Slate Grocery REIT (SGR.UN) AI Stock Analysis

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TSE:SGR.UN Dividends

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Slate Grocery REIT

(TSX:SGR.UN)

81Outperform

Slate Grocery REIT presents a strong investment case with excellent financial performance, robust technical indicators, and an attractive valuation. The positive sentiment from the earnings call further enhances the stock's appeal, although attention to liabilities and trading below net asset value remain areas to watch.

Slate Grocery REIT (SGR.UN) vs. S&P 500 (SPY)

Market Cap

C$836.94M

Dividend Yield8.68%

Average Volume (3M)118.97K

Price to Earnings (P/E)15.7

Beta (1Y)0.98

Revenue Growth3.30%

EPS Growth159.71%

CountryCA

EmployeesN/A

SectorReal Estate

Sector Strength76

IndustryREIT - Retail

Share Statistics

EPS (TTM)0.89

Shares Outstanding59,009,000

10 Day Avg. Volume101,198

30 Day Avg. Volume118,971

Financial Highlights & Ratios

PEG Ratio0.10

Price to Book (P/B)N/A

Price to Sales (P/S)2.78

Price to Cash Flow (P/CF)9.00

P/FCF Ratio6.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$14.22

Price Target Upside2.01% Upside

Rating ConsensusHold

Number of Analyst Covering2

Slate Grocery REIT Business Overview & Revenue Model

Company DescriptionSlate Grocery REIT (SGR.UN) is a real estate investment trust that focuses on acquiring, owning, and managing grocery-anchored real estate properties across the United States. The company's portfolio primarily consists of properties leased to grocery stores, offering essential services that ensure consistent consumer demand. Slate Grocery REIT is committed to providing stable and growing distributions to its investors through strategic acquisitions and active management of its property assets.

How the Company Makes MoneySlate Grocery REIT makes money primarily through leasing its properties to tenants, with a significant focus on grocery-anchored real estate. The majority of their revenue comes from rental income generated by long-term leases with grocery stores and other essential service retailers that are typically less sensitive to economic cycles. Additionally, the company may benefit from property appreciation and strategic sales of assets within its portfolio. Slate Grocery REIT's earnings are supported by its focus on properties that provide stable cash flows through essential retail services, enhanced by potential partnerships with large national grocery chains and continued expansion in high-demand markets.

Slate Grocery REIT Financial Statement Overview

Summary

Slate Grocery REIT shows strong revenue growth and effective cost management, resulting in healthy margins. While the balance sheet indicates balanced leverage, liabilities require careful monitoring. Cash flow generation is robust, though strategic cash management remains crucial. The company is well-positioned within the REIT industry, but ongoing attention to profitability and debt management is needed.

Income Statement

Very Positive

Slate Grocery REIT has shown consistent revenue growth over the years, with a noticeable increase from 2021 to 2024. The gross profit margin is strong, indicating effective management of costs relative to revenue. However, the net profit margin, while positive, reflects a moderate level of profitability, suggesting room for improvement in controlling other operational expenses. The EBITDA margin is robust, highlighting the company's ability to generate earnings before accounting for interest, taxes, depreciation, and amortization.

Balance Sheet

Positive

The balance sheet of Slate Grocery REIT presents a moderate debt-to-equity ratio, indicative of a balanced leverage strategy. However, the return on equity has shown variability, suggesting fluctuating efficiency in generating profits from shareholders' equity. The equity ratio is relatively stable, signifying a solid capital structure. Nevertheless, the company’s total liabilities are substantial, which could pose risks if not managed properly.

Cash Flow

Positive

The cash flow statements reveal a positive trend in free cash flow, reflecting the company's capacity to generate cash after capital expenditures. The operating cash flow to net income ratio indicates solid cash conversion, enhancing financial flexibility. However, fluctuations in financing and investing cash flows suggest potential volatility in cash management strategies.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
209.13M	203.28M	177.49M	138.28M	126.13M
	Gross Profit
135.40M	130.47M	127.41M	100.86M	91.50M
	EBIT
0.00	124.88M	49.83M	60.52M	58.99M
	EBITDA
128.47M	86.77M	140.66M	104.87M	77.40M
	Net Income Common Stockholders
39.67M	13.60M	128.80M	90.87M	41.26M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
22.67M	23.59M	20.39M	14.04M	2.36M
	Total Assets
2.23B	2.24B	2.27B	1.74B	1.32B
	Total Debt
1.17B	1.16B	1.13B	937.74M	726.37M
	Net Debt
1.14B	1.14B	1.11B	923.71M	724.01M
	Total Liabilities
1.38B	1.37B	1.34B	1.11B	870.84M
	Stockholders Equity
673.47M	687.44M	740.51M	619.02M	452.72M
Cash Flow		Free Cash Flow
67.04M	71.78M	51.95M	46.12M	36.61M
	Operating Cash Flow
70.97M	76.30M	58.99M	50.80M	39.35M
	Investing Cash Flow
-10.43M	-20.55M	-381.74M	-190.85M	5.79M
	Financing Cash Flow
-61.46M	-52.55M	329.11M	151.72M	-45.19M

Slate Grocery REIT Technical Analysis

Technical Analysis Sentiment

Positive

Last Price13.94

Price Trends

50DMA

13.91

Positive

100DMA

13.77

Positive

200DMA

13.15

Positive

Market Momentum

MACD

-0.02

Negative

RSI

53.63

Neutral

STOCH

87.60

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SGR.UN, the sentiment is Positive. The current price of 13.94 is above the 20-day moving average (MA) of 13.71, above the 50-day MA of 13.91, and above the 200-day MA of 13.15, indicating a bullish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 53.63 is Neutral, neither overbought nor oversold. The STOCH value of 87.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:SGR.UN.

Slate Grocery REIT Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SGR.UN	81 Outperform	C$836.94M	15.68	5.60%	8.68%	3.30%	159.71%
SRU.UN	76 Outperform	C$4.33B	18.94	4.50%	7.35%	9.46%	-42.77%
CRR.UN	72 Outperform	C$2.68B	―	-0.22%	6.12%	8.82%	92.79%
REI.UN	71 Outperform	$5.11B	10.80	6.34%	6.55%	11.62%	1120.60%
Sector *	59 Neutral	$2.73B	11.65	0.11%	8783.19%	5.45%	-17.32%
AX.UN	58 Neutral	$712.35M	―	-2.86%	8.28%	-10.56%	81.41%
D.UN	55 Neutral	$303.46M	―	-9.20%	6.27%	4.16%	-57.38%

* Real Estate Sector Average

Performance Comparison

TSE:SGR.UN

Slate Grocery REIT

13.94

3.88

38.57%

TSE:REI.UN

RioCan Real Estate Investment

17.19

0.70

4.21%

TSE:D.UN

Dream Office Real Estate Investment

16.00

-2.12

-11.71%

TSE:AX.UN

Artis Real Estate Investment

7.24

1.24

20.69%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

25.40

4.60

22.12%

TSE:CRR.UN

Crombie Real Estate ate

14.54

2.43

20.07%

Slate Grocery REIT Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: 2.42% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong performance in leasing activity, income growth, and successful refinancing, alongside challenges like trading below net asset value and higher tax expenses. The sentiment is overall positive due to the strong operational performance and favorable market conditions.

Highlights

Strong Leasing Activity and Income Growth

The REIT completed close to 3 million square feet of total leasing throughout the year at double-digit rental spreads. New deals were completed at 28% above comparable average in-place rent and non-option renewals at over 14% above expiring rents. Same-property NOI increased by $6.7 million or 4.3% on a trailing 12-month basis.

Stable Occupancy and Positive Pipeline

Portfolio occupancy remained stable at 94.8%, with expectations of continued positive trends in occupancy due to new leasing opportunities.

Successful Debt Financing

The team financed over $630 million of debt throughout the year at an interest rate spread similar to the maturing debt, indicating lender confidence in the REIT's business.

Market Position and Investment Opportunity

The REIT's units are trading at a discount to net asset value, presenting a compelling investment opportunity. The REIT has been a top-performing retail REIT stock in Canada and the U.S. on a total return basis over the last several years.

Favorable Retail Market Conditions

High construction costs and tight lending conditions limit new retail development, contributing to limited supply and increased pricing power for landlords.

Strong Interest from Investors

Private institutional investors are interested in owning U.S. assets that generate U.S. dollars, with expectations of increased interest in the grocery-anchored real estate sector.

Lowlights

Units Trading Below Net Asset Value

Despite strong operational performance, the REIT's units are trading at a discount to net asset value, which is seen as a challenge for the REIT.

Higher Tax Expenses

Current tax expenses came in higher than expected, due to finalizing state tax filings for the year.

Bad Debt from Tenant Bankruptcies

Higher bad debt year-on-year due to specific tenant bankruptcies, although the management views this as an opportunity to mark rents to market.

Company Guidance

During the Slate Grocery REIT's Fourth Quarter 2024 Financial Results Conference Call, the company reported a robust performance with a 4.3% increase in same-property net operating income (NOI) totaling $6.7 million on a trailing 12-month basis. They achieved close to 3 million square feet of total leasing for the year at double-digit rental spreads, with new deals 28% above comparable average in-place rent and non-option renewals over 14% above expiring rents. Portfolio occupancy was stable at 94.8%, supported by a strong pipeline of new leasing opportunities. Despite challenging financing conditions, Slate Grocery REIT refinanced over $630 million of debt at an interest rate similar to maturing debt. The call also highlighted the opportunity for growth due to average in-place rents of $12.65 per square foot, significantly below the market average of $23.80. The REIT's units trade at a discount to net asset value, presenting a compelling investment opportunity, as the company continues to leverage high construction costs and tight lending conditions that limit new retail development.

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.