IIPR - Getty Realty: Consistent Growth At A Cheap Multiple

2024-06-20 15:52:52 ET

Summary

• Getty Realty's fundamentals and market price have diverged, with AFFO/share growing consistently while the market price has fallen, making the stock materially undervalued.
• The implied cap rate and AFFO multiple undervalue Getty's reliability and growth potential, with a clear runway for steady earnings growth.
• Getty's focus on automotive-related properties, strong tenant rent coverage, and clean underwriting process set it up for long-term growth and potential capital gains.

Getty Realty's ( GTY ) fundamentals and market price have diverged. Specifically, its AFFO/share has consistently grown at a healthy pace while its market price has fallen. Consequently, the stock has moved from fair value to materially undervalued. As it stands today, Getty is trading at an 8.3% implied cap rate and 11.5X AFFO multiple while having a clear runway of steady earnings growth.

I believe the AFFO multiple substantially undervalues the company's reliability and growth, and the implied cap rate significantly undervalues its assets relative to what those properties could be sold for in the private market....

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