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A Look At Apple Hospitality REIT (APLE) Valuation After Fresh Overweight Ratings And Insider Buying

Simply Wall St · 2d ago

Barclays has just initiated coverage on Apple Hospitality REIT (APLE) with an Overweight rating. This move coincides with recent insider buying by the CEO and support from another Overweight call at Cantor Fitzgerald.

See our latest analysis for Apple Hospitality REIT.

At a share price of US$12.09, Apple Hospitality REIT has a 30 day share price return of 5.5%, while the 1 year total shareholder return shows a 10.2% decline. This suggests recent momentum has picked up after a weaker stretch, alongside the Motto by Hilton Nashville Downtown acquisition and fresh Overweight coverage.

If you are comparing Apple Hospitality’s steadier profile with areas of the market that may offer faster capital growth, this could be a useful moment to scan fast growing stocks with high insider ownership.

With the shares at US$12.09, sitting below both Barclays’ US$14.00 and the average US$12.80 analyst target, as well as an indicated intrinsic discount, the key question is whether there is still a buying opportunity here or if the market is already pricing in future growth.

Most Popular Narrative: 7% Undervalued

The most followed narrative puts Apple Hospitality REIT’s fair value at US$13.00 per share, compared with the recent close at US$12.09, implying modest upside priced off relatively muted growth assumptions.

Analysts are assuming Apple Hospitality REIT's revenue will grow by 1.7% annually over the next 3 years.

Analysts assume that profit margins will shrink from 12.7% today to 12.0% in 3 years time.

Read the complete narrative.

Want to see what keeps the valuation supported even with softer earnings and only low single digit revenue growth? The answer lies in the earnings multiple that narrative uses, the implied share count path, and the way discounting turns those future cash flows into today’s fair value. Curious which assumptions carry the most weight in that US$13.00 figure? The full narrative lays those inputs out side by side so you can judge them for yourself.

Result: Fair Value of $13 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear risks, including pressure from alternative lodging competitors and higher refinancing costs, that could challenge those margin and valuation assumptions.

Find out about the key risks to this Apple Hospitality REIT narrative.

Build Your Own Apple Hospitality REIT Narrative

If you look at the numbers and come to a different conclusion, or simply prefer your own work, you can build a custom view in minutes: Do it your way.

A great starting point for your Apple Hospitality REIT research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.