MERLIN Properties SOCIMI SA : Undervalued relative to peers, but don’t ignore the other factors

MERLIN Properties SOCIMI SA relative valuation is now UNDERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 55.

Our analysis is based on comparing MERLIN Properties SOCIMI SA with the following peers – Lar Espana Real Estate SOCIMI SA, Hispania Activos Inmobiliarios, SOCIMI, S.A., Axiare Patrimonio SOCIMI SA and Aedifica (LRE-ES, HIS-ES, AXIA-ES and AED-BE).

Relative Valuation

MERLIN Properties SOCIMI SA’s price of EUR 10.43 is lower than CapitalCube’s implied price of EUR 11.25. CapitalCube believes that at these levels, MERLIN Properties SOCIMI SA is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between EUR 8.25 and EUR 11.10.

Relative Valuation

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It’s current Price/Book of 1.01 is about median in its peer group.
  • The market expects MRL-ES to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • MRL-ES‘s relative capital efficiency and net profit margins are both around the median level.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • MRL-ES‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.

Investment Outlook

MERLIN Properties SOCIMI SA has a fundamental score of 55 and has a relative valuation of UNDERVALUED.

MERLIN Properties SOCIMI SA’s Fundamental Analysis Score is about average at 55, thus not allowing for a specific classification into the Value – Price Matrix.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market expects MRL-ES to maintain the median rates of return it generates currently.

The market expects MRL-ES to grow at about the same rate as its chosen peers (P/E of 8.41 compared to peer median of 7.29) and to maintain the peer median return (ROE of 15.00%) it currently generates.

The company’s current Price/Book of 1.01 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

MRL-ES has moved towards a median ROE and P/E from a Turnaround profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

MERLIN Properties SOCIMI SA engages in the acquisition and management of commercial real estate properties. The firm operates through the following segments: Office buildings, High Street retail assets, Shopping centers, Logistics assets, Hotels and Other. The company was founded on March 25, 2014 and is headquartered in Madrid, Spain.

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