Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 16 Jan, 25 | EGP | Buy | USD 164.3 | USD 180.0 | USD 200.0 | 11 days | 21.7% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
EastGroup Properties, Inc. (NYSE: EGP), a member of the S&P Mid-Cap 400 and Russell 1000 Indexes, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 20,000 to 100,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. The Company's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 60.5 million square feet.
Increase in EBITDA Margin
(69.6% in Q3 FY24 vs 68.3% in Q3 FY23)
Increase in Net Margin
(33.9% in Q3 FY24 vs 33.4% in Q3 FY23)
Higher Cash Conversion Cycle Days
(49.6 Days in Q3 FY24 vs 48.6 Days in Q3 FY23)
Decrease in Operating Margin
(39.6% in Q3 FY24 vs 40.8% in Q3 FY23)
Leasing Demand Volatility, Construction and Development Risk, Interest Rate and Financing Risk, Market and Economic Cycles, Inflation and Cost Pressures, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 164.3 | 145.0 | 180.0 | 200.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
1. Funds from Operations (FFO) Performance- EastGroup’s Funds from Operations (FFO) for Q3 2024 were $2.13 per share, an increase of 6.5% compared to $2.00 per share in Q3 2023. When excluding gains from involuntary conversions and business interruption claims, FFO increased by 9.2%, reaching $2.13 per share in Q3 2024, up from $1.95 per share in the prior year. This represents a solid 9.2% growth and demonstrates strong operational performance amidst market challenges.
2. Same Property Net Operating Income (NOI)- The company saw a 5.5% increase in Same Property Net Operating Income (NOI) on a straight-line basis, excluding income from lease terminations, for Q3 2024. On a cash basis, this increase was slightly higher at 5.9%, indicating robust organic growth in the portfolio. This performance underscores the resilience of EastGroup’s core properties, which benefit from strong demand in the Sunbelt markets.
3. Leasing Activity and Rental Rate Growth- EastGroup reported a remarkable 50.9% increase in rental rates for new and renewal leases on a straight-line basis during Q3 2024, which reflects the ongoing strength of market conditions and the demand for last-mile logistics space. However, the percentage of operating portfolio leased and occupied showed a slight decline, with occupancy down to 96.5% compared to 97.7% in Q3 2023, suggesting a minor cooling in demand for industrial properties.
4. Expansion and Development Initiatives- The company continued its growth strategy with the acquisition of a 179,000-square-foot operating property for approximately $36 million, enhancing its presence in Austin. In addition, EastGroup commenced construction on two development projects totaling 310,000 square feet in Austin and Houston, with a projected total investment of $40 million. These investments indicate EastGroup’s commitment to expanding its footprint in key markets with high growth potential.
5. Property Acquisitions and Market Expansion- In line with its expansion strategy, EastGroup acquired two industrial buildings, Hays Commerce Center 3 & 4, in Austin, totaling 179,000 square feet for $35.78 million. The property, which is fully leased, increases EastGroup’s exposure to the growing Austin market, bringing its total holdings in the area to approximately 1.76 million square feet. Additionally, the company acquired land in Nashville, valued at $10.1 million, for future development, marking another step in its strategy to expand into high-demand markets.
Considering recent key business, financial updates, current trading levels, key business risks, and technical indicators analysis, a ‘Buy’ recommendation has been given on the Eastgroup Properties Inc (NYSE: EGP) at the closing price of USD 164.30, as on January 16, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Real Estate Industry: REIT - Industrial
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| EGP EastGroup Properties Inc |
0.13 0.07% | 176.28 | 35.08 | - | 13.39 | 2.82 | 15.38 | 21.11 |
| PLD Prologis Inc |
-1.005 0.90% | 110.78 | 42.17 | 52.08 | 14.75 | 2.25 | 18.70 | 23.08 |
| PSA Public Storage |
-3.605 1.20% | 295.69 | 27.33 | 27.32 | 11.54 | 8.95 | 14.45 | 20.02 |
| PLDGP Prologis Inc |
0.50 0.92% | 55.00 | 10.93 | - | 5.05 | - | ||
| EXR Extra Space Storage Inc |
-1.305 0.88% | 147.19 | 28.98 | 28.74 | 14.47 | 2.23 | 19.14 | 26.72 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 16, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Copyright © 2023 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.
