Independent Realty Trust

Aug. 31, 2019 12:55 PM ETIndependence Realty Trust, Inc. (IRT)
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Contributor Since 2018

I am a novice investor who works as a property manager for a large real estate company. I am study Finance and Economics at Lamar University.

Summary

  • Book/Market Value is Good.
  • Capital Structure is Decent.
  • Revenue and Earnings are kind of Sketchy.

From a study of the 2018 10K report:

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(The Following Calculated With Depreciation Added Back)

Current Ratio = 1.7

Equity = 716,349,000

Book Value = $8.45

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Market Value = $13.91

a ROE of 5.88% according to Macrotrends

Dividend Yield of 5.18%

Current Quarterly Dividend of $.18 per share

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Earnings Per Share Looks Really Sketchy

Revenue has gone up continually, but earnings have been all over the place. 

So I did some research.

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On page 53 of the 2018 10K, when I removed depreciation expense from the expenses, I was able to calculate Funds From Operations. 

This showed that actual Net Income for 2017 was 64,407.

In 2018 actual Net Income was 71,449.

This also revealed the following:

2017 EPS: .83

2018 EPS: .82

This EPS is more than sufficient to cover the .72 annual dividend, which makes me feel much more confident in this company. 

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Margin Of Safety:

If I buy this stock at the current market price, I am risking 39% of my principal. However if I hold it for 10 years, I am guaranteed a total of $7.2 per share, which means in the long run I am guaranteed at least a gain of 12.5%.

Of course the time value of money would mean worst case scenario I break even. Which means worst case scenario, my principal is safe. Best case scenario, I make a good profit. 

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However, I am also concerned that the Book Value per Share has been dropping significantly over the past few years, I should probably pay more attention to why this is happening. 

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