Easterly Government Properties (DEA) AI Stock Analysis

• Market Cap: $1.14B
• Dividend Yield: 10.03%
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 57.7
• Beta (1Y): 0.92
• Revenue Growth: 4.60%
• EPS Growth: -5.17%
• Country: US
• Employees: 50
• Sector: Real Estate
• Sector Strength: 69
• Industry: REIT - Office
• EPS (TTM): 0.18
• Shares Outstanding: 107,970,560
• 10 Day Avg. Volume: 1,216,226
• 30 Day Avg. Volume: 1,671,951
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.73
• Price to Cash Flow (P/CF): 11.50
• P/FCF Ratio: 12.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $11.50
• Price Target Upside: 8.80% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

Easterly Government Properties demonstrates strong financial performance with consistent revenue growth, a stable balance sheet, and proficient cash flow management. The earnings call provided strong guidance with strategic growth initiatives, although concerns about government spending cuts remain. The high P/E ratio suggests overvaluation, but the attractive dividend yield and stable technical indicators balance this. Overall, the stock is positioned for stable performance with some risks.

Positive Factors

Acquisitions

DEA had an active acquisition quarter, with $119.8mm across three transactions, including non-GSA tenants.

Earnings and Guidance

DEA's 3Q24 results were encouraging, as it included a Core FFOps beat.

Financial Flexibility

Increased financial flexibility with the extension of maturity to January 2028 and increased borrowing capacity to $250mm.

Negative Factors

Lease Expirations

12 leases representing 593ksf remain expiring, posing a risk for future occupancy.

Leverage

Net debt/EBITDA increased to 7.9x, indicating higher leverage.

Tenant Uncertainty

There is uncertainty surrounding the impacts of potential cuts suggested by Elon Musk and Vivek Ramaswamy, which could affect DEA's largest tenant, the Department of Veteran Affairs, and other federal agencies.

Easterly Government Properties Business Overview & Revenue Model

Company Description

Easterly Government Properties, Inc. (NYSE:DEA) is based in Washington, D.C., and focuses primarily on the acquisition, development and management of Class A commercial properties that are leased to the U.S. Government. Easterly's experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA).

How the Company Makes Money

Easterly Government Properties makes money primarily through leasing its portfolio of properties to U.S. Government agencies on long-term leases, which provide a stable and predictable rental income. The company's revenue model is driven by rental payments from these government leases, which often include built-in rent escalations, ensuring growth in revenue over time. Additionally, the company may engage in strategic acquisitions and developments of new properties to expand its portfolio and increase its rental income. Key revenue streams include base rent, expense reimbursements, and potential gains from property sales. The company's focus on federal government tenants reduces credit risk and enhances the stability of cash flows.

Easterly Government Properties Financial Statement Overview

Summary

Easterly Government Properties shows consistent revenue growth and healthy profit margins. The balance sheet is stable with a manageable debt-to-equity ratio. Cash flow management is proficient with sustained free cash flows, although net income remains relatively low.

Income Statement

Easterly Government Properties has shown consistent revenue growth over the years, with a notable increase from $287.2 million in 2023 to $302.1 million in 2024. The company's gross profit margin and net profit margin are healthy, reflecting efficient cost management and profitability. EBIT and EBITDA margins have also improved significantly, indicating strong operational performance. However, the net income remains relatively low, which could be a point of concern.

Balance Sheet

The balance sheet is stable, with a moderate debt-to-equity ratio reflecting manageable leverage. The equity ratio is strong, indicating a solid capital structure with sufficient equity backing. Return on equity has shown positive trends, but the company should monitor debt levels to avoid potential risks associated with high leverage.

Cash Flow

Easterly Government Properties exhibits robust cash flow performance, with positive operating and free cash flow figures. The operating cash flow to net income ratio suggests efficient cash generation relative to earnings. Although there was a significant increase in investing cash outflows, the company has managed to sustain its free cash flow levels, indicating prudent financial management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
302.05M	287.23M	293.61M	274.86M	245.08M
	Gross Profit
200.98M	184.80M	195.93M	187.74M	169.52M
	EBIT
176.53M	66.39M	76.26M	73.22M	55.09M
	EBITDA
179.34M	158.79M	181.19M	163.85M	148.89M
	Net Income Common Stockholders
20.58M	18.20M	31.47M	-8.85M	-23.52M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
19.35M	9.38M	7.58M	11.13M	8.46M
	Total Assets
3.22B	2.88B	2.83B	2.83B	2.46B
	Total Debt
1.05B	1.29B	1.25B	1.21B	978.26M
	Net Debt
1.03B	1.29B	1.24B	1.20B	969.79M
	Total Liabilities
1.84B	1.47B	1.42B	1.38B	1.16B
	Stockholders Equity
1.32B	1.32B	1.24B	1.28B	1.15B
Cash Flow		Free Cash Flow
162.63M	114.48M	196.03M	481.39M	145.20M
	Operating Cash Flow
162.63M	114.48M	125.94M	118.34M	145.20M
	Investing Cash Flow
-409.64M	-127.01M	-69.10M	-363.04M	-290.18M
	Financing Cash Flow
252.88M	17.19M	-59.71M	250.17M	144.10M

Easterly Government Properties Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 10.57
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEA, the sentiment is Negative. The current price of 10.57 is below the 20-day moving average (MA) of 10.66, below the 50-day MA of 10.77, and below the 200-day MA of 11.93, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 47.43 is Neutral, neither overbought nor oversold. The STOCH value of 40.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DEA.

Easterly Government Properties Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PSTL	78 Outperform	$401.58M	65.99	1.94%	6.85%	19.87%	81.71%
LXP	72 Outperform	$2.59B	67.26	2.04%	6.00%	5.27%	58.15%
DEA	68 Neutral	$1.14B	57.73	1.44%	10.03%	4.60%	-5.17%
GOOD	63 Neutral	$686.42M	56.31	7.10%	8.05%	1.22%	―
Sector *	61 Neutral	$4.71B	17.93	-2.95%	11.44%	6.38%	-21.59%
BXP	60 Neutral	$11.77B	748.67	0.23%	5.79%	4.10%	-92.47%
HIW	55 Neutral	$3.14B	31.10	4.27%	6.84%	-0.98%	-32.02%

Easterly Government Properties Corporate Events

Easterly Government Properties Enhances Financial Stability with Loan Amendment

On January 14, 2025, Easterly Government Properties, Inc. announced an amendment to its senior unsecured term loan agreement, initially executed in 2016. The Ninth Amendment extends the loan’s maturity date to January 28, 2028, with potential extensions up to 2030, and increases the borrowing capacity from $150 million to $250 million. This strategic move, facilitated by the company’s strong banking relationships and superior credit profile, enhances its financial stability and supports its disciplined investment strategy. Additionally, Easterly has implemented an interest rate swap to fix the SOFR rate, providing greater certainty over interest rate exposure.