CBL & Associates Properties (CBL) stock is back in focus after the company sold a 5.35 acre non income producing parcel at CoolSprings Galleria in Franklin, Tennessee, to rental housing specialist Greystar.

Set against this CoolSprings Galleria deal and a recent $400 million shelf registration filing, CBL & Associates Properties shows building momentum, with a 27.59% 90 day share price return and a 94.51% 1 year total shareholder return from a latest share price of $47.4.

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With CBL & Associates Properties posting a 94.51% 1 year total shareholder return and trading at $47.40 against an analyst price target of $57.50, the key question is whether there is still a buying opportunity here or if the market is already pricing in future growth.

Preferred P/E of 8.6x: Is it justified?

On price, CBL & Associates Properties stands out because it trades on a P/E of 8.6x while its recent share price performance has been strong and the latest close is $47.40.

The P/E ratio compares the company’s share price with its earnings per share and is a common way investors think about what they are paying for current earnings. For CBL & Associates Properties, an 8.6x P/E sits below the estimated fair P/E of 9.5x and well below peer and industry averages, which suggests the market is pricing its earnings at a lower level than many comparable Retail REITs.

Compared with the US Retail REITs industry average P/E of 26x and a peer average of 35.2x, CBL & Associates Properties trades at a steep discount. If the fair P/E of 9.5x is a level the market could move toward over time, that gap between current pricing and both peers and the fair ratio is worth watching.

Result: Price-to-Earnings of 8.6x (UNDERVALUED)

However, CBL & Associates Properties still faces risks, including a recent annual decline in net income and reliance on US retail-focused properties for all reported revenue.

Another View: SWS DCF model points the other way

While the P/E of 8.6x makes CBL & Associates Properties look cheap against peers and the fair ratio, the SWS DCF model tells a different story. In this view, the stock at $47.40 sits above an estimated future cash flow value of $40.68. This raises the question of whether earnings power is being priced too generously.

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 45 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 potential upside and risk around CBL & Associates Properties leaves you undecided, take a closer look at the details and form your own stance using 3 key rewards and 4 important warning signs.

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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.