Taking Stock of American Assets Trust (AAT) After Argosy Stake and Raised FFO Guidance

American Assets Trust (AAT) just attracted a fresh $4.4 million stake from Argosy-Lionbridge Management, right after the REIT nudged its full year FFO guidance higher, a combination that naturally draws value focused investors.

See our latest analysis for American Assets Trust.

The new Argosy-Lionbridge stake and slightly higher FFO guidance land against a weaker backdrop, with a year to date share price return of negative 26.9 percent and a one year total shareholder return of negative 26.55 percent. This suggests sentiment is cautious but could improve if execution stays solid.

If this kind of contrarian setup interests you, it might be worth exploring fast growing stocks with high insider ownership as a way to uncover other under the radar opportunities with stronger growth momentum.

With shares still down sharply over the past year yet trading at a modest discount to analyst targets, the key question now is whether AAT is genuinely undervalued or if the market is already pricing in its future growth.

Price-to-Earnings of 18.9x: Is it justified?

On a price to earnings basis, American Assets Trust trades at 18.9 times earnings, which looks modest given both its own history and immediate peers.

The price to earnings ratio compares what investors pay for each dollar of current earnings, a key yardstick for income focused, mature real estate businesses like REITs.

Relative to similar companies, AAT looks attractively priced, with its 18.9 times earnings ratio sitting below both the estimated fair price to earnings of 21.8 times and the peer average of 32.4 times. This implies the market may be discounting its earnings power more heavily than its closest comparables.

However, when set against the broader global REITs universe, that same 18.9 times earnings multiple screens as expensive versus the industry average of 15.8 times. This underlines how mixed the valuation picture becomes once you zoom out from its immediate peer set.

Explore the SWS fair ratio for American Assets Trust

Result: Price-to-Earnings of 18.9x (UNDERVALUED)

However, weaker earnings momentum and steep recent share price declines could signal structural challenges, which may limit any upside if portfolio fundamentals disappoint.

Find out about the key risks to this American Assets Trust narrative.

Another View: DCF Points to Deeper Value

Our DCF model paints an even cheaper picture, with AAT trading around 13.8 percent below its estimated fair value of 22.11 dollars. If both earnings multiple and cash flow suggest undervaluation, is the market too pessimistic about future growth or is it spotting risks others are ignoring?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out American Assets Trust for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own American Assets Trust Narrative

If you see the numbers differently or want to dig into the data yourself, you can build a personalized view in just minutes, Do it your way.

A great starting point for your American Assets Trust research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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