First Industrial Realty Trust stock has returned 36.9% over the past year, yet current valuation checks suggest the shares may still trade below an estimate of intrinsic value based on a Discounted Cash Flow (DCF) view and supporting market multiples.

• First Industrial Realty Trust has gained 36.9% over the last 12 months, which puts more focus on whether recent gains already reflect its fundamentals.
• Future cash flow growth from its industrial property portfolio can support the current share price, while any shift in occupancy, rental rates or funding costs may weigh on the valuation.
• The stock screens as undervalued on both a DCF estimate and earnings multiples, yet with 3 of 6 valuation checks pointing to value it still looks like a mixed picture rather than a clear cut bargain.

The issue now is whether First Industrial Realty Trust's recent share price strength has already closed most of the gap to its intrinsic value, or if the current discount still leaves room for further upside.

Does First Industrial Realty Trust Look Undervalued on Cash Flow?

The Discounted Cash Flow (DCF) model here values First Industrial Realty Trust using adjusted funds from operations as a proxy for free cash flow to equity. On this view, the company is treated as a mature industrial REIT with growing cash flows rather than a high risk turnaround story.

First Industrial Realty Trust generated around $333.5 million of free cash flow over the last twelve months in reporting currency terms. The model assumes these cash flows grow over time and uses that path to arrive at an intrinsic value of about $71 per share. Compared with the current market price, this implies the stock trades at roughly a 10.4% discount to that estimate, which points to some remaining upside if those cash flow assumptions hold.

Overall, the DCF work suggests First Industrial Realty Trust stock currently looks undervalued relative to its estimated cash flow based intrinsic value.

Our Discounted Cash Flow (DCF) analysis suggests First Industrial Realty Trust is undervalued by 10.4%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks.

Does First Industrial Realty Trust Look Undervalued on Earnings?

P/E is a useful check for First Industrial Realty Trust because earnings are a key driver of shareholder returns for an established REIT. The stock currently trades on a P/E of about 23.2x, which sits above the Industrial REITs sector average of roughly 15.8x. However, it is below the peer group average of around 36.4x, which suggests investors are not paying as high a premium as for some similar companies.

The Fair Ratio for First Industrial Realty Trust is estimated at about 28.6x, which reflects what investors might pay given its size, sector, earnings profile and risk. Compared with the current multiple, this indicates the shares trade at a discount to that tailored benchmark even after the recent price strength.

On this P/E check, First Industrial Realty Trust stock appears undervalued relative to what the fair multiple indicates.

The First Industrial Realty Trust Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for First Industrial Realty Trust pick up where the valuation work leaves off and ask what would need to happen with the company’s growth, margins and earnings for the stock to be worth materially more or less than today’s price. Where a single ratio or model gives one figure, these Narratives set out the future that figure relies on so you can watch how closely reality lines up.

You can add your voice to the Simply Wall St community by sharing a Narrative on First Industrial Realty Trust that sets out a number driven view on where its growth, margins and execution go from here. Put your thesis on the record and track how it holds up as new results come through.

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

The Bottom Line

For First Industrial Realty Trust, both the Discounted Cash Flow (DCF) estimate and the P/E based view point to the stock as modestly undervalued rather than a clear bargain. The key question is whether cash flows from its industrial portfolio develop in line with the assumptions behind that intrinsic value estimate and the fair multiple. If rental levels, occupancy and funding costs hold near current expectations, the present discount could be justified by normal uncertainty. If those drivers disappoint, the current valuation may already be full.

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.