PLD - Embedded Expectations Analysis - 2020 12 24
Prologis, Inc. (PLD:USA) currently trades at a recent high relative to UAFRS-based (Uniform) earnings, with a 52.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about inventory, growth, and demandSpecifically, management may be overstating the foundation they have built, and they may be concerned about the continued stability of e-commerce growth. In addition, they may lack confidence in their ability to provide space for expanding businesses, execute their leasing strategy in China, and manage the cost of carrying inventory. Furthermore, they may have concerns about the sustainability of incremental demand in inventory, the churn rate of smaller businesses, and missed opportunities from their volume mix. Management may also lack confidence in their ability to meet the market demand for large lots, sustain their core FFO per share, and capitalize on the current rent growth. Finally, they may be downplaying concerns about earnings growth, and they may lack confidence in their ability to start spec projects next quarter
Prologis is a self-administered and self-managed real estate investment trust and is the sole general partner of Prologis, L.P. The company owns, manages and develops logistics facilities, with a focus on the consumption side of the global supply chain. Most of the company's properties in the United States are wholly owned, while its properties outside the United States are primarily held in co-investment ventures. The company has two segments: Real Estate Operations, which represents the ownership and development of operating properties, and includes land held for development and properties under development; and Strategic Capital, which represents the management of unconsolidated co-investment ventures.
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