- Wondering whether EPR Properties at around US$50.35 is offering good value or not right now? This article walks through the numbers so you can judge how the current price compares with its fundamentals.
- The stock has recently been volatile, with a 10.5% decline over the last 7 days and a 12.8% decline over the last 30 days, set against a 5.2% return over 1 year, 70.4% over 3 years and 49.6% over 5 years.
- Recent headlines around EPR Properties have focused on its position within the real estate investment trust space and how income-focused investors are assessing leisure and entertainment related assets. This backdrop helps explain why the market has been reassessing risk and return expectations even as longer term returns remain positive.
- On Simply Wall St's valuation checklist, EPR Properties currently scores 5 out of 6. The rest of this article will walk through the key valuation approaches behind that score before finishing with a way to look at value that goes beyond just the headline metrics.
Approach 1: EPR Properties Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a business could be worth by projecting its future adjusted funds from operations, then discounting those cash flows back to today’s dollars.
For EPR Properties, the model uses adjusted free cash flow to equity as the starting point. The latest figure is about $398.2 million, and analysts plus extrapolations have projected cash flows out to 2035, with a forecast of $552.0 million in 2030. Simply Wall St applies a 2 stage DCF approach by using analyst estimates where available and then extending those forecasts beyond the typical 5 year horizon.
Adding up all those discounted cash flows gives an estimated intrinsic value of about $123.25 per share. Compared with a current share price of roughly $50.35, the model suggests the stock trades at a 59.1% discount to this intrinsic estimate, which points to a substantial gap between price and the DCF based valuation.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests EPR Properties is undervalued by 59.1%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.
Approach 2: EPR Properties Price vs Earnings
For a profitable company, the P/E ratio is a straightforward way to see how much you are paying for each dollar of earnings. This makes it a useful cross check against the DCF result you have just seen.
What counts as a “normal” P/E depends on how fast earnings are expected to grow and how risky those earnings are. Higher growth or lower perceived risk can support a higher multiple, while slower growth or higher risk usually lines up with a lower one.
EPR Properties currently trades on a P/E of 15.36x. That is very close to the Specialized REITs industry average of 15.43x, and below the wider peer group average of 23.97x. Simply Wall St also calculates a proprietary “Fair Ratio” of 33.86x, which estimates the P/E that would be consistent with factors such as the company’s earnings growth profile, profit margins, risk characteristics, industry and market cap.
The Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for company specific features rather than assuming that all REITs or all peers should trade on the same multiple.
Comparing the Fair Ratio of 33.86x with the current P/E of 15.36x suggests the shares are trading below that Fair Ratio estimate.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your EPR Properties Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you connect your view of EPR Properties’ story to a set of forecasts and a fair value, then compare that fair value to the current price. Each Narrative sits on the Community page and updates automatically when new news or earnings arrive. One investor might build a higher value Narrative around experiential demand, balance sheet strength and the US$65.50 analyst target. Another might anchor a lower value Narrative on theater and funding risks that align more with the US$52.00 target. You can see these different stories side by side and decide which one best matches your own expectations.
Do you think there's more to the story for EPR Properties? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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