PK
Park Hotels & Resorts Inc.
$16.45
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Overvalued
Trading 182.9% above fair value
You pay
$16.45
Bear
$4.79
Fair
$5.82
Bull
$6.84
Bear
$4.79
-70.9%
$0.26 FFO × 18x
Fair
$5.82
-64.6%
$0.26 FFO × 22x
Bull
$6.84
-58.4%
$0.26 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($0.26) × default P/FFO multiple
Implied Market Multiple
62.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$16.13
Divergence from AlphaVal
64%
Summary
At $0.26 FFO/share with a 22x default REIT multiple, the base-case value is $5.82 per share. Dividend yield: 6.1%.
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.
Dividend yield of 6.1% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $16.13 (from 26 analysts). Our estimate is 64% below the consensus -- consider that gap carefully.
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