COPT Defense Properties (CDP) AI Stock Analysis

• Market Cap: $6.87B
• Dividend Yield: 3.94%
• Average Volume (3M): 960.89K
• Price to Earnings (P/E): 24.0
• Beta (1Y): 0.41
• Revenue Growth: 2.95%
• EPS Growth: N/A
• Country: US
• Employees: 427
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Office
• EPS (TTM): 0.34
• Shares Outstanding: 112,927,510
• 10 Day Avg. Volume: 1,198,586
• 30 Day Avg. Volume: 960,894
• PEG Ratio: -0.09
• Price to Book (P/B): 2.33
• Price to Sales (P/S): 4.61
• P/FCF Ratio: 11.60
• Enterprise Value/Market Cap: 0.82
• Enterprise Value/Revenue: 7.54
• Enterprise Value/Gross Profit: 11.22
• Enterprise Value/Ebitda: 14.74
• 1Y Price Target: $33.40
• Price Target Upside: 9.22% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: $34.00 ▲(11.18% Upside)

COPT Defense Properties has a solid overall performance driven by strong financial growth and positive earnings call outcomes, particularly with increased defense spending and leasing achievements. However, high leverage and valuation concerns slightly temper the outlook. The technical analysis supports a bullish trend, but caution is advised due to overbought conditions.

Positive Factors

Strong Leasing Performance

Achieving 88% of the annual leasing target with a high tenant retention rate indicates robust demand and effective property management, ensuring stable future revenue streams.

Defense Budget Impact

Increased defense spending provides a favorable outlook for COPT, enhancing opportunities in intelligence and cybersecurity sectors, which are core to their business model.

High Portfolio Occupancy

High occupancy rates reflect strong demand for COPT's properties, ensuring consistent rental income and reducing the risk of revenue volatility.

Negative Factors

High Leverage

Significant leverage could pose risks, especially if interest rates rise, potentially straining financial flexibility and increasing financial risk.

Challenges with Cash Rent Spreads

Declining cash rent spreads on renewals could impact profitability, indicating potential challenges in maintaining rental income growth.

High Vacancy at Specific Properties

High vacancy in key properties could lead to revenue loss and increased costs, affecting overall portfolio performance and cash flow.

COPT Defense Properties Business Overview & Revenue Model

Company Description

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (IT) related activities servicing what the Company believes are growing, durable, priority missions (Defense/IT Locations). The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (Regional Office Properties). As of June 30, 2023, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties. As of the same date and including 24 properties owned through unconsolidated joint ventures, COPT's core portfolio of 192 properties encompassed 22.9 million square feet and was 95% leased.

How the Company Makes Money

COPT Defense Properties generates revenue primarily through long-term leases with government agencies and defense contractors, ensuring stable cash flow. The company's revenue model is largely based on rental income from its diversified portfolio of properties, which includes office buildings, specialized facilities, and data centers tailored for defense-related operations. Key revenue streams include lease payments, tenant reimbursements for operating expenses, and potential income from property sales or development projects. Additionally, CDP benefits from strategic partnerships with government entities and contractors that enhance its leasing opportunities and provide insights into sector-specific demands, further solidifying its earnings base.

COPT Defense Properties Financial Statement Overview

Summary

COPT Defense Properties exhibits strong operational margins and cash flow efficiency, with a robust Gross Profit and steady profitability metrics. Despite a small decline in revenue growth and moderate leverage, the company maintains healthy financial standings, suitable for its industry. The balance between debt and equity remains a key area to watch for future stability.

Income Statement

COPT Defense Properties shows a solid revenue base with a TTM (Trailing-Twelve-Months) Gross Profit Margin of approximately 50.8% and a Net Profit Margin of 18.9%. However, the Revenue Growth Rate is negative at -0.7% in the latest period, indicating a slight decline. The EBIT and EBITDA margins remain strong at 29.1% and 50.9% respectively, showcasing operational efficiency despite revenue challenges.

Balance Sheet

The company maintains a Debt-to-Equity Ratio of 1.65, which implies moderate leverage typical for the REIT industry. The Return on Equity (ROE) is healthy at 9.5%, reflecting reasonable profitability. The Equity Ratio stands at 35.1%, indicating a balanced approach between debt and equity financing, although slightly lower than ideal for risk mitigation.

Cash Flow

Free Cash Flow remains robust with a TTM Free Cash Flow of $286.98M, though it has seen a slight decline from the previous year's $299.61M, resulting in a -4.2% growth rate. The Operating Cash Flow to Net Income Ratio is strong at 2.35, indicating efficient cash conversion. The Free Cash Flow to Net Income Ratio is also solid at 2.04, suggesting good cash flow generation relative to profits.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	750.43M	753.27M	684.98M	739.03M	664.45M	609.37M
Gross Profit	504.20M	260.36M	231.23M	220.41M	209.47M	199.72M
EBITDA	383.84M	369.74M	337.49M	354.46M	320.44M	303.48M
Net Income	144.29M	138.93M	-73.47M	173.03M	76.54M	97.37M
Balance Sheet
Total Assets	4.29B	4.25B	4.25B	4.26B	4.26B	4.08B
Cash, Cash Equivalents and Short-Term Investments	21.29M	38.28M	167.82M	12.34M	13.26M	18.37M
Total Debt	2.49B	2.44B	2.45B	2.26B	2.30B	2.12B
Total Liabilities	2.72B	2.69B	2.70B	2.51B	2.58B	2.36B
Stockholders Equity	1.55B	1.49B	1.48B	1.68B	1.62B	1.66B
Cash Flow
Free Cash Flow	303.01M	299.61M	255.77M	229.45M	219.12M	205.67M
Operating Cash Flow	326.10M	330.95M	276.27M	265.82M	249.15M	238.42M
Investing Cash Flow	-307.34M	-291.01M	-169.62M	-83.46M	-202.97M	-325.79M
Financing Cash Flow	-97.98M	-169.67M	46.26M	-183.18M	-50.90M	91.27M

COPT Defense Properties Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 30.58
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDP, the sentiment is Positive. The current price of 30.58 is above the 20-day moving average (MA) of 29.56, above the 50-day MA of 28.56, and above the 200-day MA of 28.00, indicating a bullish trend. The MACD of 0.68 indicates Negative momentum. The RSI at 70.21 is Negative, neither overbought nor oversold. The STOCH value of 78.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDP.

COPT Defense Properties Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CUZ	75 Outperform	4.90B	79.06	0.82%	4.39%	13.07%	-4.94%
CDP	74 Outperform	$6.87B	23.99	9.67%	3.94%	2.95%	―
KRC	69 Neutral	5.21B	23.66	4.08%	4.95%	2.26%	10.15%
HIW	68 Neutral	3.48B	27.51	5.44%	6.21%	-2.16%	-16.41%
DEI	64 Neutral	3.36B	76.52	1.89%	4.59%	-0.57%	0.00%
SLG	61 Neutral	4.93B	-115.55	0.78%	4.72%	15.25%	79.18%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%