The average target price of ADC is 87 and suggests 16% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 89.0. This translates into 18% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 75.0. This is equivalent to 0% downside potential in the worst case. 

Agree Realty Corporation is a publicly traded real estate investment trust primarily engaged in the acquisition and development of properties net leased to industry-leading retail tenants. As of September 30, 2020, the Company owned and operated a portfolio of 1,027 properties, located in 45 states and containing approximately 21.0 million square feet of gross leasable area. The Company's common stock is listed on the New York Stock Exchange under the symbol "ADC".

Agree Realty Corporation

Real Estate

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, and there is an evident trend. In the past 12 months, the dividend yield has been strong and significantly above its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends 10 times a year, which may appeal to investors valuing a regular income stream. 

ADC reported revenue of USD 637mn in the last 12 months, up 3% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 1% from FY24 to USD 1.79. Market expects EPS to reach USD 1.79 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 4ppts and its growth decelerated by 3ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 84.0% in the last 12 months, up from 83.0% in FY23. 

Historically, ADC has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 29.5%, down from 31.6% in FY23. 

Agree Realty Corporation reported a return on equity (RoE) of 3.5% in the last 12 months, up from 3.5% in FY23. The market consensus projects an RoE of 3.4% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 2.3% in the last 12 months, a decrease from 2.3% in FY23. The market analysts predict that RoA will be 2.3% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 2.3%, below the peers. The consensus estimate for FY24 for RoCE is 3.7%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.4 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

ADC boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to negligible return on capital, excessive margin volatility, poor working capital management, and weak debt servicing capacity. We note resilient historical revenue growth, robust profitability, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, ADC is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, ADC is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Agree Realty Corporation

$ 75.17

4

Agree Realty Corporation

$ 75.17

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 75.17

About

About

Agree Realty Corporation

$ 75.17

4

Agree Realty Corporation

$ 75.17

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 75.17

About

About

News and articles