Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued

GuruFocus.com
·4 min read

- By GF Value

The stock of Urstadt Biddle Properties (NYSE:UBA, 30-year Financials) is estimated to be fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $17.42 per share and the market cap of $670.1 million, Urstadt Biddle Properties stock is believed to be fairly valued. GF Value for Urstadt Biddle Properties is shown in the chart below.


Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued
Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued

Because Urstadt Biddle Properties is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 0.5% over the past five years.

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Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Urstadt Biddle Properties has a cash-to-debt ratio of 0.11, which which ranks in the middle range of the companies in REITs industry. The overall financial strength of Urstadt Biddle Properties is 4 out of 10, which indicates that the financial strength of Urstadt Biddle Properties is poor. This is the debt and cash of Urstadt Biddle Properties over the past years:

Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued
Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued

Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Urstadt Biddle Properties has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $126.7 million and earnings of $0.197 a share. Its operating margin is 33.77%, which ranks worse than 66% of the companies in REITs industry. Overall, the profitability of Urstadt Biddle Properties is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Urstadt Biddle Properties over the past years:

Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued
Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued

Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Urstadt Biddle Properties is 0.5%, which ranks in the middle range of the companies in REITs industry. The 3-year average EBITDA growth rate is -10.5%, which ranks worse than 68% of the companies in REITs industry.

Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Urstadt Biddle Properties's return on invested capital is 4.44, and its cost of capital is 7.15. The historical ROIC vs WACC comparison of Urstadt Biddle Properties is shown below:

Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued
Urstadt Biddle Properties Stock Gives Every Indication Of Being Fairly Valued

In conclusion, Urstadt Biddle Properties (NYSE:UBA, 30-year Financials) stock gives every indication of being fairly valued. The company's financial condition is poor and its profitability is fair. Its growth ranks worse than 68% of the companies in REITs industry. To learn more about Urstadt Biddle Properties stock, you can check out its 30-year Financials here.

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This article first appeared on GuruFocus.