Kimco Realty Corp (KIM, Financial) has experienced a daily decline of 2.25%, yet it boasts a 3-month gain of 22.75%, reflecting a dynamic stock performance. With an Earnings Per Share (EPS) of $0.71, investors are keen to determine if the stock is modestly overvalued. This article delves into the valuation analysis of Kimco Realty, offering insights into whether its current market price aligns with its intrinsic value.
Company Introduction
Kimco Realty Corp (KIM, Financial), a longstanding player in the U.S. real estate investment trust sector, manages an extensive portfolio of 5,282 shopping centers across prime markets, encompassing approximately 77 million square feet. The company's current stock price of $21.31 is juxtaposed against the GF Value of $18.74, suggesting a potential discrepancy between market price and fair value. This comparison sets the stage for a deeper valuation analysis, integrating financial metrics with the company's operational background.
Understanding GF Value
The GF Value is a unique metric, representing the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Kimco Realty's current market cap stands at $13.20 billion, with the GF Value suggesting a modest overvaluation. The implication is that the stock's long-term return might trail behind its business growth, given its price above the GF Value Line.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid capital loss. Kimco Realty's cash-to-debt ratio of 0.1 is more favorable than 58.45% of its industry peers. Despite this, its financial strength is rated 4 out of 10 by GuruFocus, indicating a need for caution.
Profitability and Growth
Kimco Realty's decade-long profitability and a solid operating margin of 32.53% reflect a safe investment profile, despite ranking below 71.26% of its industry counterparts. The company's profitability score is a respectable 7 out of 10. However, its growth metrics, including a 3-year average annual revenue growth rate of 0.6%, place it below 51.47% of the REITs industry, with an EBITDA growth rate that lags behind 75.14% of its peers.
ROIC vs. WACC
Comparing ROIC to WACC is essential for assessing profitability. Kimco Realty's ROIC of 2.62 falls short of its WACC of 7.84, indicating that it may not be creating sufficient value for shareholders. This comparison is a critical component of the company's financial evaluation.
Conclusion
In conclusion, Kimco Realty appears modestly overvalued based on its GF Value, with financial strength that requires scrutiny and fair profitability. Its growth position is less impressive, trailing a significant portion of the REITs industry. For a detailed understanding of Kimco Realty's financials, 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.
