CTO Realty Growth(CTO)

CTO Realty Growth, Inc.

Stock: CTO

Rating: Good

Author: Waleed M. Tariq

Summary

  • CTO became a REIT in 2021 and has had strong returns since.
  • The corporation has lower-than-average valuation multiples.
  • Buy the stock if you want income and growth.

Bullish

  • The company’s financial results and future prospects are good.
  • The corporation monetizes and reinvests low cap rate, single-tenant, and non-income-producing assets.
  • The overall debt-equity ratio is 64.69%, below 41.38 and 93.82. 1.82 interest coverage and a highly leveraged FCF margin above 46% show gearing control.

Bearish

  • The company is planning to invest more than double as compared to last year. If the investment don’t pay as projected, then that has heavy financial implications on them.

Post-Conversion Strategic Performance

  • Growth-market-oriented approach includes accretive acquisitions and dispositions and low-replacement-cost assets in attractive geographies.
  • CTO sold 15 single-tenant properties for $162.3 million in 2021 and bought 8 multi-tenant properties for $249.1 million.

Balance Sheet

  • CTO’s balance sheet is risk-free. $67 million in revolving credit, a $65 million term loan due in 2026, a $100 million term loan due in 2027, and $51 million in 3.875 percent Convertible Senior Notes due in 2025 make up its $283 million in long-term debt.

Valuation

  • TTM price to FFO and AFFO are 5.3% and 24.3% below industry median. PRR, PB, PCF, and PS underperform. Data and industry medians yield a $78.14 target price, a 22% upside. CTO stock is undervalued, and the dividend yield enhances total gains.

Conclusion

  • One year as a REIT requires consistency. CTO’s new strategy is working well. At the current market price, investors might expect increased dividends and price gains.