• If you are wondering whether SL Green Realty's current share price really reflects what the business is worth, looking closely at how it is valued can help you frame that question more clearly.
• The stock last closed at US$39.05, with a 6.5% gain over the past week, a 12.8% decline over the last 30 days, a 16.8% decline year to date, a 33.8% decline over 1 year, a 43.6% return over 3 years, and a 28.0% decline over 5 years, which gives you a mixed picture of recent and longer term sentiment.
• These moves sit against a backdrop of ongoing interest in office real estate and SL Green Realty's role as a major New York City office landlord. This keeps the stock in focus whenever investors reassess the sector. Recent coverage has continued to highlight the company in discussions about listed office real estate and the broader health of large city property markets, which can feed into shifting expectations for the shares.
• On Simply Wall St's valuation checks, SL Green Realty scores 2 out of 6 for potential undervaluation, as shown in its valuation score. The rest of this article will walk through the key valuation approaches used here, before finishing with a framework that can help you think about value in an even more complete way.

SL Green Realty scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: SL Green Realty Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes a company’s expected future cash flows, in this case adjusted funds from operations, and discounts them back to today’s value using a required rate of return. The aim is to estimate what the whole business could be worth right now based on those projected dollars.

For SL Green Realty, the model uses last twelve months free cash flow of about $275.5 million as a starting point and then applies analyst estimates and extrapolated figures. For example, Simply Wall St uses analyst projections out to 2030, with a forecast free cash flow of $212.9 million in that year. The ten year path between now and then is based on a mix of analyst inputs and mechanically extended estimates.

When those projected cash flows are discounted back, the model arrives at an estimated intrinsic value of about US$42.02 per share, compared with the recent share price of US$39.05. That implies the stock is about 7.1% undervalued, which sits within a fairly small band around the current market price.

Result: ABOUT RIGHT

SL Green Realty is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: SL Green Realty Price vs Sales

For companies where earnings can be uneven, the P/S ratio is often a cleaner way to think about value because it focuses on revenue rather than profit, which can swing with one off items. Investors usually connect higher P/S multiples with stronger growth expectations and lower perceived risk, while slower growth or higher risk tend to go with lower P/S multiples.

SL Green Realty currently trades on a P/S of 2.93x. That sits above the Office REITs industry average of 1.86x and close to the peer average of 3.17x. Simply Wall St also calculates a proprietary Fair Ratio, which is the P/S multiple it would expect for the company given factors such as earnings growth, profit margin, industry, market cap and risk profile. For SL Green Realty, this Fair Ratio is 2.56x.

Because the Fair Ratio adjusts for the company’s specific characteristics rather than relying only on broad peer or industry comparisons, it can give you a more tailored anchor for what “normal” looks like. With the current P/S of 2.93x sitting above the Fair Ratio of 2.56x by more than 0.10, the shares screen as somewhat expensive on this measure.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your SL Green Realty Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, where you tell a simple story about SL Green Realty, link that story to your own forecast for revenue, earnings and margins, and end up with a fair value that you can easily compare to the current price. All of this happens within the Narratives tool on Simply Wall St’s Community page that is used by millions of investors. Each Narrative updates as fresh news or earnings arrive and can reflect very different views, such as a more pessimistic stance closer to a US$37 fair value and US$50 price target, or a more optimistic stance closer to about US$71 fair value and a US$76 price target. This allows you to see clearly how different assumptions about SL Green Realty’s future translate into different fair values and potential buy or sell decisions.

For SL Green Realty however we'll make it really easy for you with previews of two leading SL Green Realty Narratives:

Fair value: US$51.83 per share

Gap to fair value: about 24.6% below this narrative fair value based on the recent US$39.05 share price

Revenue growth assumption: 8.45% annual revenue decline

• Focuses on premium Manhattan assets, where higher quality space and tenant demand are expected to support occupancy, rents, and net operating income over time.
• Highlights portfolio reshaping, capital recycling, and large projects such as One Vanderbilt and the Caesars Palace Times Square proposal as potential ways to build higher margin revenue streams.
• Flags risks from higher interest costs, reliance on complex investment gains, lease rollover and vacancy, project execution, and the possibility that remote or hybrid work weighs on office demand.

Fair value: US$37.00 per share

Gap to fair value: about 5.5% above this narrative fair value based on the recent US$39.05 share price

Revenue growth assumption: 11.84% annual revenue decline

• Assumes long term pressure on Manhattan office demand from remote and hybrid work, urban outmigration, and sector oversupply, with knock on effects for occupancy and rental rates.
• Points to higher ESG and retrofit costs, elevated leverage, and refinancing needs as factors that could weigh on margins, interest costs, and financial flexibility.
• Acknowledges that stronger Class A demand, diversified tenants, capital recycling, and projects such as the Caesars Palace Times Square bid could challenge this more cautious view if they play out better than expected.

These narratives sit alongside the Simply Wall St DCF and P/S work you have already seen, so you can compare the current price with different fair value anchors and decide which story feels closest to your own view of SL Green Realty.

Do you think there's more to the story for SL Green Realty? Head over to our Community to see what others are saying!

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.