Morguard NA REIT UN (MRG.UN) AI Stock Analysis

52 Followers

Top Page

Morguard NA REIT UN

(TSX:MRG.UN)

75Outperform

Morguard NA REIT UN demonstrates strong financial performance with consistent revenue growth and effective cash generation, despite some balance sheet leverage concerns. Technical indicators suggest a stable trading environment, while the stock's valuation is attractive with a low P/E ratio and a solid dividend yield. These factors contribute to a robust overall stock score, reflecting its potential as a stable investment in the REIT sector.

Morguard NA REIT UN (MRG.UN) vs. S&P 500 (SPY)

Market Cap

C$877.45M

Dividend Yield4.56%

Average Volume (3M)56.48K

Price to Earnings (P/E)8.8

Beta (1Y)0.74

Revenue Growth3.79%

EPS Growth-40.78%

CountryCA

EmployeesN/A

SectorReal Estate

Sector Strength71

IndustryREIT - Residential

Share Statistics

EPS (TTM)1.87

Shares Outstanding36,214,910

10 Day Avg. Volume73,711

30 Day Avg. Volume56,478

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.85

Price to Cash Flow (P/CF)5.00

P/FCF Ratio7.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$21.75

Price Target Upside32.46% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Morguard NA REIT UN Business Overview & Revenue Model

Company DescriptionMorguard North American Residential Real Estate Investment Trust (MRG.UN) is a Canadian-based REIT that focuses on owning and managing multi-suite residential properties across North America. The company is involved in the acquisition, development, and management of high-quality residential communities, primarily in urban markets. Morguard NA REIT aims to provide unitholders with stable and growing cash distributions through its diversified portfolio of residential real estate assets.

How the Company Makes MoneyMorguard NA REIT UN primarily generates revenue through rental income from its portfolio of residential properties. The company leases apartment units to tenants, and the rental payments collected form the core revenue stream. Additionally, the REIT may engage in property development activities to enhance its portfolio and increase rental income. Morguard NA REIT also benefits from property appreciation, which can contribute to its earnings through strategic property sales or refinancing. The company's earnings are influenced by factors such as occupancy rates, rental rates, economic conditions, and its ability to effectively manage and maintain its properties.

Morguard NA REIT UN Financial Statement Overview

Summary

Morguard NA REIT UN presents a stable financial position with strong revenue growth and cash generation. Profitability is robust, although EBIT margins show fluctuation. The balance sheet reflects moderate leverage, typical for REITs, but ROE is declining. Cash flow demonstrates efficient cash conversion, offsetting some balance sheet concerns.

Income Statement

Positive

The company shows consistent revenue growth from 2019 to 2024, achieving a revenue growth rate of 3.8% in 2024. Gross profit margin stands at 46.27%, and net profit margin at 29.6% in 2024, indicating strong profitability. However, the EBIT margin is notably fluctuating, with a substantial improvement to 52.72% in 2024 from negative levels in 2022. This suggests recovery in operational efficiency.

Balance Sheet

Positive

The debt-to-equity ratio is 0.89, indicating moderate leverage, which is typical for REITs. Return on equity (ROE) is 5.09%, showing a decline from previous years, suggesting weakening profitability on equity. The equity ratio is 43.78%, indicating a solid equity base, though slightly lower compared to peers.

Cash Flow

Positive

The company has demonstrated strong free cash flow growth, with consistent increases in operating cash flow. The operating cash flow to net income ratio of 0.96 suggests efficient cash generation relative to net income. However, the free cash flow to net income ratio also stands at 0.96, indicating a tight correlation between net income and cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
344.19M	331.62M	278.49M	245.57M	248.68M
	Gross Profit
159.24M	180.24M	131.86M	115.10M	120.30M
	EBIT
181.42M	180.24M	-38.60M	129.50M	135.53M
	EBITDA
179.27M	254.03M	149.68M	68.22M	139.29M
	Net Income Common Stockholders
101.86M	176.34M	219.28M	242.09M	175.22M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
51.26M	17.82M	14.64M	26.56M	27.30M
	Total Assets
4.57B	4.10B	3.93B	3.47B	3.08B
	Total Debt
1.79B	1.56B	1.48B	1.38B	1.31B
	Net Debt
1.74B	1.55B	1.47B	1.36B	1.28B
	Total Liabilities
2.46B	2.14B	2.08B	1.91B	1.74B
	Stockholders Equity
2.00B	1.85B	1.75B	1.48B	1.27B
Cash Flow		Free Cash Flow
97.50M	88.97M	75.17M	63.70M	50.13M
	Operating Cash Flow
97.50M	88.97M	75.17M	63.70M	50.13M
	Investing Cash Flow
-59.40M	-209.01M	-11.06M	-31.30M	-28.06M
	Financing Cash Flow
-6.74M	120.84M	-78.88M	-33.05M	-11.57M

Morguard NA REIT UN Technical Analysis

Technical Analysis Sentiment

Negative

Last Price16.42

Price Trends

50DMA

16.82

Negative

100DMA

17.10

Negative

200DMA

17.21

Negative

Market Momentum

MACD

-0.23

Positive

RSI

46.00

Neutral

STOCH

47.71

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MRG.UN, the sentiment is Negative. The current price of 16.42 is below the 20-day moving average (MA) of 16.87, below the 50-day MA of 16.82, and below the 200-day MA of 17.21, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 46.00 is Neutral, neither overbought nor oversold. The STOCH value of 47.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:MRG.UN.

Morguard NA REIT UN Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SRU.UN	76 Outperform	C$4.18B	18.45	4.50%	7.54%	9.46%	-42.77%
MRG.UN	75 Outperform	C$877.45M	8.77	5.29%	4.56%	3.79%	-40.78%
CAR.UN	72 Outperform	C$6.38B	22.68	3.20%	3.79%	4.45%	―
REI.UN	68 Neutral	$4.91B	10.49	6.34%	6.73%	11.62%	1120.60%
HR.UN	63 Neutral	C$2.47B	―	-2.29%	6.37%	-6.92%	-296.31%
Sector *	60 Neutral	$3.00B	12.40	0.61%	9872.56%	7.62%	-2.59%
AP.UN	58 Neutral	$2.07B	―	-5.79%	12.13%	4.98%	19.54%

* Real Estate Sector Average

Performance Comparison

TSE:MRG.UN

Morguard NA REIT UN

16.36

1.60

10.84%

TSE:REI.UN

RioCan Real Estate Investment

16.83

0.34

2.09%

TSE:AP.UN

Allied Properties Real Estate Investment Trust

15.00

0.09

0.61%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

24.94

4.55

22.31%

TSE:HR.UN

H&R Real Estate ate Staple

9.53

1.18

14.13%

TSE:CAR.UN

Canadian Apartment

39.55

-1.55

-3.77%

Morguard NA REIT UN Earnings Call Summary

Earnings Call Date: Feb 11, 2025 | % Change Since: -2.67% | Next Earnings Date: Apr 29, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong asset growth and rent increases in Canada offset by significant net loss and decreased occupancy in the U.S. Interest expense rise and operational challenges contributed to a cautious outlook.

Highlights

Increase in Total Assets

Total assets increased to $4.4 billion in Q3 2024, up from $4.1 billion at the end of 2023, due to a fair value increase on real estate properties and foreign exchange rate fluctuations.

Strong Canadian Rent Growth

Average monthly rent in Canada increased by 6% compared to 2023, with a 24.1% AMR growth on suite turnover.

Increase in Annual Cash Distribution

Annual cash distribution increased by $0.02 per unit, a 2.7% increase, to $0.76 per unit.

Lowlights

Significant Net Loss

Net loss of $18.8 million for Q3 2024 compared to net income of $39.2 million in 2023, primarily due to noncash items such as a $99.7 million increase in fair value loss on Class B LP units.

Decrease in U.S. Occupancy

U.S. occupancy decreased to 91.7% from 93.7% in 2023, driven by turnover during the summer leasing season.

Interest Expense Increase

Interest expense increased by $5.5 million compared to Q3 2023, primarily due to higher principal and interest rates.

Decrease in Net Operating Income

IFRS net operating income decreased by $0.4 million or 0.7% compared to 2023, with NOI in the U.S. decreasing by 4%.

Company Guidance

During the Q3 2024 earnings call for MRG.UN.TO, several key financial metrics and guidance were provided. The REIT's total assets increased to $4.4 billion, up from $4.1 billion at the end of 2023, due to factors including a fair value increase in real estate properties. They reported $103.3 million in cash and a $1.7 billion long-term debt. Mortgage payables have a weighted average term of 5.1 years and an interest rate of 3.87%. The debt-to-gross book value ratio slightly increased to 38.9%. The REIT repurchased about 1.1 million units under the NCIB at an average price of $16.94, with an IFRS net asset value per unit at $41.30. The annual cash distribution was increased by 2.7% to $0.76 per unit. Despite a net loss of $18.8 million, mostly due to non-cash items, the REIT saw a net operating income of $52 million, a slight decrease from the previous year. In Canada, the average monthly rent rose by 6% to $1,754, while in the U.S., it increased by 2% to USD 1,911. Canadian occupancy was at 97.8%, and U.S. occupancy at 91.7%. The REIT also completed $31.8 million in capital expenditures. Looking ahead, the REIT plans to continue with its share buyback strategy and is exploring acquisition opportunities, particularly where cap rates are favorable.

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.