Vornado Realty Trust (VNO) Could Be 15% Undervalued As Manhattan Office Story Holds

Vornado Realty Trust (VNO) is back in focus after recent price moves that left the stock down about 4% over the past month and about 12% over the past 3 months.

At a share price of $33.81, Vornado Realty Trust has seen near term momentum fade, with a 30 day share price return down about 4% and a 90 day move down almost 12%. This comes even though the year to date share price return is slightly positive and the 3 year total shareholder return is strongly positive, while the 1 year figure remains in decline.

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Vornado Realty Trust now trades meaningfully below both analyst targets and one estimate of intrinsic value, after a choppy stretch for the share price. How wide is that gap in practical terms, and what does it say about fair value?

Most Popular Narrative: 15.3% Undervalued

Against a last close of $33.81, the most followed narrative pegs Vornado Realty Trust’s fair value at about $39.92, implying a double digit discount that hinges on how its New York portfolio and redevelopment pipeline convert into earnings over time.

Vornado Realty Trust continues to benefit from tight conditions in high quality Manhattan offices, with vacancy in this segment reported near 6% and new leases signing at triple digit starting rents, which supports further revenue and same store NOI growth as remaining space in this pool is leased. Large scale redevelopments and repositionings such as PENN 1, PENN 2, 350 Park Avenue, 623 Fifth Avenue and Park Avenue Plaza are intended to drive higher rent per square foot and occupancy, which flows through to higher revenue and earnings as leases roll and commence on upgraded space.

See why 5 investors see Vornado Realty Trust as 15% undervalued.

Result: Fair Value of $39.92 (UNDERVALUED)

Still, the bullish story around Vornado Realty Trust can unravel if higher refinancing costs squeeze earnings or if tenant improvement spending remains elevated for longer than expected.

Find out about the key risks to this Vornado Realty Trust narrative.

Another View on Vornado Realty Trust’s Valuation

The first take leans on analyst fair value around $39.92, which points to upside from today’s $33.81. A different lens tells a cooler story. On a price-to-sales ratio (P/S) of 3.4x, Vornado Realty Trust trades richer than the US Office REITs average of 2x and only slightly below peers at 3.6x, even though the fair ratio is 3.7x. That combination suggests less obvious mispricing and more debate about how much risk you are really being compensated for.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Mixed messages on Vornado Realty Trust’s valuation and risk reward profile make this a stock you need to inspect directly rather than rely on headlines. To see how the trade off between potential upside and the concerns showing up in the data stacks up, start by reviewing the 1 key reward and 6 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.

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