Easterly Government Properties (DEA) AI Stock Analysis

• Market Cap: $911.57M
• Dividend Yield: 13.05%
• Average Volume (3M): 764.09K
• Price to Earnings (P/E): 49.0
• Beta (1Y): 0.48
• Revenue Growth: 6.06%
• EPS Growth: -15.10%
• Country: US
• Employees: 50
• Sector: Real Estate
• Sector Strength: 80
• Industry: REIT - Office
• EPS (TTM): 0.07
• Shares Outstanding: 44,905,160
• 10 Day Avg. Volume: 815,658
• 30 Day Avg. Volume: 764,086
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.09
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 14.00
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $18.00
• Price Target Upside: -10.36% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

Easterly Government Properties demonstrates strong financial performance and strategic growth initiatives, bolstered by effective cash flow and successful debt financing. However, technical indicators point to bearish trends, and the high P/E ratio suggests potential overvaluation. The dividend reduction may concern income-focused investors, while the company's strategic positioning and portfolio additions support future growth.

Positive Factors

Earnings

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 $250 million.

Investment Activity

The company introduced 2025 guidance above the Street, driven by increased investment activity.

Negative Factors

Dividend Policy

The Board of Directors of Easterly lowered the dividend after defending it for over two years, which has put the stock under pressure.

Leverage

Net debt/EBITDA remains elevated and is likely to continue to rise with announced investment activity.

Occupancy Risk

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

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 strong operational performance with consistent revenue growth, a robust gross profit margin, and effective cash flow generation. However, high financing costs affect net profitability, and the moderate leverage level requires monitoring.

Income Statement

Easterly Government Properties has shown consistent revenue growth, with a TTM revenue increase from the previous year. The gross profit margin remains strong at approximately 58.8% for the TTM, indicating efficient cost management. However, the net profit margin is lower due to high financing costs, affecting the overall profitability.

Balance Sheet

The company maintains a solid equity base with an equity ratio of 41.4% in the TTM, indicating a stable financial structure. However, the debt-to-equity ratio stands at 0.88, reflecting a moderate level of leverage, which could pose risks if interest rates rise.

Cash Flow

Easterly Government Properties demonstrates strong cash flow generation with a TTM operating cash flow of $162.9 million, exceeding net income. The operating cash flow to net income ratio is robust, suggesting effective cash earnings conversion. However, free cash flow growth has been modest, indicating potential constraints in cash available after investments.

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
78.67M	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
1.60B	1.29B	1.25B	1.21B	978.26M
	Net Debt
1.58B	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: 20.08
• 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 20.08 is below the 20-day moving average (MA) of 20.24, below the 50-day MA of 23.62, and below the 200-day MA of 28.18, indicating a bearish trend. The MACD of -0.97 indicates Negative momentum. The RSI at 37.66 is Neutral, neither overbought nor oversold. The STOCH value of 45.00 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
PGRE	68 Neutral	$2.24B	―	-2.11%	3.03%	1.67%	73.75%
DEA	63 Neutral	$911.57M	48.96	1.32%	13.05%	6.06%	-15.10%
Sector *	60 Neutral	$2.81B	11.39	0.21%	8508.43%	6.31%	-14.32%
BDN	50 Neutral	$721.62M	―	-18.11%	14.42%	-2.22%	1.51%
JBGS	50 Neutral	$1.32B	―	-8.54%	4.62%	-12.34%	-36.05%
PDM	48 Neutral	$809.90M	―	-3.79%	7.68%	-6.23%	18.07%

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.