Growthpoint Properties Australia (ASX:GOZ) is a AUDA$2.26B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that originated in the US and has since been taken on board globally. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Australian stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether Growthpoint Properties Australia is lagging or leading in the industry. View our latest analysis for Growthpoint Properties Australia

What’s the catalyst for Growthpoint Properties Australia’s sector growth?

Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. This is because REITs tend to be dependent on debt funding. They are also considered as bond investment alternatives due to their high and stable dividend payments. In the past year, the industry delivered negative growth of -4.47%, underperforming the Australian market growth of 6.89%. Growthpoint Properties Australia leads the pack with its impressive earnings growth of 12.15% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Growthpoint Properties Australia poised to deliver a -37.23% growth over the next couple of years.

Is Growthpoint Properties Australia and the sector relatively cheap?

The REIT industry is trading at a PE ratio of 8x, lower than the rest of the Australian stock market PE of 18x. This illustrates a somewhat under-priced sector compared to the rest of the market. Furthermore, the industry returned a higher 15.57% compared to the market’s 11.86%, making it a potentially attractive sector. On the stock-level, Growthpoint Properties Australia is trading at a PE ratio of 8x, which is relatively in-line with the average REIT stock. In terms of returns, Growthpoint Properties Australia generated 16.24% in the past year, in-line with its industry average.

What this means for you:

Are you a shareholder? Growthpoint Properties Australia’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given Growthpoint Properties Australia is trading in-line with its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Growthpoint Properties Australia as part of your portfolio. However, if you’re relatively concentrated in REIT, you may want to value Growthpoint Properties Australia based on its cash flows to determine if it is overpriced based on its current growth outlook.

Are you a potential investor? If Growthpoint Properties Australia has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company, given that it is trading relatively in-line with its peers. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time.

For a deeper dive into Growthpoint Properties Australia’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other real estate stocks instead? Use our free playform to see my list of over 100 other real estate companies trading on the market.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.