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Morguard NA REIT UN (TSE:MRG.UN)
TSX:MRG.UN
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Morguard NA REIT UN
(TSX:MRG.UN)
Select Model
Select Model
Rating:76Outperform
Price Target:
C$19.50
▲(10.86% Upside)
Morguard NA REIT UN's overall stock score is driven by strong financial performance and attractive valuation. The company's robust revenue growth and solid profitability, combined with an undervalued P/E ratio and attractive dividend yield, are significant strengths. Technical analysis suggests a stable outlook, though caution is advised due to slightly negative momentum indicators.
Positive Factors
Revenue Growth
The robust revenue growth indicates strong market demand and effective property management, supporting long-term financial stability and expansion.
Cash Flow Management
Effective cash management ensures the company can meet its obligations and invest in growth opportunities, enhancing financial resilience.
Balance Sheet Health
A balanced debt-to-equity ratio indicates prudent financial management, providing flexibility for future investments and stability in downturns.
Negative Factors
Margin Decline
Declining margins could indicate rising costs or pricing pressures, potentially impacting profitability if not addressed.
Return on Equity
A modest ROE suggests limited efficiency in generating returns on shareholder investments, which could affect investor confidence over time.
Operating Cash Flow Efficiency
Low operating cash flow efficiency may indicate challenges in converting income into cash, potentially impacting liquidity and operational flexibility.
Morguard NA REIT UN (MRG.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$910.00M
Dividend Yield4.37%
Average Volume (3M)19.78K
Price to Earnings (P/E)7.5
Beta (1Y)0.79
Revenue Growth3.83%
EPS Growth63.32%
CountryCA
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Residential
Share Statistics
EPS (TTM)0.23
Shares Outstanding34,925,644
10 Day Avg. Volume17,597
30 Day Avg. Volume19,776
Financial Highlights & Ratios
PEG Ratio-0.54
Price to Book (P/B)0.31
Price to Sales (P/S)1.81
P/FCF Ratio6.38
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$21.00Price Target Upside19.39% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Morguard NA REIT UN Business Overview & Revenue Model
Company DescriptionThe REIT is an unincorporated, open-ended real estate investment trust established under and governed by the laws of the Province of Ontario. The Units of the REIT trade on the Toronto Stock Exchange under the ticker symbol MRG.UN. With a strategic focus on the acquisition of high-quality multi-suite residential properties in Canada and the United States, the REIT maximizes long-term Unit value through active asset and property management. The REIT's portfolio is comprised of 13,275 residential suites (as of October 27, 2020) located in Alberta, Ontario, Colorado, Texas, Louisiana, Illinois, Georgia, Florida, North Carolina, Virginia and Maryland with an appraised value of approximately $3.1 billion at September 30, 2020.
How the Company Makes MoneyMorguard NA REIT generates revenue primarily through rental income from its portfolio of commercial properties. The REIT leases space to tenants in its retail, office, and industrial sectors, which provides a steady stream of cash flow. Additionally, MRG.UN may benefit from property management fees and other ancillary services related to its real estate holdings. Key revenue streams include long-term leases with tenants, which often include built-in rent escalations, and the potential for property appreciation over time, enhancing overall asset value. The company may also engage in strategic partnerships or joint ventures to expand its portfolio and leverage additional resources, further contributing to its earnings.
Morguard NA REIT UN Earnings Call Summary
Earnings Call Date:Oct 29, 2024
(Q3-2024)
| % Change Since: |
Next Earnings Date:Feb 17, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong asset growth and rent increases in Canada offset by significant net loss and decreased occupancy in the U.S. Interest expense rise and operational challenges contributed to a cautious outlook.Q3-2024 Updates
Positive Updates
Increase in Total Assets
Total assets increased to $4.4 billion in Q3 2024, up from $4.1 billion at the end of 2023, due to a fair value increase on real estate properties and foreign exchange rate fluctuations.
Strong Canadian Rent Growth
Average monthly rent in Canada increased by 6% compared to 2023, with a 24.1% AMR growth on suite turnover.
Increase in Annual Cash Distribution
Annual cash distribution increased by $0.02 per unit, a 2.7% increase, to $0.76 per unit.
Negative Updates
Significant Net Loss
Net loss of $18.8 million for Q3 2024 compared to net income of $39.2 million in 2023, primarily due to noncash items such as a $99.7 million increase in fair value loss on Class B LP units.
Decrease in U.S. Occupancy
U.S. occupancy decreased to 91.7% from 93.7% in 2023, driven by turnover during the summer leasing season.
Interest Expense Increase
Interest expense increased by $5.5 million compared to Q3 2023, primarily due to higher principal and interest rates.
Decrease in Net Operating Income
IFRS net operating income decreased by $0.4 million or 0.7% compared to 2023, with NOI in the U.S. decreasing by 4%.
Company Guidance
During the Q3 2024 earnings call for MRG.UN.TO, several key financial metrics and guidance were provided. The REIT's total assets increased to $4.4 billion, up from $4.1 billion at the end of 2023, due to factors including a fair value increase in real estate properties. They reported $103.3 million in cash and a $1.7 billion long-term debt. Mortgage payables have a weighted average term of 5.1 years and an interest rate of 3.87%. The debt-to-gross book value ratio slightly increased to 38.9%. The REIT repurchased about 1.1 million units under the NCIB at an average price of $16.94, with an IFRS net asset value per unit at $41.30. The annual cash distribution was increased by 2.7% to $0.76 per unit. Despite a net loss of $18.8 million, mostly due to non-cash items, the REIT saw a net operating income of $52 million, a slight decrease from the previous year. In Canada, the average monthly rent rose by 6% to $1,754, while in the U.S., it increased by 2% to USD 1,911. Canadian occupancy was at 97.8%, and U.S. occupancy at 91.7%. The REIT also completed $31.8 million in capital expenditures. Looking ahead, the REIT plans to continue with its share buyback strategy and is exploring acquisition opportunities, particularly where cap rates are favorable.Morguard NA REIT UN Financial Statement Overview
Summary
Morguard NA REIT UN shows strong revenue growth and efficient operations with a solid income statement. However, declining profit margins and cash flow growth are concerns. The balance sheet is stable, but there is room for improvement in return on equity.Income Statement
The income statement shows strong revenue growth with a TTM increase of 79.5%, indicating robust expansion. Gross profit margin is healthy at 47.8%, though it has decreased from previous years. Net profit margin is solid at 26.97%, but has declined from 29.59% in the previous year. EBIT and EBITDA margins remain strong, reflecting efficient operations.85
Very Positive
Balance Sheet
The balance sheet is stable with a manageable debt-to-equity ratio of 0.90, showing a slight increase from previous years. Return on equity is moderate at 4.82%, indicating room for improvement in generating returns for shareholders. The equity ratio is healthy, suggesting a strong asset base relative to liabilities.75
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth, which is a concern. However, the operating cash flow to net income ratio is reasonable at 0.27, and the free cash flow to net income ratio is strong at 1.0, indicating good cash conversion from profits.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 354.36M | 344.19M | 331.62M | 278.49M | 245.57M | 248.68M |
| Gross Profit | 171.04M | 186.38M | 180.24M | 131.86M | 115.10M | 120.30M |
| EBITDA | 175.98M | 179.27M | 254.03M | 149.68M | 68.22M | 139.29M |
| Net Income | 123.69M | 101.86M | 176.34M | 219.28M | 242.09M | 175.22M |
Balance Sheet | ||||||
| Total Assets | 4.60B | 4.57B | 4.10B | 3.93B | 3.47B | 3.08B |
| Cash, Cash Equivalents and Short-Term Investments | 81.77M | 51.26M | 17.82M | 14.64M | 26.56M | 27.30M |
| Total Debt | 1.79B | 1.79B | 1.56B | 1.48B | 1.38B | 1.31B |
| Total Liabilities | 2.49B | 2.46B | 2.14B | 2.08B | 1.91B | 1.74B |
| Stockholders Equity | 1.99B | 2.00B | 1.85B | 1.75B | 1.48B | 1.27B |
Cash Flow | ||||||
| Free Cash Flow | 96.40M | 97.50M | 88.97M | 75.17M | 63.70M | 50.13M |
| Operating Cash Flow | 96.40M | 97.50M | 88.97M | 75.17M | 63.70M | 50.13M |
| Investing Cash Flow | -67.93M | -59.40M | -209.01M | -11.06M | -31.30M | -28.06M |
| Financing Cash Flow | -54.72M | -6.74M | 120.84M | -78.88M | -33.05M | -11.57M |
Morguard NA REIT UN Technical Analysis
Positive
17.59
Price Trends
17.25
Positive
17.70
Negative
17.45
Positive
Market Momentum
0.02
Negative
63.53
Neutral
97.37
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MRG.UN, the sentiment is Positive. The current price of 17.59 is above the 20-day moving average (MA) of 16.93, above the 50-day MA of 17.25, and above the 200-day MA of 17.45, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 63.53 is Neutral, neither overbought nor oversold. The STOCH value of 97.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MRG.UN.
Morguard NA REIT UN Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$910.00M | 7.50 | 6.37% | 4.37% | 3.83% | 63.32% | |
74 Outperform | C$3.39B | 10.13 | 6.23% | 2.47% | 6.52% | -54.45% | |
71 Outperform | C$2.00B | 3.69 | 18.10% | 4.37% | 6.19% | 79.98% | |
69 Neutral | C$490.15M | 6.55 | 7.26% | 3.85% | -1.21% | ― | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
54 Neutral | C$675.80M | -26.24 | -3.64% | 4.64% | -6.91% | 82.31% | |
47 Neutral | C$1.85B | -18.51 | -4.40% | 3.00% | 1.55% | -401.05% |
* Real Estate Sector Average
TSE:MRG.UN
Morguard NA REIT UN
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6.35%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.