STOR – Market expectations are for Uniform ROA to remain stable, but management may have concerns about growth opportunities, financing activities, and portfolio initiatives

May 2, 2022

  • STORE Capital Corporation (STOR) currently trades above corporate and historical averages relative to Uniform earnings, with a 26.4x Uniform P/E (Fwd. V/E’).

  • At these levels, markets are pricing in expectations for Uniform ROA to remain stable at 5%-6% levels, accompanied by 7% Uniform asset growth.

  • Meanwhile, analysts expect Uniform ROA to improve to 7% in 2023, accompanied by 5% Uniform asset shrinkage.

  • If sustained going forward, these levels would imply a stock price closer to $15, representing approximately 48% equity downside for the firm.

  • Moreover, the firm’s most recent earnings call suggests management may have concerns about growth opportunities, financing activities, and portfolio initiatives.

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