Is Easterly Government Properties (DEA) Pricing Look Interesting After Recent Share Price Weakness

• Wondering if Easterly Government Properties is offering fair value at its current price, or if the recent share moves have opened up a mispricing you should pay attention to?
• The stock most recently closed at US$22.27, with a 4.5% decline over the past week, a 7.8% decline over the past month, a 4.5% gain year to date, and a 6.5% decline over the last year. The 3 year and 5 year returns stand at 17.9% and 41.0% declines respectively.
• Recent coverage around Easterly Government Properties has focused on keeping investors informed with evergreen analysis. The aim is to offer updated context on the business and its valuation rather than react to a single short term event. This article was triggered to maintain ongoing coverage so investors can frame the recent price moves within a broader, more consistent view of the company.
• Easterly Government Properties currently has a valuation score of 2 out of 6. This means it screens as undervalued on two of six checks that we will walk through next. We will then look at an even more complete way of thinking about valuation at the end of the article.

Easterly Government Properties scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Easterly Government Properties Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future adjusted funds from operations and discounting those cash flows back to today using a required return.

For Easterly Government Properties, the model uses recent adjusted free cash flow of about $126.5 million and a 2 stage Free Cash Flow to Equity approach. Analysts provide explicit forecasts for the next few years, and Simply Wall St then extrapolates those out further, including a projected free cash flow of $179.9 million in 2035, all in US$.

When all those projected cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of about $51.73 per share. Against the recent share price of $22.27, this implies a 57.0% discount, which points to Easterly Government Properties screening as materially undervalued on this measure.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Easterly Government Properties is undervalued by 57.0%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Easterly Government Properties.

Approach 2: Easterly Government Properties Price vs Earnings

For companies that are profitable, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. It ties the share price directly to the bottom line, which is what ultimately supports dividends and reinvestment.

What counts as a “normal” P/E depends a lot on growth expectations and risk. Higher expected earnings growth or lower perceived risk can support a higher multiple, while slower growth or higher risk usually go with a lower one.

Easterly Government Properties currently trades on a P/E of 83.64x. That is well above the Office REITs industry average of 15.89x and above the peer group average of 49.22x. Simply Wall St’s Fair Ratio estimate for Easterly Government Properties is 47.73x. This Fair Ratio is a proprietary figure that reflects the company’s earnings profile alongside factors such as its growth outlook, profit margins, risk characteristics, industry and market cap.

Because the Fair Ratio incorporates those company specific drivers, it can be more informative than a simple comparison with peers or the sector. Comparing 83.64x with the Fair Ratio of 47.73x suggests the shares are pricing in more than this framework would imply.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Easterly Government Properties Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple tool on Simply Wall St’s Community page. Here you connect your story about Easterly Government Properties to your own forecasts for revenue, earnings and margins. These then flow through to a Fair Value you can compare with the current price to help decide if the stock fits your plan. That Fair Value updates automatically when new information, such as earnings or news, comes in. One investor might build a Narrative that leans on stable government leases and a consensus Fair Value around US$24.08 per share. Another might focus on risks such as elevated capital costs or changing government space needs and land on a lower Fair Value. Each investor is using the same company but a different story to guide their decisions.

Do you think there's more to the story for Easterly Government Properties? 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com