Alexander's (ALX) Asset Sale And Target Lease Put Its Valuation In Focus

Alexander's (ALX) is drawing fresh attention after closing an asset sale of a non core property and securing a full lease with Target at its key Queens shopping center, moves tied to cash flow and balance sheet strength.

See our latest analysis for Alexander's.

Alexander's share price has gained 5.66% over the past month and 14.03% over the past 90 days, while the 1 year total shareholder return of 25.37% and 3 year total shareholder return of 90.71% point to momentum that recent asset sales and leasing progress may be reinforcing.

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Alexander's latest asset sale and the Target lease can be read as a simple mood shift in the stock or as a clearer signal about the underlying REIT portfolio. So how does the current price stack up against those fundamentals?

Price-to-Earnings of 69x: Is it justified?

Alexander's is currently trading on a P/E of 69x, which sits against a last close of $277.93 and puts the stock at a premium to several reference points.

The P/E multiple compares the company’s share price to its earnings per share and is a common shorthand for how much investors are paying for each dollar of current earnings. For a REIT like Alexander's, a higher P/E can reflect expectations around future earnings growth, perceived quality of the underlying properties, or confidence in its income profile. However, it also means the bar for performance is set higher.

Here, Alexander's 69x P/E is described as expensive relative to the peer average of 21.7x and the wider US Retail REITs industry average of 27.1x. This points to a considerable premium over similar stocks. It also stands above an estimated fair P/E of 39x and suggests a gap between the current market price placed on earnings and the level that regression based analysis indicates the multiple could move toward over time.

Explore the SWS fair ratio for Alexander's

Result: Price-to-Earnings of 69x (OVERVALUED)

However, Alexander's narrow, New York focused portfolio and the current P/E premium leave little room for disappointment if leasing, redevelopment, or funding conditions become less supportive.

Find out about the key risks to this Alexander's narrative.

Another view: SWS DCF model points to a different story

While Alexander's looks expensive on a 69x P/E, the SWS DCF model also presents it as overvalued, with an estimate of future cash flow value at $183.05 per share compared with the current $277.93. That gap raises a simple question: how much optimism is already in the price?

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 Alexander's 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 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed signals around Alexander's leave you unsure, review the numbers yourself and form an independent view using the 1 key reward and 3 important warning signs

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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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