On the four Ms, Federal Realty Investment Trust earns 46 for management and 46 for moat. The management score rests on a return on invested capital of 480.3% and a gross margin of 9.7% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 1.55x equity.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 8.9% a year, below the 9.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 17.8x. That produces an intrinsic value of $51.66, a 10-CAP price of $74.08 and a payback time price of $88.59, with the value zone set at the highest of the three, $88.59. Today's price of $108.03 sits 22% above it.
The price is above the value zone and the business scores 46 for moat and 46 for management. Neither test argues for paying up here.
| Price | $108.03 |
| Market cap | $9.3B |
| P/E ratio | 21.5x |
| Return on invested capital | 480.3% |
| Gross margin | 9.7% |
| Debt to equity | 1.55x |
| Free cash flow yield | 3.8% |
| Growth rate used | 8.9% |
| Growth rate measured | 9.0% |
| Exit multiple assumed | 17.8x |
| Company | Moat | Buy price |
| Regency Centers (REG) | 44 | $39.12 |
| Kimco Realty (KIM) | 44 | $22.40 |
| Realty Income Corp. (O) | 57 | $46.91 |
| Simon Property Group (SPG) | 73 | $117.37 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Federal Realty Investment Trust rather than accepting ours.