Book value is an important accounting measure which calculates the net value of a company’s assets minus the net value of its liabilities. Assessing a company’s book value allows investors to screen for stocks that are trading below book value, which indicates an undervalued stock.These 3 undervalued stocks have stock prices trading below book value per share, making them undervalued along with their high dividend yields.
Kilroy Realty (KRC)
Kilroy Realty Corporation is a self-administered real estate investment trust (REIT). The company operates in office and mixed-use submarkets along the West Coast. The company owns, develops, acquires, and manages real estate assets, consisting primarily of properties in the coastal regions of Greater Los Angeles, San Diego County, the San Francisco Bay Area, and Greater Seattle.KRC’s stabilized portfolio totaled approximately 14.2 million square feet of primarily office and life science space. The company also had more than 1,000 residential units in Hollywood and San Diego.On October 25th, 2023, Kilroy Realty Corporation reported its third-quarter financial results for Fiscal Year (FY)2023. The company reported a 2.8% growth in revenues, reaching $283.6 million, compared to the previous year’s $276.0 million.Kilroy maintained a robust position, with funds from operations (FFO) available to common stockholders and unitholders at $134.0 million, or $1.12 per diluted share, indicating the company’s resilience in the face of market challenges. Kilroy’s leasing and occupancy metrics underscored its strong market presence. The stabilized portfolio showed an occupancy rate of 86.2% and a lease rate of 87.5% as of September 30, 2023.The company sports a solid and healthy balance sheet with interest coverage of a 3.3 ratio and a debt/equity ratio of 0.9. The dividend payout ratio, well below a typical REIT ratio, of only 48% based on FY2023 FFO, is safe and well covered.KRC has a price-to-book ratio of 0.65. KRC yields 6.5%.
SL Green Realty (SLG)
SL Green Realty was formed in 1980. It is an integrated real estate investment trust (REIT) that is focused on acquiring, managing, and maximizing the value of Manhattan commercial properties. It is Manhattan’s largest office landlord, with a market capitalization of $2.3 billion, and currently owns 59 buildings totaling 33 million square feet. On June 26th, 2023, SLG sold its 50% stake in 245 Park Avenue for $1.0 billion.In mid-October, SLG reported (10/18/2023) financial results for the third quarter of fiscal 2023. Its same-store net operating income grew 10.4% over the prior year’s quarter and its occupancy rate edged up sequentially from 89.8% to 89.9%. FFO per share fell -23% over the prior year’s quarter, from $1.66 to $1.27, though they exceeded the analysts’ consensus by $0.01. SLG has been severely hit by the pandemic, which has led many tenants to adopt a work-from-home model.Occupancy of office space in New York remains near historic lows. This has caused an unprecedented tenant-friendly environment. Moreover, high interest rates have increased the interest expense of SLG from $17 million in Q1-2022 to $43 million. SLG provided guidance for FFO per share of $5.05-$5.35 in 2023. We have lowered our forecast from $5.50 to $5.25 but the dividend remains well covered.SLG stock trades at a price-to-book ratio of 0.61. SLG stock yields 8.7%.
Viatris (VTRS)
Viatris is a global healthcare company formed in November 2020 from a merger between Mylan and Pfizers’ UpJohn Business unit. The company offers various treatments and operates within three business segments: Brands, Complex Gx & Biosilimiars, and Generics.The brand segment is driven by well-known products such as Viagra and Dymista. In addition, Viatris makes generic versions of branded drugs once patents and other exclusivities expire. These medications share the same formula but cost less than “brand” medicine. Finally, Viatris offers a portfolio of diverse global biosimilar franchises, with approximately 150 marketing authorizations in over 85 countries focused on oncology, immunology, endocrinology, ophthalmology, and dermatology.The company released Q3 2023 results on November 7th, 2023 and reported total net sales of $3.93 billion, showing a 1% increase on an operational basis compared to the same period in 2022 after adjusting for divestitures. Key brands like Yupelri and Dymista performed above expectations to keep revenue flat.The company generated around $135 million in new product revenues in the third quarter and aims to reach over $450 million in new product revenues for 2023.VTRS stock trades at a price-to-book ratio of 0.55. VTRS has a dividend payout ratio of 51% for the full year. VTRS yields 5.2%.More By This Author:Dividend Kings In Focus: Kenvue
3 Dividend Champions For Long-Term Income
Dividend Aristocrats In Focus: Kenvue
