Ascendas Real Estate Investment Trust Shares (OTCPK: ACDSF, Financial performance for 30 years) shows all indications of a fair value as calculated by GuruFocus Value. GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock should be traded. It is calculated based on historical multiples at which the stock has traded, past business growth rates, and analysts’ estimates of future business performance. If the share price is significantly above the GF value line, it is overvalued and its future performance is likely to be low. On the other hand, if it is significantly below the GF value line, its future yield is likely to be higher. With a current price of $ 2.24 per share and a market capitalization of $ 9.2 billion, Ascendas Real Estate Investment Trust shares are considered fairly valued. The GF value for the Ascendas real estate investment fund is shown in the chart below.
Since Ascendas Real Estate Investment Trust is priced fairly, the long-term return on its stock is likely to be close to the growth rate of its business, which is estimated to grow 6.57% annually over the next three to five years.
It is always important to check the financial soundness of the company before buying shares. Investments in companies with low financial strength have a higher risk of irrecoverable losses. Looking at cash-to-debt ratio and interest coverage is a great way to understand the financial soundness of a company. Ascendas Real Estate Investment Trust has a cash to debt ratio of 0.05, which is in the middle range of companies in the REIT industry. The overall financial strength of Ascendas Real Estate Investment Trust is 4 out of 10, which indicates the poor financial strength of Ascendas Real Estate Investment Trust. These are Ascendas Real Estate Investment Trust’s debt and cash over the past years:
Investing in profitable companies comes with less risk, especially in companies that show consistent long-term profitability. Typically, a high-margin company offers more productivity potential than a low-margin company. Ascendas Real Estate Investment Fund has been profitable for 10 years over the past 10 years. Over the past 12 months, the company had revenues of $ 770.5 million and earnings of $ 0.027 per share. Its operating margin is 66.60% better than 79% of companies in the REIT industry. Overall, GuruFocus rates the profitability of Ascendas Real Estate Investment Trust as satisfactory. These are the revenue and net income of Ascendas Real Estate Investment Trust in recent years:
Growth is probably the most important factor in valuing a company. A GuruFocus study found that growth is closely related to the long-term performance of the company’s stock. The faster a company grows, the more likely it is to create value for shareholders, especially if growth is profitable. Average annual growth rate of revenue for 3 years Ascendas Real Estate Investment Trust accounts for -0.6%, which is in line with the average among companies in the REIT industry. The average EBITDA growth rate over 3 years is -0.2%, which is in line with the average level among companies in the REIT industry.
Another way to gauge a company’s profitability is to compare its return on investment (ROIC) with a weighted cost of capital (WACC). Return on Investment (ROIC) measures how well a company generates cash flow compared to the capital it has invested in its business. Weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all securities holders to fund its assets. If the ROIC is higher than the WACC, it means the company is creating value for its shareholders. Over the past 12 months, the ROIC Ascendas Real Estate Investment Trust was 4.52 and its WACC was 3.52. The historical comparison between ROIC and WACC of Ascendas Real Estate Investment Trust is shown below:
In conclusion, the shares of the investment trust Ascendas Real Estate (OTCPK: ACDSF, Financial performance for 30 years) shows all the signs of a fair assessment. The financial condition of the company leaves much to be desired, and the profitability is satisfactory. Its growth is in the middle range of companies in the REIT industry. To find out more about the Ascendas Real Estate Investment Trust promotions, you can check out its 30 year financial report here.
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