Initiating Coverage: Alexander’s Inc

The financial analysis of Alexander’s Inc. shows a positive outlook, highlighted by a Buy rating. This rating is the result of detailed evaluations of various financial measures and comparisons with similar companies in the industry. The basis for this recommendation includes the company’s strong performance in revenue and net income growth, as well as cash flow stability, which gives it an advantage over competitors.

Alexander’s, Inc. reported revenue of $224.96 million, which is in line with the industry median. This revenue performance is supported by a 100% positive outcome over the last two fiscal years, exceeding the industry average of 92.4%. This steady performance not only suggests stable financial health but also the company’s success in keeping revenue growth positive in different market conditions. A 9% growth in revenue over the Last Twelve Months (LTM) further shows its ability to increase revenue more effectively than its peers, with the industry’s median growth rate at 5%.

Regarding profitability, Alexander’s, Inc. maintained a 100% positive net income rate over the last two years, which is notably higher than the industry average of 53.3%. This indicates a steady profit, even though there was a 16% decrease in net income growth LTM, which is slightly better than the industry median decline of 18.3%. These figures suggest the company handles profitability issues better than most in the market.

The company’s Levered Free Cash Flow (LFCF) of $109.11 million is above the industry median, showing stronger cash generation. A 100% positive LFCF rate in recent years highlights the company’s financial steadiness. Additionally, a 6% growth in LFCF over the LTM contrasts with the industry median of -8.80%, demonstrating its competitive edge in improving cash flow despite industry challenges.

However, there are financial stability concerns with an Altman Z-Score of 1.65, indicating a higher risk of financial distress compared to competitors. Still, the company’s shareholder yield of 6.5% exceeds the industry norm, showing a solid commitment to shareholder value. The high debt-to-tangible equity ratio of 468.3% shows a strong reliance on debt financing and presents increased leverage risks.

Dividend performance analysis shows an 8.5% current dividend yield, above the industry average and indicating the potential for better returns for investors. The company’s cautious approach to dividend to LFCF yield ratio and consistent dividend growth rate underscores its careful dividend policy and reliability in payments.

In terms of share value, a dividend target of $18.65 is identified, indicating that payouts from actual cash flow are achievable. Applying a 15X Dividend Multiple to sustainable dividends indicates promising return potential and lower investment risk. Additionally, a 25% premium for dividend stability highlights the company’s consistent dividend payments. The current valuation of $349.67, compared to the stock price of $211.68, suggests that the stock might be undervalued, presenting a significant investment opportunity.

The valuation analysis predicts a one-year target stock price of $349.67, suggesting a considerable opportunity for appreciation. A future dividend target of $18.65, based on a cautious payout, and a projected total return of 74% combine potential stock price growth with anticipated dividends. These predictions are based on a detailed review of the company’s financial standing, competitive position, and market performance.