Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the REITs - Commercial industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued REITs - Commercial Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued REITs - Commercial Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the REITs - Commercial industry for Monday, September 09, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the REITs - Commercial industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Industrial Logistics Properties Trust’s Value Grade

Value Grade:

Industrial Logistics Properties Trust is a real estate investment trust (REIT). The Company owns and leases industrial and logistics properties throughout the United States. It owns approximately 411 properties containing 59.9 million rentable square feet in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16.7 million rentable square feet that are primarily industrial lands located on the island of Oahu, Hawaii, and 185 properties containing approximately 43.2 million rentable square feet that are industrial and logistics properties located in 38 other states, or its Mainland Properties. The Company operates in one business segment, consisting of ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. The Company is managed by The RMR Group, which is a United States (U.S.) alternative asset management company.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Industrial Logistics Properties Trust has a Value Score of 70, which is considered to be undervalued.

When you look at Industrial Logistics Properties Trust’s price-to-sales ratio at 0.71 compared to the industry median at 4.88, this company has a lower price relative to revenue compared to its peers. This could make Industrial Logistics Properties Trust’s stock more attractive for value investors.

Now, let’s assess Industrial Logistics Properties Trust’s EV/EBITDA ratio, also known as enterprise multiple. At 15.6, when compared to the industry median of 15.8, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Industrial Logistics Properties Trust’s shareholder yield is lower than its industry median ratio of 2.82%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Industrial Logistics Properties Trust’s price-to-book ratio is lower than its industry median ratio of 1.32. This could make Industrial Logistics Properties Trust more attractive to investors looking for a new addition to their portfolio.

JBG SMITH Properties’s Value Grade

Value Grade:

JBG SMITH Properties is a real estate investment trust. The Company owns, operates, invests in, and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, DC, notably National Landing. The Company operates through three segments: commercial, multifamily, and third-party asset management and real estate services. Its portfolio comprises about 14.2 million square feet of office, multifamily, and retail assets at share, 99% of which are metro-served. It also maintains a development pipeline encompassing about 8.8 million square feet of mixed-use, primarily multifamily, development opportunities. Its operating portfolio consists of about 44 operating assets comprising 16 multifamily assets totaling 6,318 units, 26 commercial assets totaling 8.3 million square feet and two wholly owned land assets for which it is the ground lessor. Additionally, the Company has two under-construction multifamily assets with 1,583 units.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

JBG SMITH Properties has a Value Score of 63, which is considered to be undervalued.

JBG SMITH Properties’s price-to-book ratio is higher than its peers. This could make JBG SMITH Properties less attractive for value investors when compared to the industry median at 1.32.

You can read more about JBG SMITH Properties’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Net Lease Office Properties’s Value Grade

Value Grade:

Net Lease Office Properties (NLOP) is a real estate investment trust (REIT). The Company owns a diversified portfolio of office properties that are primarily leased to corporate tenants on a single-tenant, net-lease basis. The majority of the office properties owned by the Company are located in the United States, with the balance in Europe. NLOP operates as one segment, and through its subsidiaries, owns, operates, and finances office buildings. NLOP owns approximately 47 office properties, comprising 44 properties in the United States, including three remaining properties leased to Blue Cross Blue Shield, and three properties in Europe. The Company's business plan is to focus on realizing value for its shareholders primarily through strategic asset management and disposition of property portfolios over time.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Net Lease Office Properties has a Value Score of 78, which is considered to be undervalued.

Net Lease Office Properties’s price-to-book ratio is higher than its peers. This could make Net Lease Office Properties less attractive for value investors when compared to the industry median at 1.32.

You can read more about Net Lease Office Properties’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Orion Office REIT Inc’s Value Grade

Value Grade:

Orion Office REIT Inc. is an internally managed real estate investment trust (REIT). The Company is engaged in the ownership, acquisition, and management of a diversified portfolio of office buildings located in suburban markets across the United States and leased primarily on a single tenant. Its portfolio is comprised of traditional office buildings, as well as governmental office, medical office, office/laboratory, office/research, and office/flex properties. The Company owns and operates 75 office properties with an aggregate of 8.7 million leasable square feet located in 29 states. It leases its corporate office space, including its corporate headquarters, which is located in Phoenix, Arizona. Its tenants operate in a range of industries, health care equipment and services, government and public services, financial institutions, insurance, capital goods, software and services, consumer durables and apparel, telecommunication services, materials, and energy.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Orion Office REIT Inc has a Value Score of 92, which is considered to be undervalued.

Orion Office REIT Inc’s price-to-book ratio is higher than its peers. This could make Orion Office REIT Inc less attractive for value investors when compared to the industry median at 1.32.

You can read more about Orion Office REIT Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Wheeler Real Estate Investment Trust Inc’s Value Grade

Value Grade:

Wheeler Real Estate Investment Trust, Inc. is a fully integrated, self-managed commercial real estate investment company. The Company owns, leases, and operates income-producing retail properties with a primary focus on grocery-anchored centers. It owns a portfolio consisting of seventy-nine properties, including seventy-five retail shopping centers, totaling 8,142,065 leasable square feet, and four undeveloped land parcels totaling approximately 61 acres. The properties are geographically located in the Mid-Atlantic, Southeast, and Northeast. The Company’s income producing properties are located in South Carolina, Georgia, Virginia, Pennsylvania, North Carolina, Massachusetts, New Jersey, Florida, Connecticut, Kentucky, Tennessee, Alabama, Maryland, West Virginia, and Oklahoma. The Company generally leases its properties to national and regional supermarket chains and selects retailers that offer necessity and value-oriented services and items and generate regular consumer traffic.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Wheeler Real Estate Investment Trust Inc has a Value Score of 66, which is considered to be undervalued.

You can read more about Wheeler Real Estate Investment Trust Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other REITs - Commercial Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about REITs - Commercial stocks as well as other industrys.

Choosing Which of the 5 Best REITs - Commercial Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Industrial Logistics Properties Trust stock has a Value Grade of B.
• JBG SMITH Properties stock has a Value Grade of B.
• Net Lease Office Properties stock has a Value Grade of B.
• Orion Office REIT Inc stock has a Value Grade of A.
• Wheeler Real Estate Investment Trust Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the REITs - Commercial industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About REITs - Commercial Stocks

Want to learn more about REITs - Commercial stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued REITs - Commercial Stocks for Monday, September 09
• 4 Undervalued REITs - Commercial Stocks for Friday, September 06
• 3 Undervalued REITs - Commercial Stocks for Wednesday, September 04
• Which Is a Better Investment, Broadstone Net Lease Inc or Inventrust Properties Corp Stock?

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.