Apple Hospitality REIT Stock Is Believed To Be Significantly Overvalued
- By GF Value
The stock of Apple Hospitality REIT (NYSE:APLE, 30-year Financials) is believed to be significantly overvalued, 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 $15.81 per share and the market cap of $3.5 billion, Apple Hospitality REIT stock gives every indication of being significantly overvalued. GF Value for Apple Hospitality REIT is shown in the chart below.
Because Apple Hospitality REIT is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
Link: These companies may deliever higher future returns at reduced risk.
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. Apple Hospitality REIT has a cash-to-debt ratio of 0.00, which which ranks in the bottom 10% of the companies in REITs industry. The overall financial strength of Apple Hospitality REIT is 3 out of 10, which indicates that the financial strength of Apple Hospitality REIT is poor. This is the debt and cash of Apple Hospitality REIT over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. Apple Hospitality REIT has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $601.9 million and loss of $0.77 a share. Its operating margin is -17.91%, which ranks in the bottom 10% of the companies in REITs industry. Overall, the profitability of Apple Hospitality REIT is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of Apple Hospitality REIT over the past years: