RMR
The RMR Group Inc.
$20.21
Stable Earnings Power
75%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 36.5% below fair value
You pay
$20.21
Bear
$25.46
Fair
$31.83
Bull
$38.19
Bear
$25.46
+26.0%
$2.08 × 12x P/E
Fair
$31.83
+57.5%
$2.08 × 15x P/E
Bull
$38.19
+89.0%
$2.08 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
9.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $32.00 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $31.83 per share.
Warnings
The company's reported profits differ from official accounting profits by 102%. Check what costs are being left out of the adjusted number.
The company pays out 175% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples