CBL & Associates Properties (CBL) has moved to reshape its retail portfolio by closing the acquisition of Gateway Mall in Lincoln, Nebraska, and agreeing to sell an open-air center to recycle capital into cash-flow-focused assets.

At a share price of US$37.72, CBL & Associates Properties has posted a 3.94% 30 day share price return and a 40.36% 1 year total shareholder return. This suggests recent momentum has added to a much stronger longer term result as investors weigh its latest portfolio reshaping moves.

If these mall portfolio changes have you thinking about where else capital could work hard, it might be a good moment to widen your search with our 20 top founder-led companies.

With CBL & Associates trading at US$37.72, sitting at roughly an 18% discount to one intrinsic value estimate and about 19% below the US$45 price target, you have to ask: is there still a buying opportunity here, or has the market already priced in future growth?

Preferred P/E of 8.7x: Is It Justified?

On a P/E of 8.7x, CBL & Associates Properties screens as good value compared both to its sector and to an estimated fair P/E, even after the recent share price move to $37.72.

The P/E ratio tells you how much investors are paying for each dollar of earnings, which matters a lot for a retail REIT where cash generation and profit stability are often a focus. In CBL & Associates Properties' case, earnings have been growing, with a reported 131.8% earnings increase over the past year and profitability established over the past 5 years.

The company is described as trading at good value compared to peers and the wider Retail REITs industry. Its current 8.7x P/E sits below both the peer average of 59.6x and the US Retail REITs industry average of 28.1x. That is a wide gap, and the estimated fair P/E of 9.6x suggests that if the market were to re-rate CBL & Associates Properties closer to that level, the valuation could shift toward what the model views as a more typical earnings multiple for the business.

Against that backdrop, the SWS fair ratio analysis highlights where the valuation could logically settle if earnings quality, growth and risk profile were priced more in line with similar companies, rather than at such a steep discount.

Result: Price-to-Earnings of 8.7x (UNDERVALUED)

However, you still have to weigh risks such as annual net income contraction of 91.5% and the chance that portfolio reshaping does not translate into steadier earnings.

Another Take Using Our DCF Model

The SWS DCF model takes a different path to valuing CBL & Associates Properties and arrives at an estimated future cash flow value of $46.01 per share, compared with the current $37.72 price. This implies the shares screen as undervalued on this approach as well. If cash flows soften or growth assumptions prove too optimistic, the gap between estimated value and the current price could close faster than investors expect.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CBL & Associates Properties for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of risks and rewards leaves you on the fence, take a closer look at the full picture and shape your own view with our 3 key rewards and 3 important warning signs.

Looking for more investment ideas?

If this CBL story has sharpened your thinking, do not stop here, use the same tools to spot other opportunities that could fit your plan.

• Target potential mispricings by scanning 47 high quality undervalued stocks that pair reasonable valuations with solid underlying metrics.
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• Protect your downside by shortlisting 73 resilient stocks with low risk scores that stack up well on quality and stability checks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.