Goodman Property Trust NZSE GNZ Valuation After Annual Results Highlight Profitability Shift

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Goodman Property Trust’s latest earnings shift the focus to profitability

Goodman Property Trust (NZSE:GNZ) has put fresh financials on the table, with full year sales of NZ$223.1 million, compared with NZ$277.9 million a year earlier, and net income of NZ$248 million, versus NZ$109.6 million.

See our latest analysis for Goodman Property Trust.

The earnings release appears to have supported a positive shift in sentiment, with the share price at NZ$2.06 and a 90 day share price return of 6.74%, while the 1 year total shareholder return of 7.25% points to steady but moderate compounding.

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With Goodman Property Trust’s unit price up over the past year and the latest earnings showing stronger profitability despite lower sales, the key question is whether the stock is still undervalued or whether the market is already pricing in future growth.

Price-to-earnings of 12.7x: Is it justified?

On a P/E of 12.7x at a unit price of NZ$2.06, Goodman Property Trust looks cheaper than both the wider NZ market and its Industrial REIT peers.

The P/E ratio shows how much investors are paying for each dollar of earnings. This is especially relevant for a mature, income focused real estate trust where profit, rather than rapid revenue expansion, is the main driver of value.

Goodman Property Trust’s current P/E of 12.7x sits below the NZ market average of 16.7x, and also below the Industrial REITs industry average of 15.1x and a peer average of 14.1x. This points to the market applying a lower earnings multiple than many comparable stocks even though earnings grew 126.3% over the past year and outpaced both its own 5 year trend and the sector’s growth.

If the P/E were to move closer to the estimated fair P/E of 13.2x suggested by the SWS fair ratio work, that would represent a shift in how the market prices each dollar of Goodman Property Trust’s earnings relative to today’s level.

Explore the SWS fair ratio for Goodman Property Trust

Result: Price-to-earnings of 12.7x (UNDERVALUED).

However, you still need to weigh softer revenue of NZ$307.8m and an intrinsic value premium against any potential future returns from this NZ$3.2b real estate trust.

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Another way to look at value: DCF points in the opposite direction

While the P/E of 12.7x hints at good value against the NZ market and Industrial REIT peers, the SWS DCF model paints a different picture. On that measure, Goodman Property Trust at NZ$2.06 is trading above an estimated future cash flow value of NZ$1.19. This implies the units could be overvalued. So which signal do you treat as the primary anchor for your own view?

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 Goodman Property Trust 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 196 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With mixed signals on value and sentiment running in both directions, it makes sense to move quickly and test the numbers yourself. To see both sides of the story in one place, start with the 4 key rewards and 2 important warning signs.

Ready to hunt for more investment ideas?

If Goodman Property Trust has sharpened your focus on value and quality, do not stop here, widen your search and pressure test your next move.

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.

Companies discussed in this article include GNZ.NZ.

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