Is Apple Hospitality REIT Offering a Value Opportunity After Its 2024 Share Price Slump?

• If you are wondering whether Apple Hospitality REIT is quietly turning into a value opportunity or a value trap, you are not alone. This stock has enough moving pieces to merit a closer look.
• Despite a 6.7% gain over the last month and a small 0.4% uptick in the past week, the share price is still down 19.6% year to date and 15.6% over the last year, which signals that the market may still be reassessing the risk and return profile here.
• Recently, investors have been digesting a mix of macro signals around travel demand resilience, interest rate expectations, and the broader REIT sector rotation, all of which directly affect sentiment toward hotel focused real estate names like Apple Hospitality. At the same time, ongoing conversations about property values and refinancing costs across the lodging industry have kept a spotlight on balance sheet strength and long term cash flow visibility.
• On our framework, Apple Hospitality REIT scores a 4 out of 6 on valuation checks, suggesting it screens as undervalued on several important measures. Next, we will break down those methods one by one while also hinting at a deeper way to think about what fair value really means for this stock.

Find out why Apple Hospitality REIT's -15.6% return over the last year is lagging behind its peers.

Approach 1: Apple Hospitality REIT Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what Apple Hospitality REIT is worth today by extrapolating its adjusted funds from operations into the future and discounting those cash flows back to the present.

Apple Hospitality currently generates about $384.9 Million in free cash flow, and analysts expect this to moderate over time as the business matures. Based on available forecasts and Simply Wall St’s extrapolations, free cash flow is projected to be around $239.6 Million in 2035, with a gentle decline in the earlier years before stabilizing.

When all those projected cash flows are discounted back, the model arrives at an intrinsic value of roughly $16.65 per share. That is about 26.9% above the current market price, implying the stock is trading at a meaningful discount to its estimated fair value.

In plain terms, the cash flow math suggests investors are paying significantly less than what Apple Hospitality’s future stream of dollars appears to be worth.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Apple Hospitality REIT is undervalued by 26.9%. Track this in your watchlist or portfolio, or discover 912 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Apple Hospitality REIT.

Approach 2: Apple Hospitality REIT Price vs Earnings

For a profitable business like Apple Hospitality REIT, the price to earnings ratio is a straightforward way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, companies with stronger growth prospects and lower perceived risk tend to deserve higher PE multiples, while slower growing or riskier names usually trade on lower ones.

Apple Hospitality currently trades on a PE of about 16.4x, which sits slightly above the Hotel and Resort REITs industry average of roughly 15.3x but far below the broader peer group average of around 61.7x. To move beyond these blunt comparisons, Simply Wall St uses a Fair Ratio, here estimated at 31.3x, which is the PE you might expect given Apple Hospitality’s earnings growth profile, margins, industry, market cap, and risk factors.

This Fair Ratio is more tailored than a simple peer or industry check because it adjusts for the company’s specific fundamentals rather than assuming one size fits all. With the current PE of 16.4x sitting well below the 31.3x Fair Ratio, the multiple based view lines up with the DCF work and points to Apple Hospitality REIT looking undervalued on earnings.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1463 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Apple Hospitality REIT Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce Narratives, which are simple stories investors build around a company that connect their view of its future revenue, earnings and margins to a financial forecast and, ultimately, to a fair value estimate. On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool to spell out their assumptions, see the fair value those assumptions imply, and then compare that fair value to the current share price to decide whether Apple Hospitality REIT looks like a buy, hold or sell. Because Narratives update dynamically as new information like earnings, guidance changes or macro news comes in, your story and valuation can evolve in real time rather than staying fixed. For Apple Hospitality REIT, for example, one investor might build a cautious Narrative that sees softer travel demand, tighter margins and a fair value near $12.00, while a more optimistic investor might emphasize disciplined cost control, buybacks and resilient demand to justify a fair value closer to $15.00.

Do you think there's more to the story for Apple Hospitality REIT? Head over to our Community to see what others are saying!

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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