-Earnings of 23.7x: Is it justified?

Terreno Realty’s shares trade at a price-to-earnings (P/E) ratio of 23.7x, which positions the stock as a potential value play versus both its estimated fair multiple and direct peers.

The price-to-earnings ratio indicates how much investors are willing to pay per dollar of earnings and is a widely followed measure in the REIT sector since it links profits to current price expectations. For Terreno Realty, a lower P/E relative to its fair value benchmark often suggests the market is not pricing the company’s earning power aggressively, potentially creating a value opportunity if growth continues.

Digging deeper, Terreno Realty’s P/E of 23.7x is not only below its estimated fair P/E (29.9x), but also meaningfully under the peer group average (31.2x) for US industrial REITs. This presents a compelling valuation gap, implying the market may be underestimating the company’s earnings outlook relative to industry standards. If sentiment shifts or earnings surprise to the upside, that multiple could rise toward the “fair” level assigned by regression models for similar companies.

Explore the SWS fair ratio for Terreno Realty

Result: Price-to-Earnings of 23.7x (UNDERVALUED)

However, with annual net income growth trending negative and a muted one-year return, slowing profitability remains a key risk to the current valuation thesis.

Find out about the key risks to this Terreno Realty narrative.

Another View: What Does Our DCF Model Say?

Taking a different approach, the SWS DCF model values Terreno Realty at $81.42 per share, which stands well above the current market price of $58.03. This suggests a deeper undervaluation than the multiples indicate. However, as with any projection, it relies on longer-term assumptions that may or may not play out. Could the market be overlooking future potential, or are there good reasons for this discount?

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 Terreno Realty 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 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 Terreno Realty Narrative

If you have your own take on Terreno Realty’s outlook or want to dive into the numbers yourself, you can easily build a personalized narrative in just a few minutes. Do it your way.

A great starting point for your Terreno Realty research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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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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