Shares of Real Estate Investment Trust (REIT) VICI Properties (VICI) have been rising lately as investors seek safe haven due to rising inflation. However, given its high payout ratio, will the stock be a sustainable hedge against a turbulent macroeconomic environment? Keep reading to know our point of view.
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Real Estate Investment Trust (REIT) VICI Properties Inc. (VCI) Inside Las Vegas Owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including the world-famous Caesar Palace. The company has 28 gaming facilities in its national, geographically diverse portfolio covering more than 62 million square feet and about 25,000 hotel rooms and more than 250 restaurants, bars, nightclubs and sportsbooks.
Known for providing REITs Natural protection against inflation This is because real estate rents and prices rise in tandem with normal prices. Furthermore, many leases are tied to inflation, thus, supporting the increase in dividends of REIT and providing a reliable income flow even during the period of inflation. With the rise in the consumer price index 8.5% in MarchRepresenting the hottest inflation since December 1981, investors are looking for safe bets, which helped VICI’s share price rise 6.3% last month.
However, the stock has declined 3.6% in the last six months and closed at .8 28.83 in yesterday’s trading session to date from 4.3% year on year.
Here’s how to shape VICI’s performance in the near term:
Bottom line declined in its last reported quarter
For the fiscal quarter ended December 31, 2021, VICI’s total revenue grew 2.7% year on year to $ 383.15 million. However, its net income stood at $ 283.80 million, down 2.3% from its previous year value, while its net earnings per share fell 17% to $ 0.44 a year. FFO and FFO came in at $ 281.48 million and $ 0.44 per share, respectively, compared to $ 288.01 million and $ 0.53 in the same quarter last year. Of AFFO Was $ 278.88 million, 10. 10.8% higher than the previous quarter But its shares fell 4.3% year-over-year to F 0.44 per AFFO.
Mixed expectations
Analysts expect the company’s revenue to grow 13.3% year-over-year for the quarter ended March 31, 2022, and 30.6% for the current quarter ending June 30, 2022. Also, VICI’s revenue is expected to increase by 50.2% year on year $ 2.27 billion from year to year. However, Street expects the company’s EPS to reach about 4 0.42 for the quarter ended March 31, 2022, indicating a 16% decline from its previous year’s value. Also, its EPS is expected to decline by 7.4% in the current quarter, but is expected to grow by 12.5% this year.
Mixed assessment
Trailing-In terms of 12-month price / sales, VICI is currently trading at 10.57x, up 60.5% from the 6.58x industry average. Also, its 23.60 trailing-12-month price / cash flow ratio is 38.2% higher than the 17.08 industry average.
However, VICI’s trailing-12-month P / FFO is 9.5% lower than the 17.13x industry average, and its P / AFFO is 19.5% lower than the 19.28x industry average.
POWR ratings reflect uncertainty
VICI has an overall C rating, which translates into our ownership neutral POWR rating Method. POWR ratings are calculated taking into account 118 individual factors, each factor weighing to an optimal degree.
The stock has a C grade for its value, which is consistent with its mixed valuation.
VICI also has a C grade for stability, in sync with its 1.13 beta.
There are 19 stocks in it REITs – Hotels Industry, VCI is at No. 4.
In addition to what I mentioned above, one can also see the VICI grades for quality, growth, speed and feel. Here.
REITs – See the top-rated stocks in the hotel industry Here.
The last row
The price of VICI has risen late due to renewed investor attention in the face of rising inflation. However, its EPS has declined to its last reported quarter, and analysts expect further decline in the reported quarter. Moreover, its payout ratio is 78.4%, which raises questions about the sustainability of its dividend payments as it accounts for most of the company’s revenue. As such, I think it might be wise to wait for VICI’s bottom line to improve before investing in stocks.
How VICI Properties Inc. (VICI) stacks up against his peers?
Although VICI has an overall POWR rating of C, one might find its industrial counterpart, Megaworld Corporation (MGAWY), Which has a B (Buy) rating.
VICI shares rose $ 0.10 (+ 0.35%) in pre-market trading on Thursday. Year-to-date, VICI is down -2.99%, compared to the -6.37% increase in the benchmark S&P 500 index over the same period.
About the Author: Shubhshree Kar
Shubhshree’s keen interest in financial instruments led him to build a career as an investment analyst. After earning a master’s degree in economics, he acquired knowledge of equity research and portfolio management in Finlatics.
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