Terreno Realty (TRNO): Evaluating Valuation as Share Price Momentum Builds

Terreno Realty (TRNO) has attracted interest recently as investors look more closely at its performance in the industrial real estate sector. With shares moving near the $63 mark, there is curiosity about its year-to-date and recent returns.

See our latest analysis for Terreno Realty.

Momentum around Terreno Realty is picking up, with a 9.91% share price return over the past month and a year-to-date gain of 9.39%. These trends suggest renewed confidence in its growth prospects. Looking longer term, total shareholder returns of 17% over three years and more than 24% over five years highlight the company’s resilience and appeal for those seeking both stability and upside potential.

If you’re interested in discovering which other companies have been quietly building momentum, it’s worth exploring fast growing stocks with high insider ownership.

With shares currently trading at a modest discount to analyst price targets and an intrinsic value estimate that suggests further upside, the question remains: is Terreno Realty an overlooked gem, or is the market already anticipating its growth story?

Price-to-Earnings of 20.3: Is it justified?

With Terreno Realty’s latest closing price at $62.79, its price-to-earnings (P/E) ratio currently stands at 20.3. This shows shares are trading above the global industrial REITs industry average and reflects a premium relative to sector peers.

The price-to-earnings ratio is a standard way to value property companies, comparing a company's current share price to its per-share earnings. For industrial REITs like Terreno Realty, it indicates how much investors are willing to pay for each dollar of earnings. Higher values can indicate growth expectations, or simply reflect a more popular company among investors.

Terreno Realty’s P/E of 20.3 is notably higher than the global industrial REITs industry average of 16.1, implying the market sees more robust prospects here. However, relative to its closest peers at an average P/E of 32.7, Terreno still looks cheaper. It is also below its estimated fair P/E ratio of 22.6, suggesting the multiple could tick upward should expectations be met.

Explore the SWS fair ratio for Terreno Realty

Result: Price-to-Earnings of 20.3 (ABOUT RIGHT)

However, slowing net income growth and exposure to shifts in industrial real estate demand could present challenges to Terreno Realty’s positive outlook in the near term.

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

Another View: What Does Our DCF Model Reveal?

While the market's focus is often on earnings ratios, our DCF model offers a different perspective. According to this approach, Terreno Realty is trading below an estimated fair value of $70.45. This suggests the shares could be undervalued relative to their long-term cash flow potential. Should investors trust this deeper valuation, or is it a sign of unreasonable optimism?

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 914 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 want to reach your own conclusion, take a closer look at the numbers and build your perspective on Terreno Realty 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 2 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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