The average target price of SPG is 187 and suggests 14% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 220.0. This translates into 34% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 159.0. This is equivalent to 3% downside potential in the worst case. 

Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

Simon Property Group, Inc.

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, but the dynamics are unclear. 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. On average, the company pays dividends quarterly, which may appeal to investors valuing a regular income stream. 

SPG reported revenue of USD 5 994mn in the last 12 months, up 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 13% from FY24 to USD 6.28. Market expects EPS to reach USD 7.06 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). Within the past six months, its performance has trailed this peer group's by 6ppts and its growth accelerated by 7ppts 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 77.2% in the last 12 months, a decline from 79.2% in FY23. 

Historically, SPG has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 34.2%, down from 40.8% in FY23. 

Simon Property Group, Inc. reported a return on equity (RoE) of 72.9% in the last 12 months, down from 76.5% in FY23. The market consensus projects an RoE of 82.5% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 6.8%, above the peers. The consensus estimate for FY24 for RoCE is 11.5%, again ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.1% in the last 12 months, a decrease from 6.7% in FY23. The market analysts predict that RoA will be 7.3% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.9 in the past several years. This ratio implies a poor 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.

SPG boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

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

In highly turbulent market conditions, SPG is as volatile as an index. In other words, the stock will move with 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 limited. 

In normal market circumstances, SPG is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from low to minimal. 

Considering past and projected metrics, the stock is moderately 'expensive' compared to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Simon Property Group, Inc.

$ 162.94

4

Simon Property Group, Inc.

$ 162.94

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 162.94

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