PECO
Phillips Edison & Company, Inc.
$40.30
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Mild
·
Conviction
Fair Value
Trading 5.3% below fair value
You pay
$40.30
Bear
$34.13
Fair
$42.54
Bull
$50.96
Bear
$34.13
-15.3%
$3.00 FFO × 16x
Fair
$42.54
+5.6%
$3.00 FFO × 20x
Bull
$50.96
+26.4%
$3.00 FFO × 23x
Key Value Driver
FFO/share ($3.00) × retail P/FFO multiple
Implied Market Multiple
13.4x
Summary
Our base-case estimate uses P/FFO × Retail REIT Multiple. We then blend that result with the average analyst price target of $41.40 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $42.54 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
The 1.1% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Dividend-based valuation: $6.35 (85% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify