Amidst the daily fluctuations of the stock market, VICI Properties Inc (VICI, Financial) recently experienced a daily gain of 0.92%, contrasting with a slight 3-month decline of 0.36%. With an Earnings Per Share (EPS) of $2.39, investors are prompted to consider whether the stock is modestly undervalued. This article delves into a valuation analysis to explore the true value of VICI Properties (VICI), inviting readers to engage with the following in-depth examination.
Company Introduction
VICI Properties Inc is a distinguished real estate investment trust in the US, focusing on a portfolio that includes gaming, hospitality, entertainment, and leisure destinations. The company operates through two segments: real property business and golf course business, with notable assets such as the Cascata and Rio Secco golf courses. Currently, VICI Properties (VICI, Financial) stands at a market price of $30.79 per share, with a market capitalization of $31.90 billion. This valuation prompts an intriguing question: how does this price compare to the company's fair value?
Summarize GF Value
The GF Value is a unique metric that estimates the intrinsic value of a stock by incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance projections. The GF Value Line suggests the fair trading value for VICI Properties (VICI, Financial), which is currently set at $40.38. If a stock's price significantly deviates from this line, it may indicate an overvaluation or undervaluation, with corresponding implications for future returns. VICI Properties (VICI) appears modestly undervalued, hinting at potentially higher future returns relative to its business growth.
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Financial Strength
Investors must scrutinize a company's financial strength to avoid the high risk of permanent capital loss. Key indicators such as the cash-to-debt ratio and interest coverage can provide insight into this aspect. VICI Properties has a cash-to-debt ratio of 0.03, ranking lower than many of its peers in the REITs industry. With an overall financial strength rating of 5 out of 10, VICI Properties' financial health is deemed fair.
Profitability and Growth
Investing in profitable companies, especially those with consistent long-term profitability, poses less risk. VICI Properties has not only been profitable for 8 out of the past 10 years but also boasts impressive profit margins. With a revenue of $3.50 billion and an operating margin of 91.42%, it outperforms 96.45% of its industry counterparts. Its profitability rank stands strong at 8 out of 10.
When it comes to growth, VICI Properties' 3-year average annual revenue growth is 13.2%, which is commendable within the industry. However, its EBITDA growth rate is a modest 1.3%, reflecting a mixed performance in terms of expansion.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) offers another perspective on profitability. Ideally, a company's ROIC should exceed its WACC to indicate efficient use of capital. For VICI Properties, the past 12 months have seen an ROIC of 8.03%, slightly above its WACC of 7.58%.
Conclusion
Overall, VICI Properties (VICI, Financial) exhibits signs of being modestly undervalued. The company's fair financial condition and strong profitability, coupled with its satisfactory growth metrics, make it an intriguing option for value investors. For a deeper understanding of VICI Properties and its stock potential, one can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
