On Monday, Jones Trading adjusted its outlook on CTO Realty Group (NYSE:CTO), reducing the price target to $19.00 from the previous $21.00, yet maintaining a Buy rating on the company's stock. The adjustment was made following CTO Realty Group's recent financial performance report, which showed funds from operations (FFO) surpassing expectations.
CTO Realty Group reported an FFO of $0.48 per share, which exceeded the analyst's projection of $0.41 and the consensus estimate of $0.38. The Adjusted FFO also outperformed forecasts, reaching $0.52 against the anticipated $0.43 and consensus estimate of $0.38. The company's same-property net operating income (NOI) showed a year-over-year growth of 6.0%.
The real estate investment trust also reported the signing of 15 comparable leases for approximately 95,000 square feet, with an average cash base rent of $26.09 per square foot. This leasing activity represents a significant increase of 68.2% in comparable rent per square foot.
In addition, CTO Realty Group has been active in the market, acquiring two multi-tenant retail properties for a total of $71 million, covering roughly 319,000 square feet. These acquisitions came with a weighted average going-in cash capitalization rate of 8.0%. The company also sold a mixed-use property located in downtown Santa Fe, New Mexico, for $20 million, which had an exit cap rate of 8.2% and resulted in a gain of $4.6 million.
Jones Trading expressed a positive outlook on CTO Realty Group's portfolio and believes that the stock holds significant potential for growth. The analyst pointed out that CTO shares are trading at a substantial discount when compared to industry peers based on traditional valuation metrics. The shares are currently at a 10% discount to Jones Trading's first-quarter 2024 net asset value (NAV) estimate of $18.99 and offer a high dividend yield of 9.2%. The revised price target of $19.00 is equivalent to 100% of the estimated NAV, and if met, could yield a total return of 36%.
InvestingPro Insights
CTO Realty Group (NYSE:CTO) presents an interesting profile for investors considering its recent financial performance and market activity. According to InvestingPro data, the company boasts a solid Market Cap of $391.47M USD and an attractive Dividend Yield of 8.93%, which is a significant consideration for income-focused investors. The company's ability to maintain dividend payments for an impressive 49 consecutive years, as noted in one of the InvestingPro Tips, underscores its commitment to shareholder returns.
While the P/E Ratio currently stands at 30.52, it is important to note that the company is trading at a low P/E ratio relative to near-term earnings growth, which could indicate potential for stock price appreciation. Additionally, the company's Revenue Growth over the last twelve months as of Q1 2024 is 25.27%, suggesting a strong top-line expansion that could be a harbinger of future profitability. This growth narrative is further supported by the company's Gross Profit Margin of 73.27%, highlighting its efficiency in generating profit from its revenues.
For those interested in a deeper analysis, InvestingPro offers a range of additional tips to evaluate CTO Realty Group's investment potential. Currently, there are 9 more InvestingPro Tips available, which could provide valuable insights for a well-rounded investment decision. To explore these tips and gain a comprehensive understanding of CTO's financial health and future prospects, visit https://www.investing.com/pro/CTO. Don't forget to use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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