Highwoods Properties (HIW) recently recast a $150 million unsecured bank term loan, extending its maturity from May 2027 to June 2031 and linking interest costs partly to greenhouse gas emission reduction targets.

At a share price of $29.28, Highwoods Properties has seen a 30 day share price return of 16.28% and a 90 day share price return of 42.14%. The 3 year total shareholder return of 70.99% contrasts with a modest decline in the 1 year total shareholder return of 0.69%, suggesting recent momentum has picked up even as long term income and price outcomes have varied.

If this kind of shift in sentiment has you looking beyond a single office REIT, it could be a good moment to scan for 20 top founder-led companies

With Highwoods Properties stock up sharply over the past quarter yet still trading at what some models flag as a sizeable intrinsic discount, the central question becomes whether there is still a buying opportunity or if the market is already pricing in potential future growth.

Most Popular Narrative: 11.7% Overvalued

Highwoods Properties stock last closed at $29.28, compared with a narrative fair value estimate of $26.22 that has recently been nudged slightly lower.

The analysts have a consensus price target of $26.22 for Highwoods Properties based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $38.0, and the most bearish reporting a price target of just $23.0.

Want to see what sits behind that wide price target spread? The narrative leans on shifting revenue expectations, slimmer margins, and a future earnings multiple that is anything but ordinary.

Result: Fair Value of $26.22 (OVERVALUED)

However, if Highwoods Properties delivers stronger leasing than expected or benefits from limited new office supply in its Sunbelt markets, then the current overvaluation argument could weaken.

Another View: SWS DCF Model Points To Deep Undervaluation

While the analyst narrative frames Highwoods Properties stock as about 11.7% overvalued versus a fair value of $26.22, the SWS DCF model paints a very different picture. On this view, Highwoods is trading at $29.28, which is 53.4% below an estimated future cash flow value of $62.84. This implies a wide gap between earnings based sentiment and cash flow based valuation.

This kind of split forces you to decide which set of assumptions you find more realistic: earnings compression and low multiples, or a cash flow profile that supports a much higher value. It also raises the question of whether that gap represents risk that today’s price drifts down or an opportunity if the cash flows arrive.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Highwoods 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

With sentiment on Highwoods Properties split between overvaluation concerns and a bullish cash flow model, it makes sense to look at the full picture quickly and decide where you stand, based on the 2 key rewards and 4 important warning signs highlighted in the 2 key rewards and 4 important warning signs.

Looking for more investment ideas beyond Highwoods Properties?

If Highwoods Properties has sharpened your focus, do not stop here. Broaden your watchlist with other clear, data driven ideas before the next move passes you by.

• Target potential mispricings by scanning companies that combine quality fundamentals with attractive valuations using the 45 high quality undervalued stocks.
• Prioritize resilience by reviewing companies that score well on balance sheet strength and fundamentals through the solid balance sheet and fundamentals stocks screener (48 results).
• Hunt for lesser known opportunities with sound metrics by checking the screener containing 20 high quality undiscovered gems before they attract wider attention.

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.