CubeSmart (CUBE) is back on investors’ radar after teaming up with CBRE Investment Management on a US$250 million self-storage venture, starting with a Phoenix acquisition and pairing growth plans with a recently issued US$450 million unsecured note.

At a share price of US$38.61, CubeSmart has logged a 5.35% 90 day share price return and a 9.07% year to date share price return. The 1 year total shareholder return of 3.14% decline and 3 year total shareholder return of 3.66% decline contrast with a 33.12% gain over five years, suggesting recent momentum has been rebuilding as investors weigh the new US$250 million venture and higher leverage from the US$450 million unsecured note.

If this self storage deal has you thinking about where else growth capital is heading, it could be a good moment to scan our list of 24 power grid technology and infrastructure stocks as another infrastructure themed opportunity set.

With CubeSmart trading at US$38.61, showing a gain over five years but a decline over the past year, alongside a 5.42% dividend yield and higher leverage, is the market underestimating this new growth push or already pricing it in?

Most Popular Narrative: 7% Undervalued

At a last close of $38.61 versus a narrative fair value of about $41.53, the most followed view sees CubeSmart trading at a discount that hinges on how its storage demand and margins play out over the next few years.

Continued focus on expense discipline, highlighted by better than expected insurance renewals, tax appeals, and operating efficiencies, should moderate expense growth, resulting in higher net margins and stronger FFO as stabilizing top line trends combine with sector leading cost controls.

Curious what kind of revenue path, margin reset, and future earnings multiple sit behind that fair value estimate? The narrative leans on specific growth and profitability assumptions that may surprise you if you only look at the recent earnings dip.

Result: Fair Value of $41.53 (UNDERVALUED)

However, if new supply in key Sunbelt markets lingers or movement in rates stays weaker for longer, that recovery narrative could look a lot less convincing.

Build Your Own CubeSmart Narrative

If you think the crowd has this story wrong or simply want to stress test the assumptions yourself, you can build a custom view in minutes by starting with Do it your way.

A great starting point for your CubeSmart research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.