EPR Properties (EPR) is a leading diversified experiential net lease real estate investment trust (REIT). As of March 31, 2024, the company’s experiential portfolio consisted of 165 theatre properties, 58 eat & play properties, 24 attraction properties,11 ski properties, seven experiential lodging properties, 21 fitness & wellness properties, and one gaming and cultural property.

As of March 31, 2024, the company’s owned experiential portfolio consisted of nearly 19.70 million square feet, which includes 0.5 million square feet of properties it intends to sell. The experiential portfolio, excluding properties EPR plans to sell, was 99% leased and comprised $36.10 million in property under development and $20.20 million in undeveloped land inventory.

During the first quarter of 2024, EPR’s investment spending totaled $85.70 million, including $33.40 million for acquiring an attraction property in New York and $14.70 million for the acquisition and financing of land for two build-to-suit eat & play developments in Kansas and Illinois, respectively.

Moreover, the company remains focused on maintaining solid liquidity and financial flexibility. As of March 31, 2024, EPR had $59.50 million in cash on hand, no borrowings on its $1 billion unsecured revolving credit facility, and a consolidated debt profile entirely at fixed interest rates, with only $136.60 million maturing in August 2024.

Given its robust financial health, EPR Properties raised its monthly dividend by 3.6% to $0.285 per share, beginning with the dividend paid on April 15, 2024, to common shareholders of record as of March 28, 2024. The company pays an annual dividend of $3.42, which translates to a yield of 8.22% at the current share price.

Shares of EPR have gained 3.1% over the past month to close the last trading session at $41.44.

Let’s look at factors that could influence EPR’s performance in the upcoming months.

Robust First-Quarter Financials

For the first quarter that ended March 31, 2024, EPR reported total revenue of $167.23 million, surpassing analysts’ estimates of $149.23 million. Its mortgage and other financing income rose 23.3% from the year-ago value to $12.91 million. The company’s net income available to common shareholders of EPR was $56.68 million, or $0.75 per share, up 8.8% and 8.7% year-over-year, respectively.

Additionally, the company’s AFFO came in at $85.67 million, or $1.12 per common share, respectively. As of March 31, 2024, EPR’s cash and cash equivalents stood at $59.47 million, and its total assets were $5.69 billion.

Full-Year 2024 Guidance

EPR confirmed FFOAA per common share guidance for the full year of $4.76 to $4.96, representing a rise of 3.2% at the midpoint from 2023. Also, the company confirmed investment spending guidance of $200 million to $300 million and disposition proceeds guidance of $50 million to $75 million.

Impressive Historical Growth

Over the past three years, EPR’s revenue has grown at a CAGR of 23.4%. Its EBITDA has improved at a 26.8% CAGR over the same period. The company’s EBIT has grown at a CAGR of 57.5% over the same timeframe. Also, EPR’s levered free cash flow has grown at an impressive CAGR of 45.6%.

Favorable Analyst Expectations

Analysts expect EPR’s revenue and EPS for the fiscal year (ending December 2025) to increase 2.6% and 3.3% year-over-year to $638.12 million and $5.01, respectively. Moreover, the company has topped consensus revenue estimates in all four trailing quarters, which is remarkable.

Accelerating Profitability

EPR’s trailing-12-month gross profit margin of 91.59% is 38.1% higher than the 66.33% industry average. Its trailing-12-month EBIT margin of 52.04% is 144.6% higher than the industry average of 21.27%. Likewise, its AFFO yield and AFFO/Total Revenue of 12.21% and 54.26% are 68.6% and 32.8% higher than the industry average of 7.24% and 40.85%, respectively.

Further, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 6.18%, 4.06%, and 3.13% are favorably compared to the industry averages of 2.94%, 2.13%, and 1.29%, respectively. Also, its net income margin of 25.73% is 195.8% higher than the industry average of 8.70%.

Low Valuation

EPR’s forward P/AFFO multiple of 8.61 is 42.2% lower than the industry average of 14.90. Similarly, its forward Price/Cash Flow of 7.38x is 40.8% lower than the industry average of 12.45x. Moreover, the stock’s forward Price/Book multiple of 1.28 is 14.3% lower than the industry average of 1.49.

POWR Ratings Reflect Promise

EPR’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. EPR has a B grade for Quality, in sync with its higher-than-industry profitability.

Within the REITs – Retail industry, EPR is ranked #2 out of 30 stocks.

Beyond what I have stated above, we have also given EPR grades for Growth, Stability, Valuation, Sentiment, and Momentum. Get all EPR ratings here.

Bottom Line

EPR Properties continued its solid momentum during the first quarter of 2024, which it experienced last year, focusing on driving long-term reliable earnings growth. The REIT seeks attractive, relationship-driven opportunities to deploy capital in experiential assets across its target property types.

Supported by its solid liquidity position and financial flexibility, the company is well-poised to pursue strategic growth opportunities, enhancing its portfolio of high-quality experiential assets and maintaining stable dividend payments. Given its solid financial health, reliable dividends, attractive valuation, and robust long-term outlook, EPR could be an ideal buy for steady gains.

How Does EPR Properties (EPR) Stack Up Against Its Peers?

While EPR has an overall grade of B, you may also check out these other stocks within the REITs – Retail industry with A (Strong Buy) or B (Buy) ratings: Simon Property Group Inc. (SPG), Saul Centers, Inc. (BFS), and Brixmor Property Group Inc. (BRX).

To explore more A and B-rated REITs, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

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EPR shares were unchanged in premarket trading Wednesday. Year-to-date, EPR has declined -10.94%, versus a 17.98% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...

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