Initiating Coverage: Alpine Property Trust

Alpine Income Property Trust, Inc. has been rated “Buy” by TDR, indicating a positive outlook on the company’s financial future. This recommendation comes with a one-year price target of $31.16, suggesting there might be a 114% increase. The evaluation draws on various financial metrics and competitor comparisons.

In terms of financial performance, the company reported a revenue of $45.64 million for the past year, which is below the index median of $226.97 million. Despite this, Alpine Income Property Trust has seen a 100% growth in revenue over the last two fiscal years, which is above the index average growth rate of 92.4%. However, the revenue growth rate of 1% is less than the median of 5%. For net income, the company reported positive results in half of the observed years, just under the index average of 53.3%, with a net income decrease of -467%, significantly worse than the index median decrease of -18.3%.

The company’s cash flow analysis shows that its levered free cash flow (LFCF) was $25.64 million, less than the median competitor’s $78.64 million. Yet, Alpine Income Property Trust demonstrated an exceptional 100% rate of positive LFCF over the past two years, surpassing the competitor’s average of 91.9%. The growth of LFCF over the last year was 4%, in contrast to the competitor’s median decline of 8.8%, highlighting the company’s effectiveness in managing costs or improving operations.

The balance sheet analysis presents a mixed picture of the company’s financial health. An Altman Z-Score of 0.76 signals a higher risk of financial distress compared to the index average of 2.40. The company excels in shareholder returns, offering a Shareholder Yield of 4.8%, and uses debt wisely, with a debt-to-tangible equity ratio of 137.6%, much lower than the index average of 307.6%. This indicates a cautious approach to debt management and a commitment to maximizing shareholder value.

The company’s dividend performance shows a current yield of 7.2%, slightly below the index average of 7.5%. The Dividend Yield / LFCF Yield ratio of 58.4% points to a relatively stable dividend policy. The dividend growth over the past year was 0.0%, signaling a steady approach amidst growth challenges.

For stock valuation, the analysis suggests a Dividend Target based on 45% of the past two years’ LFCF, leading to a target of $1.66. Applying a 15X Dividend Multiple and a 25% premium for dividend stability results in a Current Valuation of $31.16. This figure is well above the current stock price of $15.35, indicating that the stock might be undervalued and potentially a good investment opportunity.

The projected one-year stock price of $31.16 and an expected dividend of $1.66 reflect a conservative approach towards dividend payout, targeting a total return of 114% over the next year. While these projections are inherently speculative, they suggest a positive future for Alpine Income Property Trust, Inc.

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