On Monday, Raymond James has downgraded W. P. Carey & Co. (NYSE:WPC) from Outperform to Market Perform following a notable decline in the company's stock price last Friday. The stock experienced a 6.5% drop after W. P. Carey announced its fourth-quarter earnings and hosted a conference call.
The initial earnings report appeared satisfactory, with the company narrowing and maintaining its 2024 Adjusted Funds From Operations (AFFO) guidance. W. P. Carey also reported continued investment activity, with $346 million in transactions during the fourth quarter and $177 million year-to-date. Progress was noted in the sale of on-balance sheet office properties, reducing office assets to less than 3% of the company's total Annual Base Rent (ABR).
Despite these seemingly positive developments, deeper analysis exposed concerns. The company's investment volume guidance increased by $250 million, suggesting more accretive transactions. The timeframe for remaining office sales was extended to the first half of 2024, and a $3 million unexpected dividend was received from Lineage holdings. Even with lower interest rates since the last guidance and these beneficial factors, the AFFO guidance remained unchanged.
"It wasn't until the conference call that several credit issues and one large non-renewal were revealed, and the stock sold off from $60 at the start of the call to under $57 by midday as investors realized the updated 2024 guide would have been lower if not for some of the positive tweaks. Clearly investors were surprised, and in net-lease, that™s rarely a good thing," said the analyst.
InvestingPro Insights
In light of recent events with W. P. Carey & Co. (NYSE:WPC), InvestingPro offers valuable insights into the company's financial health and stock performance. With a current Market Cap of $12.55B and a notable Gross Profit Margin of 91.96% over the last twelve months as of Q4 2023, WPC demonstrates an impressive ability to generate earnings relative to its revenue. However, the company's stock has experienced significant volatility, as highlighted by a one-month Price Total Return of -14.83%.
InvestingPro Tips suggest that the stock is currently in oversold territory, which could potentially signal an opportunity for investors. This assessment is based on the Relative Strength Index (RSI), which is a momentum oscillator that measures the speed and change of price movements. Additionally, WPC has shown a strong commitment to shareholder returns, maintaining dividend payments for 26 consecutive years, with a current Dividend Yield of 6.0%.
While the company's P/E Ratio stands at 17.49, it is trading at a high P/E Ratio relative to near-term earnings growth, which is worth considering for those looking at the stock's valuation. Furthermore, analysts anticipate that WPC will be profitable this year, a prediction supported by the company's profitability over the last twelve months.
For investors seeking a deeper dive into WPC's financials and stock analysis, InvestingPro provides a comprehensive list of additional tips. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting access to all the insights and data that InvestingPro has to offer.
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