What are we looking for?
There are 150 industry categories in our StockCalc database and today we are looking at real estate services companies. Real estate services companies operate, manage, and lease commercial, industrial and residential properties including retirement residences and long-term care homes. The group includes services such as brokers and agents, but excludes real estate development firms. Companies here may also provide investment management services as well as consulting and market research for the sector.
The screen
We used StockCalc’s screener to select the top 10 listed real estate services companies by market capitalization on the TSX. We then used StockCalc’s valuation tools to calculate fundamental (or intrinsic) valuation for each stock to see if it is undervalued or overvalued compared with its price.
Overview of the techniques used:
- Discounted cash flow (DCF value) is a valuation technique in which cash-flow projections are discounted back to the present to calculate value per share.
- A price comparables (price comps) technique values the company on the basis of ratios from selected comparable companies;
- An adjusted book value (ABV) is calculated by multiplying book value per share by a stock’s 10-year average price-to-book ratio.
- If a stock has analyst coverage, we may look at the consensus target price.
More about StockCalc
StockCalc is a fundamental valuation platform with tools to calculate and report on value per share for thousands of public companies listed on major North American stock exchanges. StockCalc also contains numerous tools to understand what the stocks you are investing in are worth. Globe Unlimited subscribers can subscribe to StockCalc using the promo code ‘Globe30′, which offers a 30-day free trial and special pricing for the second month.
What we found
Given this industry includes both residential and commercial properties, there are a variety of factors to look at for the future cash flows of these companies, including interest rates, inflation, demand for residential and commercial property as well as less direct areas such as mortgage availability and demographics.
Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.