NNN REIT (NNN) has seen shares drift slightly lower over the past month, down about 2%, despite posting annual revenue and net income growth. Some investors are now reassessing the value proposition at current levels.

While NNN REIT’s share price has softened around 2% this past month, it’s worth noting that momentum has faded following a modest YTD share price return of 5.7%. Longer-term investors have experienced mixed results, with a one-year total shareholder return of -6% but a strong 53% total return over five years. This shows that value can emerge for those with patience.

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With shares now trading at a modest discount to analyst targets and substantial long-term gains on record, is NNN REIT undervalued based on fundamentals, or is the market already factoring in all potential future growth?

Most Popular Narrative: 4.8% Undervalued

At a last close of $42.40, the most followed narrative sees NNN REIT’s fair value as $44.54. This highlights a contrast between modest market pricing and bolder future expectations.

The company's ongoing acquisitions of properties with initial cap rates around 7.4% and long lease terms averaging over 17 years, amid robust sales-leaseback deal flow and a rising acquisition pipeline, suggest an ability to lock in above-average yields and benefit from favorable inflation-linked rent escalations. This should provide durable growth in FFO and long-term earnings.

Want to know what assumptions are powering this premium? The narrative points to ambitious expansion, strategic deals, and a future profit outlook not often seen in traditional REITs. Find out which bold projections are driving estimates above today’s stock price. Some numbers might surprise you.

Result: Fair Value of $44.54 (UNDERVALUED)

However, persistent retailer bankruptcies and rising financing costs could still undermine NNN REIT’s earnings trajectory and challenge the optimistic growth outlook.

Build Your Own NNN REIT Narrative

If you have a different perspective or want to dig deeper into the numbers, you're invited to craft your own story in just a few minutes. Do it your way

A great starting point for your NNN REIT research is our analysis highlighting 3 key rewards and 1 important warning sign 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.