Assessing Macerich’s (MAC) Valuation After Recent Results And Ongoing Share Price Rebound

Macerich (MAC) has drawn fresh attention after reporting annual revenue of US$1,041.061 million and a net loss of US$197.923 million, prompting investors to reassess this US$5.199b retail REIT.

See our latest analysis for Macerich.

At a share price of US$19.53, Macerich has shown firm upward momentum recently, with a 5.45% year to date share price return and a 30.05% total shareholder return over the past year, building on a 121.65% three year total shareholder return.

If this kind of rebound in a retail REIT has your attention, it could be a good moment to broaden your search with our screener of 20 top founder-led companies

With Macerich trading at US$19.53, an indicated intrinsic discount of about 40% and only a modest gap to analyst targets, the key question is simple: is there real value left here, or is the market already pricing in future growth?

Most Popular Narrative: 8% Undervalued

With Macerich last closing at $19.53 against a narrative fair value of $21.19, the core question is how future operations and balance sheet moves support that gap.

Ongoing asset dispositions and disciplined portfolio refinement are concentrating capital in top-performing, high-barrier, urban and coastal assets, enhancing pricing power, stabilizing cash flows, and allowing for continued improvements in balance sheet strength and lower interest expense, positively impacting net earnings.

Read the complete narrative.

Want to understand the playbook behind this value gap? It leans on changing revenue mix, slimmer margins, and a future profit multiple that would surprise many REIT investors.

Result: Fair Value of $21.19 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the high net debt level and reliance on asset sales, combined with ongoing e commerce pressure on mall tenants, could easily upset that value story.

Find out about the key risks to this Macerich narrative.

Another Way to Look at Macerich’s Value

The fair value narrative around $21.19 per share leans heavily on future earnings and margins, but the SWS DCF model paints a different picture. On that measure, Macerich at $19.38 is compared with an estimate of $32.07, which points to a much deeper undervaluation.

If one model suggests an 8% gap and another suggests a far larger gap, a key question is which set of assumptions you treat as closer to reality and how much uncertainty you are willing to take on around those cash flow forecasts.

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

Next Steps

Given the mix of concerns and optimism in this story, the next move is to look at the numbers yourself and decide how they stack up against your own expectations, then weigh up the 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If Macerich has sharpened your focus, do not stop here. Broaden your watchlist with other focused ideas that could suit your approach and risk comfort.

• Target strong cash generation and quality fundamentals by checking out the 63 high quality undervalued stocks that already screen for both value and resilience.
• Prioritise stability and income by reviewing the 12 dividend fortresses that concentrate on companies with higher yields.
• Limit surprises and focus on steadier names by scanning the 65 resilient stocks with low risk scores that highlight businesses with lower risk profiles.

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