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COPT Defense Properties (CDP)
NYSE:CDP
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COPT Defense Properties
(NYSE:CDP)
68Neutral
Positive Factors
Data Center Development
CDP has announced the acquisition of a large land parcel for data center development, indicating growth potential in this sector.
Financial Performance
4Q cash SSNOI growth of 10.0% contributed to FY growth of 9.1%, marking a company record.
Leasing Performance
CDP completed 675k SF of new and renewal leasing in its operating portfolio, achieving a FY leasing total over 3.1M SF, which is 47.1% higher than 2023 and 17.1% higher than pre-pandemic levels.
Negative Factors
Leasing and Development
The potential relocation of US Space Command to Huntsville could provide CDP with leasing and development opportunities.
Leasing Retention
COPT's acquisition of land to support one gigawatt of data centers is seen as a significant boost to its development capabilities.
Leasing Spreads
4Q leasing spreads were down (0.2%) on a cash basis.
COPT Defense Properties (CDP) vs. S&P 500 (SPY)
Market Cap
$6.15B
Dividend Yield4.32%
Average Volume (3M)1.17M
Price to Earnings (P/E)22.3
Beta (1Y)0.65
Revenue Growth9.97%
EPS GrowthN/A
CountryUS
Employees427
SectorReal Estate
Sector Strength73
IndustryREIT - Office
Share Statistics
EPS (TTM)1.22
Shares Outstanding112,699,450
10 Day Avg. Volume950,787
30 Day Avg. Volume1,172,205
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.00
Price to Cash Flow (P/CF)7.50
P/FCF Ratio6.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$32.57Price Target Upside19.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
COPT Defense Properties Business Overview & Revenue Model
Company DescriptionCOPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (IT) related activities servicing what the Company believes are growing, durable, priority missions (Defense/IT Locations). The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (Regional Office Properties). As of June 30, 2023, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties. As of the same date and including 24 properties owned through unconsolidated joint ventures, COPT's core portfolio of 192 properties encompassed 22.9 million square feet and was 95% leased.
How the Company Makes MoneyCOPT Defense Properties generates revenue primarily through leasing its properties to government agencies and defense contractors. The company benefits from long-term lease agreements with stable, creditworthy tenants, ensuring a consistent income stream. Additionally, CDP may engage in property development and sales to optimize its portfolio and capitalize on market demand. Partnerships with government entities and major defense firms enhance its market position and contribute to its financial stability.
COPT Defense Properties Financial Statement Overview
Summary
COPT Defense Properties shows strong recovery in profitability with improved margins and a debt-free balance sheet. Revenue growth is modest, and free cash flow is declining, but overall financial stability is positive.Income Statement
COPT Defense Properties has demonstrated solid revenue growth with a 9.96% increase in TTM revenue compared to the previous year. The company's gross profit margin improved to 49.83% in the TTM, reflecting strong operational efficiency. Net profit margin has turned positive in the TTM at 18.44%, a significant improvement from negative net income in the prior year. However, EBITDA margin slightly decreased to 43.93% in the TTM. Overall, the company's income statement reflects a strong recovery and growth trajectory.81
Very Positive
Balance Sheet
The balance sheet shows a significant improvement with no debt in the TTM, a major shift from previous years, enhancing financial stability. The equity ratio is stable at 36.12%, indicating a balanced asset financing structure. The ROE improved significantly to 9.04% in the TTM, showcasing effective utilization of equity. However, the company's total assets have remained relatively flat, indicating potential limitations in asset growth.75
Positive
Cash Flow
Free cash flow decreased by 30.88% in the TTM compared to the previous year, indicating a potential challenge in generating cash. The operating cash flow to net income ratio is strong at 1.65, demonstrating efficient cash earnings. However, free cash flow to net income ratio stands at 1.27, suggesting that free cash flow generation is slightly weaker relative to net income. Overall, cash flow management appears stable but with room for improvement in free cash flow growth.69
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 753.27M | 684.98M | 739.03M | 664.45M | 609.37M |
| Gross Profit | ||||
| 744.03M | 231.23M | 220.41M | 209.47M | 199.72M |
| EBIT | ||||
| 487.27M | 188.46M | 48.64M | 168.70M | 160.71M |
| EBITDA | ||||
| 384.02M | 337.49M | 192.23M | 320.44M | 303.48M |
| Net Income Common Stockholders | ||||
| 138.93M | -73.47M | 173.03M | 76.54M | 97.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 38.28M | 167.82M | 12.34M | 13.26M | 18.37M |
| Total Assets | ||||
| 4.25B | 4.25B | 4.26B | 4.26B | 4.08B |
| Total Debt | ||||
| 2.44B | 2.45B | 2.26B | 2.30B | 2.12B |
| Net Debt | ||||
| 2.40B | 2.28B | 2.25B | 2.29B | 2.10B |
| Total Liabilities | ||||
| 2.69B | 2.70B | 2.51B | 2.58B | 2.36B |
| Stockholders Equity | ||||
| 1.49B | 1.48B | 1.68B | 1.62B | 1.66B |
| Cash Flow | Free Cash Flow | |||
| 299.61M | 255.77M | 229.45M | 219.12M | 205.67M |
| Operating Cash Flow | ||||
| 330.95M | 276.27M | 265.82M | 249.15M | 238.42M |
| Investing Cash Flow | ||||
| -291.01M | -169.62M | -83.46M | -202.97M | -325.79M |
| Financing Cash Flow | ||||
| -169.67M | 46.26M | -183.18M | -50.90M | 91.27M |
COPT Defense Properties Technical Analysis
Neutral
27.27
Price Trends
27.54
Negative
29.19
Negative
28.58
Negative
Market Momentum
-0.12
Negative
54.87
Neutral
48.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDP, the sentiment is Neutral. The current price of 27.27 is above the 20-day moving average (MA) of 26.69, below the 50-day MA of 27.54, and below the 200-day MA of 28.58, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 54.87 is Neutral, neither overbought nor oversold. The STOCH value of 48.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CDP.
COPT Defense Properties Risk Analysis
COPT Defense Properties disclosed 40 risk factors in its most recent earnings report. COPT Defense Properties reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
COPT Defense Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $401.58M | 65.99 | 1.94% | 6.85% | 19.87% | 81.71% | |
72 Outperform | $2.59B | 67.26 | 2.04% | 6.00% | 5.27% | 58.15% | |
68 Neutral | $6.15B | 22.25 | 9.33% | 4.32% | 9.97% | ― | |
68 Neutral | $1.14B | 57.73 | 1.44% | 10.03% | 4.60% | -5.17% | |
63 Neutral | $686.42M | 56.31 | 7.10% | 8.05% | 1.22% | ― | |
61 Neutral | $4.70B | 17.65 | -3.00% | 11.43% | 5.99% | -19.07% | |
55 Neutral | $3.14B | 31.10 | 4.27% | 6.84% | -0.98% | -32.02% |
* Real Estate Sector Average
Performance Comparison
CDP
COPT Defense Properties
27.27
4.52
19.87%
GOOD
Gladstone Commercial
14.98
2.39
18.98%
HIW
Highwoods Properties
29.64
6.22
26.56%
LXP
LXP Industrial Trust
8.65
0.28
3.35%
DEA
Easterly Government Properties
10.60
0.21
2.02%
PSTL
Postal Realty
14.28
1.00
7.53%
COPT Defense Properties Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -7.24% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance in 2024 with significant achievements in tenant retention and leasing activities, alongside strategic investments. However, concerns about potential delays in defense appropriations and increased financing costs create some challenges. Overall, the highlights outweigh the lowlights.Highlights
Strong Financial Performance
FFO per share was $2.06, exceeding the midpoint of initial guidance by six cents, representing a 6.2% increase over 2023. Same property cash NOI increased by 9.1% year-over-year, the highest increase reported.
Record Tenant Retention
Achieved tenant retention of 86%, the highest annual level in over twenty years.
Successful Leasing Activities
Executed 500,000 square feet of vacancy leasing, exceeding the initial target by 25%, and achieved 45% vacancy leasing of total available inventory.
Strategic Investments
Committed $212 million to new investments, including first building acquisitions since 2015, in San Antonio and Columbia Gateway.
Growth Forecast for 2025
Establishing FFO per share guidance of $2.66 at the midpoint, implying a 3.5% growth over 2024.
Lowlights
Short-term Occupancy Reduction
Year-over-year occupancy ticked down sixty basis points due to strategic investments, with a deliberate short-term reduction.
Increased Financing Costs
Projected a one and a half cent increase in financing costs affecting 2025 performance.
Potential Delays in Defense Appropriations
Concerns about potential delays in defense budget approvals due to political factors, which might impact business operations.
Company Guidance
During COPT Defense Properties' fourth quarter and full year 2024 results conference call, several key metrics and guidance for 2025 were discussed. The company reported an adjusted FFO per share of $2.06 for 2024, exceeding initial guidance by six cents and marking a 6.2% increase over the previous year. This growth was driven by a 9.1% increase in same property cash NOI and a tenant retention rate of 86%, the highest in over two decades. The company executed 500,000 square feet of vacancy leasing, representing 45% of the year's initial vacant space. For 2025, COPT Defense Properties anticipates FFO per share to reach $2.66 at the midpoint, reflecting a 3.5% growth over 2024, despite expected increases in financing costs. The company plans to commit $212 million to new investments and has set a vacancy leasing target of 400,000 square feet. Additionally, a retention range of 75% to 85% is projected, with a focus on maintaining strong tenant relationships amidst a supportive defense spending environment under the current administration.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.