EASTGROUP PROPERTIES, INC. (EGP): what the price requires
At today's price, EASTGROUP PROPERTIES, INC. (EGP) is priced for +14.1% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/EGP
Headline
| Field | Value |
|---|---|
| Ticker | EGP |
| Company | EASTGROUP PROPERTIES, INC. |
| Current price | $210.72/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | 14.1% |
| Price-to-FFO | 23.9x |
| FFO yield | 4.2% |
Solve inputs: computed at a 9.6% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +0.40σ |
| cohort percentile (of 88 peers) | 90 |
| sustained it ~5 years at this level | 54% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.68x | 4 | expensive |
| Earnings | 2.62x | 4 | expensive |
| Relative | 2.27x | 6 | expensive |
| Growth | 1.10x | 5 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.
Per-Model Detail (n=19)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $193.30 | 1.09x | yes | FCF base $0.5B, growth 12% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection |
| DCF Exit Multiple | Growth | $191.72 | 1.10x | yes | Exit EV/EBITDA: 56.6x / 58.6x / 60.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $212.21 | 0.99x | yes | P/E 35x (sector median), scenarios: 29.1x / 35.0x / 40.9x (bear / base = sector held flat / bull), EV/EBITDA 31.57x |
| Simple DDM | Growth | $633.36 | 0.33x | yes | DPS $6.25, g=8.2% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $118.30 | 1.78x | yes | Stage 1: 5% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $59.08 | 3.57x | yes | BV/sh $66.79, ROE (TTM) 8.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $55.53 | 3.79x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $74.52 | 2.83x | yes | Rev $0.7B, growth 12% (input: historical growth; tapered), Terminal P/S: 6.6x / 8.0x / 9.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $106.20 | 1.98x | yes | FFO/share $8.85, growth 5% (input: historical FFO/share growth, 10y median), PEG=8.28 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $54.96 | 3.83x | yes | BV $66.79 + 5yr PV of (ROE (TTM) 8.2% − Kₑ 9.3%) × BV; BV grows 5.3%/yr |
| Graham Number | Asset | $115.33 | 1.83x | yes | √(22.5 × FFO/share $8.85 × BVPS $66.79) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $52.49 | 4.01x | yes | EBITDA $0.22B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $69.23 | 3.04x | yes | FCF $489.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $66.86 | 3.15x | yes | SBC-adj FCF $0.48B (FCF $0.49B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $132.10 | 1.60x | yes | FFO/share $8.85 × (8.5 + 2×4.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $82.60 | 2.55x | yes | Revenue $0.74B × sector P/S 6.0x |
| PEG Fair Value | Relative | $61.80 | 3.41x | yes | FFO/share $8.85 × (PEG 1.5 × growth 4.7% (input: historical FFO/share growth, 10y median)) → PE 7.0x |
| Earnings Yield | Earnings | $95.68 | 2.20x | yes | FFO/share $8.85 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $125.54 | 1.68x | yes | FFO/share $8.85 × 14.2x P/FFO (route cohort median, n=85); FFO $0.47B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 54M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Funds from operations (trailing) | $474.1m |
| Share count CAGR (dilution) | 6.7% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Net debt could not be resolved from the corporate debt tags in the filings (REIT notes and mortgage debt are often tagged outside the corporate ladder), so the leverage ratio is withheld rather than rendered from incomplete tags. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.
Bullet Takeaways
- EastGroup is a development-led Sunbelt industrial REIT (91% business distribution space, roughly half of the portfolio self-developed) compounding funds from operations in the mid-to-high single digits, with Q1 2026 FFO of $2.30 per share, up 8.5%.
- The defining risk is valuation: at about 27 times adjusted funds from operations the price embeds roughly 13%-a-year growth in that cash measure, the price-to-FFO multiple sits at the very top of the REIT group, and the asset, earnings, and peer-multiple methods all read it as expensive while only the growth lens reaches the price.
- Watch same-store NOI and new supply: cash same-property NOI grew 9.2% on a 96.5%-leased portfolio, but development returns invite competing supply, and Houston and Dallas make up roughly a fifth of annualized base rent.
Bull Case
Valuing an industrial REIT comes down to one question: can it keep growing the cash its buildings throw off faster than the rest of the sector, and EastGroup is built to do exactly that. Unlike a REIT that simply buys finished warehouses, EastGroup develops a large share of its own portfolio, the higher-return path. The 10-K notes the company has developed approximately 50% of its total portfolio (on a square foot basis), with a focus on business distribution space that makes up 91% of the portfolio. Building rather than buying is what lets EastGroup earn development yields above market cap rates, and it is the structural reason its funds from operations grow faster than a buy-and-hold peer's.
The operating numbers show the model compounding. In Q1 2026, funds from operations reached $2.30 per share, up 8.5% sequentially, and the company raised its full-year 2026 FFO guidance midpoint to $9.52 per share, a 6.4% increase over 2025. The portfolio is nearly full, leased at 96.5% and occupied at 95.9%, and same-property net operating income rose 7.5% on a straight-line basis and 9.2% on a cash basis. Cash same-store NOI growth above 9% on an already-full portfolio is the mark of genuine pricing power: existing tenants are renewing at materially higher rents.
The balance sheet is conservative enough to keep the development engine running through a downcycle. Net debt sits at roughly 3.3 times funds from operations, low for a REIT, and fixed-charge coverage is about 15 times, an unusually strong cushion. The company funds its development pipeline partly with equity, which is why the share count grows, but it does so from a position of low leverage rather than stress, and it pays a $1.55 quarterly dividend, roughly a 3.1% yield. A best-in-class Sunbelt industrial developer with high occupancy, double-digit cash same-store rent growth, and a fortress-conservative balance sheet is the durable compounder the bull is paying up for, which is precisely why only the growth-crediting valuation methods reach the price near 27 times adjusted funds from operations.
Bear Case
The qualitative problem with EastGroup is simple to state: it is a very good company at a very full price, and quality is not the same thing as value. The market has awarded EastGroup an adjusted-funds-from-operations multiple near the top of the entire REIT group, and on a price-to-FFO basis it sits at the very top. That is the disconnect. The valuation methods make it concrete: asset value, earnings power, and peer multiples all read the price as richly valued, and only the forward-growth lens reaches it. When three of four families say expensive and the stock still trades at the top of its sector, the buyer is paying for flawless execution to continue indefinitely, with no margin for a stumble.
The execution that has to continue depends on variables EastGroup does not control. Its model is development-led, and the 10-K is explicit that returns can be hurt by construction costs, changes in the price of oil, and weather-related and climate-related events, while the real estate business is highly competitive for both properties and tenants. Industrial development is also self-correcting: high returns attract new supply, and a wave of competing warehouse construction in EastGroup's markets would pressure the rent growth that justifies the premium. The Sunbelt concentration sharpens this, with Houston and Dallas alone making up roughly a fifth of annualized base rent, tying a meaningful share of the portfolio to Texas economic conditions and, through the oil-price sensitivity the filing flags, to energy markets.
The rate environment is the final pressure. A REIT priced at about 27 times adjusted funds from operations, FFO net of the maintenance capex that keeps the buildings leasable, is in effect a long-duration asset: its value rests on a low discount rate applied to a long stream of growing cash. If rates stay higher for longer, the cap rate the market applies to industrial real estate drifts up, and a premium multiple compresses even if the buildings perform. On that truer cash base the price implies AFFO growth of roughly 13% a year, a demanding pace that runs ahead of the mid-single-digit FFO growth EastGroup has typically delivered, so the bear is not only that the business stumbles; it is that paying the top multiple in the sector for that kind of compounding leaves the buyer exposed to multiple compression and new supply, with the value methods already flagging that the price has run ahead of the fundamentals it rests on.
Valuation
A real estate trust is valued on its funds from operations, the cash earnings plus property depreciation that fund the dividend, and the truer cash base is adjusted funds from operations, FFO net of the maintenance capex that keeps the buildings leasable. At about 27 times adjusted funds from operations, EastGroup's price implies the trust grows that cash measure roughly 13% a year. That is a demanding pace, ahead of the mid-single-digit funds-from-operations growth the company has typically delivered, and it is the engine the premium is paying for. What makes it elevated is the multiple itself: on a price-to-FFO basis EastGroup sits at the very top of the REIT group, the AFFO multiple sits above it once maintenance capex is taken out, and the buyer is paying a premium for that growth rather than getting it cheaply.
The method families show the shape of a quality premium. Asset value, earnings power, and peer multiples all read the price as richly valued, and only the forward-growth lens reaches it. This is the same pattern that marks any durable compounder: the static methods, which value the buildings and the current cash, cannot price a development pipeline that compounds, so they fall short, while the growth-DCF that credits future cash earnings lands at the price. The premium is the market paying for EastGroup's development-led growth model, not a mispricing the static methods overlooked. Whether it is earned depends on the durability of Sunbelt rent growth and the absence of a new-supply glut.
For a REIT, solvency is read against funds from operations rather than through corporate debt-coverage lenses, because a REIT's depreciation-heavy GAAP earnings understate its real cash generation. On that basis EastGroup is conservatively financed: net debt of roughly 3.3 times FFO is low for the sector, and fixed-charge coverage near 15 times is a strong cushion that protects the dividend and the development pipeline through a downturn. The company issues equity to fund development, which grows the share count, but it does so from low leverage rather than necessity. The reconciliation with the street is mild: the consensus is a Buy with an average target modestly above the current price, which says the market and analysts agree this is a high-quality REIT fairly to fully priced, with the premium multiple the main source of downside risk if rates rise or supply catches up.
Catalysts
Q1 2026 was a strong quarter that reinforced the Sunbelt industrial growth story. EastGroup reported funds from operations of $2.30 per share, up 8.5% sequentially, and raised its full-year 2026 FFO guidance midpoint to $9.52 per share, a 6.4% increase over 2025 results and 30 basis points above initial guidance. The portfolio was leased at 96.5% with occupancy at 95.9%, and same-property NOI rose 7.5% straight-line and 9.2% on a cash basis. The company also kept its $1.55 quarterly dividend, an annualized $6.20 at roughly a 3.1% yield.
The capital deployment continued the development-led model. EastGroup started four development projects totaling 586,000 square feet at projected costs of roughly $84 million, acquired two Class A buildings in Jacksonville, and exited the Fresno market, reshaping the portfolio toward higher-growth Sunbelt submarkets. Analyst sentiment is constructive, with a Buy consensus and an average target modestly above the current price, and the stock set a 12-month high on an upgrade earlier in the period. The forward catalysts are the pace of development starts, the trajectory of cash same-store rent growth, and whether new industrial supply in EastGroup's core Texas and Southeast markets stays in check.
Peer Cohorts (Per Segment, With Filing Citations)
Industrial properties (single reportable segment) (reported)
- PLD (Prologis, Inc.)
- (no filing in the citation store)
- REXR (Rexford Industrial Realty, Inc.)
- (no filing in the citation store)
- FR (FIRST INDUSTRIAL REALTY TRUST, INC.)
- (no filing in the citation store)
- TRNO (Terreno Realty Corporation)
- (no filing in the citation store)
- STAG (STAG Industrial, Inc.)
- (no filing in the citation store)
- LXP (LXP INDUSTRIAL TRUST)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
EastGroup Q1 2026 earnings release · EastGroup Q1 2026 earnings call