Vesta Real Estate Corporation, S.A.B. de C.V. (NYSE: VTMX)

Sector: Real Estate Industry: Real Estate - Development CIK: 0001969373
Market Cap 11.83 Bn
P/B 4.60
P/E 120.68
P/S 43.52
ROIC (Qtr) 2.69
Div Yield % 1.78
Rev 1y % (Qtr) 13.66
Total Debt (Qtr) 1.45 Bn
Debt/Equity (Qtr) 0.56
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About

Investment thesis

Bull case

  • Healthy cash reserves of 587M provide 3.52x coverage of short-term debt 166.90M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 196.70M provides strong 15.89x coverage of stock compensation 12.38M, indicating sustainable incentive practices.
  • Strong operating cash flow of 196.70M provides 5.72x coverage of SG&A expenses 34.38M, showing efficient operational cost management.
  • Strong tangible asset base of 4.60B provides 3.18x coverage of total debt 1.45B, indicating robust asset backing and low credit risk.
  • Robust tangible asset base of 4.60B provides 10.45x coverage of working capital 440.30M, indicating strong operational backing.

Bear case

  • Operating cash flow of 196.70M barely covers its investment activities of (308.27M), with a coverage ratio of -0.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 196.70M provides thin coverage of dividend payments of (67.07M) with a -2.93 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (79.77M) provides weak coverage of capital expenditures of 276.47M, with a -0.29 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 196.70M provides minimal 0.93x coverage of tax expenses of 211.82M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (79.77M) represents just -0.13x of debt issuance 595.10M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Real Estate - Development
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VTMX Vesta Real Estate Corporation, S.A.B. de C.V. 11.83 Bn 120.68 43.52 1.45 Bn
2 CCS Century Communities, Inc. 2.20 Bn 14.92 0.53 1.44 Bn
3 FOR Forestar Group Inc. 1.53 Bn 9.16 0.91 0.79 Bn
4 FPH Five Point Holdings, LLC 0.38 Bn 4.01 1.95 0.44 Bn
5 SKYH Sky Harbour Group Corp 0.19 Bn -44.25 7.89 0.35 Bn
6 OZ Belpointe PREP, LLC 0.19 Bn -5.15 26.12 0.26 Bn
7 JFB JFB Construction Holdings 0.16 Bn -53.12 7.47 0.00 Bn
8 SDHC Smith Douglas Homes Corp. 0.16 Bn 14.38 0.16 0.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.75 1.43
EV to Cash from Ops. EV/CFO 64.40 3.32
EV to Debt EV to Debt 8.76 296.38
EV to EBIT EV/EBIT 35.69 -7.88
EV to EBITDA EV/EBITDA 59.76 -0.77
EV to Free Cash Flow [EV/FCF] EV/FCF -158.80 -6.68
EV to Market Cap EV to Market Cap 1.07 1.29
EV to Revenue EV/Rev 46.60 10.93
Price to Book Value [P/B] P/B 4.60 2.09
Price to Earnings [P/E] P/E 120.68 6.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.46 -24.67
Dividend Payout Ratio % Div Payout % (Qtr) 279.30 23.30
Dividend per Basic Share Div per Share (Qtr) 0.60 0.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -64.05 -3.13
Interest Coverage Int. cover (Qtr) 7.88 -12.63
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -62.18 -104.71
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 108.75 29.52
Dividend Growth (1y) % Div 1y % (Qtr) -17.59 -0.47
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -69.39 -5.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.11 -36.06
EBIT Growth (1y) % EBIT 1y % (Qtr) -14.93 7.48
EBT Growth (1y) % EBT 1y % (Qtr) -16.69 -2.06
EPS Growth (1y) % EPS 1y % (Qtr) -93.85 -8.78
FCF Growth (1y) % FCF 1y % (Qtr) -5.82 109.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.56 34.01
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.06 0.42
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.03
Cash Ratio Cash Ratio (Qtr) 2.62 0.96
Current Ratio Curr Ratio (Qtr) 2.97 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 0.56 0.97
Interest Cover Ratio Int Coverage (Qtr) 7.88 -12.63
Times Interest Earned Times Interest Earned (Qtr) 7.88 -12.63
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 131.20 6.42
EBIT Margin % EBIT Margin % (Qtr) 130.57 35.19
EBT Margin % EBT Margin % (Qtr) 113.99 -40.37
Gross Margin % Gross Margin % (Qtr) 90.00 29.45
Net Profit Margin % Net Margin % (Qtr) 36.10 -51.49