In This Article:
Inmobiliaria Colonial SOCIMI, SA. (BME:COL) is a €4.05B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. 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 ES stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Inmobiliaria Colonial SOCIMI is lagging or leading in the industry. Check out our latest analysis for Inmobiliaria Colonial SOCIMI
What’s the catalyst for Inmobiliaria Colonial SOCIMI’s sector growth?
Issues around rate hikes and yield changes have made investors sceptical of REITs. The capacity for these investment vehicles to absorb a rate hike should be considered, hence, factors such as lease durations and pricing power in the market would require a deeper dive. Over the past year, the industry saw growth in the twenties, beating the ES market growth of 9.28%. Inmobiliaria Colonial SOCIMI leads the pack with its impressive earnings growth of over 100% last year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be -53.83% compared to the wider REIT sector growth hovering next year.
Is Inmobiliaria Colonial SOCIMI and the sector relatively cheap?
The REIT industry is trading at a PE ratio of 12.36x, lower than the rest of the ES stock market PE of 19.76x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry returned a similar 12.10% on equities compared to the market’s 11.64%. On the stock-level, Inmobiliaria Colonial SOCIMI is trading at a lower PE ratio of 5.3x, making it cheaper than the average REIT stock. In terms of returns, Inmobiliaria Colonial SOCIMI generated 19.15% in the past year, which is 7.05% over the REIT sector.
Next Steps:
Inmobiliaria Colonial SOCIMI is a REIT industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, Inmobiliaria Colonial SOCIMI is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at Inmobiliaria Colonial SOCIMI’s fundamentals in order to build a holistic investment thesis.