Simon Property Group has delivered a 124.9% total return over the past 5 years, yet current valuation checks and an intrinsic value estimate based on a Discounted Cash Flow (DCF) approach both suggest the stock still trades at a discount to its estimated worth. With fresh headlines around higher potential rent from Saks Global store closures and a separate family dispute over real estate assets, investors are weighing how much of this is already reflected in the share price.

• Over 5 years, Simon Property Group has returned 124.9%, which puts today’s price in the context of a strong long term run for shareholders.
• On the business side, expected higher rent from re-leasing space vacated by Saks Global can support cash flow. At the same time, the separate lawsuit involving members of the Simon family may add a layer of governance and perception risk that investors will watch closely.
• The company screens as undervalued on most major checks, with a high value score of 5 out of 6, and the Discounted Cash Flow (DCF) estimate points to Simon Property Group trading around 27.5% below its intrinsic value.

The issue now is whether Simon Property Group’s current share price still offers an attractive margin between market value and intrinsic value after such a strong multi year return.

Is Simon Property Group Still Cheap on Cash Flow?

The Discounted Cash Flow (DCF) model here uses adjusted funds from operations to estimate what Simon Property Group is worth based on its cash generation. In this analysis, Simon Property Group is modeled on recovering and then growing cash flows, starting from the latest twelve month free cash flow of about $4.0b and rising to over $5.3b by 2030. That stream of projected cash flows, discounted back, leads to an estimated intrinsic value of about $304 per share.

Compared with the current share price, that intrinsic value implies Simon Property Group screens as around 27.5% undervalued. The recent lift in expected rent from re leasing former Saks Global space helps explain why the cash flow outlook in the model supports a higher value than where the stock trades today.

Overall, the Discounted Cash Flow workup suggests Simon Property Group stock appears undervalued relative to its modeled cash flows.

Our Discounted Cash Flow (DCF) analysis suggests Simon Property Group is undervalued by 27.5%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Is Simon Property Group Still Cheap on Earnings?

P/E suits Simon Property Group because earnings are a core yardstick for established, cash generative REITs. On this measure, Simon Property Group trades on a P/E of about 15.5x, which is below the Retail REITs industry average of roughly 26.8x and a peer group average closer to 31.1x.

A more tailored fair P/E multiple that factors in Simon Property Group’s size, margins and risk profile is about 23.9x. This is materially higher than the current 15.5x level, which indicates the market is pricing the stock at a sizable discount to what this framework suggests could be reasonable.

On the P/E multiple, Simon Property Group stock appears undervalued relative to both its sector and the fair ratio estimate.

The Simon Property Group Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where Simon Property Group's valuation gap leaves off by explaining which paths for growth, margins and earnings would need to occur for the stock to be worth materially more or less than today’s price. Each narrative links a specific fair value to a particular mix of potential catalysts and risks, so you can track over time which version of Simon Property Group's story is taking shape on the Community page.

Share a narrative on Simon Property Group and build your own number-driven case on whether increased rent from re-leased Saks Global space and the recent family lawsuit ultimately support or challenge today’s price. Add your view now and see how it holds up as new leasing updates and governance news emerge.

Do you think there's more to the story for Simon Property Group? Head over to our Community to see what others are saying!

The Bottom Line

For Simon Property Group, both the Discounted Cash Flow (DCF) intrinsic value estimate and the P/E based comparison point to the same conclusion. The stock screens as undervalued on cash flow and earnings checks that broadly line up with the stronger value score. From here, the key question is whether the current discount reflects an opportunity for patient investors or a lasting penalty for governance and legal risks tied to the recent family dispute and how leasing income actually evolves.

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.