- By GF Value
The stock of Innovative Industrial Properties (NYSE:IIPR, 30-year Financials) appears to be fairly valued, 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 $174.89 per share and the market cap of $4.2 billion, Innovative Industrial Properties stock gives every indication of being fairly valued. GF Value for Innovative Industrial Properties is shown in the chart below.
Because Innovative Industrial Properties is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 46.5% over the past five years.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Innovative Industrial Properties has a cash-to-debt ratio of 0.92, which is better than 90% of the companies in REITs industry. The overall financial strength of Innovative Industrial Properties is 6 out of 10, which indicates that the financial strength of Innovative Industrial Properties is fair. This is the debt and cash of Innovative Industrial Properties over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Innovative Industrial Properties has been profitable 3 over the past 10 years. Over the past twelve months, the company had a revenue of $116.9 million and earnings of $3.22 a share. Its operating margin is 59.66%, which ranks better than 69% of the companies in REITs industry. Overall, the profitability of Innovative Industrial Properties is ranked 4 out of 10, which indicates poor profitability. This is the revenue and net income of Innovative Industrial Properties over the past years: