Essential Properties Realty Trust, Inc. (EPRT): what the price requires

Generated: 2026-07-19 · Source: https://boothcheck.com/report/EPRT

Headline

Field	Value
Ticker	EPRT
Company	Essential Properties Realty Trust, Inc.
Current price	$31.44/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	0.2%
Price-to-FFO	16.3x
FFO yield	6.1%

Solve inputs: computed at a 9.2% cost of equity with 4% terminal growth over a 5-year stage; each 1pp of cost of equity moves the implied growth ~4.2pp.

How unusual the bet is: within-range

Reference	Value
vs own history	-1.24σ
cohort percentile (of 88 peers)	63
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

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	3.12x	5	expensive
Earnings	3.81x	5	expensive
Relative	1.15x	6	expensive
Growth	0.80x	5	justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.

Per-Model Detail (n=21)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$127.24	0.25x	yes	FCF base $0.4B, growth 24% (input: historical growth), terminal g 4.0%, WACC 7.0%, 7yr projection
DCF Exit Multiple	Growth	$54.39	0.58x	yes	Exit EV/EBITDA: 15.5x / 17.5x / 19.5x (bear / base = today's held flat / bull), 7yr
Relative Valuation	Relative	$48.35	0.65x	yes	P/E 27.38x (blended: static sector reference 35x + trailing (TTM) 16x), scenarios: 22.2x / 27.4x / 32.6x (bear / base = reference held flat / bull), EV/EBITDA 20x
Simple DDM	Growth	$38.38	0.82x	yes	DPS $1.23, g=5.8% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$28.11	1.12x	yes	Stage 1: 9% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$13.09	2.40x	yes	BV/sh $20.70, ROE (TTM) 5.8%, ke 9.3%
Two-Stage Excess Return	Asset	$10.09	3.12x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$39.52	0.80x	yes	Rev $0.6B, growth 24% (input: historical growth; tapered), Terminal P/S: 9.1x / 11.3x / 13.4x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair Value	Relative	$23.64	1.33x	yes	FFO/share $1.97, growth 9% (input: historical FFO/share growth, 6y median), PEG=2.87 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$5.59	5.62x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.27B × (1−0%) / WACC 7.0% → EPV (no growth)
Residual Income	Asset	$9.70	3.24x	yes	BV $20.70 + 5yr PV of (ROE (TTM) 5.8% − Kₑ 9.3%) × BV; BV grows 3.8%/yr
Graham Number	Asset	$30.29	1.04x	yes	√(22.5 × FFO/share $1.97 × BVPS $20.70) — Graham's conservative floor
EV/EBITDA Relative	Relative	$37.82	0.83x	yes	EBITDA $0.53B × sector EV/EBITDA 20.0x
FCF Yield	Earnings	$8.25	3.81x	yes	FCF $403.7M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$7.57	4.15x	yes	SBC-adj FCF $0.39B (FCF $0.40B − SBC $0.01B) capitalized at Kₑ
Ben Graham Formula	Earnings	$43.86	0.72x	yes	FFO/share $1.97 × (8.5 + 2×9.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$3.80	8.27x	yes	BV $20.70 × (ROIC 1.3% / WACC 7.0%)
P/Sales Sector	Relative	$16.71	1.88x	yes	Revenue $0.59B × sector P/S 6.0x
PEG Fair Value	Relative	$26.69	1.18x	yes	FFO/share $1.97 × (PEG 1.5 × growth 9.0% (input: historical FFO/share growth, 6y median)) → PE 13.6x
Earnings Yield	Earnings	$21.30	1.48x	yes	FFO/share $1.97 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	$27.93	1.13x	yes	FFO/share $1.97 × 14.2x P/FFO (route cohort median, n=85); FFO $0.42B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 212M
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt (REIT basis)	$2.6b
Net debt / FFO	6.26x
Fixed-charge coverage (FFO basis)	4.9x
Funds from operations (trailing)	$417.7m
Share count CAGR (dilution)	13.5%
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.

Bullet Takeaways

• Essential Properties is a fast-growing net-lease REIT with a 99.7%-leased book of 2,300 properties, a 14.4-year weighted average lease term, and only 5.2% of base rent expiring before 2031, compounding AFFO per share 11% year over year.
• The biggest specific risk is the external-growth model itself: roughly $419 million of equity was raised in one quarter to fund acquisitions, so per-share growth depends on the spread between deal yields and a roughly 9% cost of capital staying positive.
• What to watch next is the pace and accretion of acquisitions against raised 2026 investment guidance of $1.1 to $1.5 billion, plus consumer-spending health among its service and experience-based tenants.

Bull Case

The trajectory is the cleanest part of the story. Adjusted funds from operations grew 11% year over year in the first quarter to $0.50 per share, and management lifted full-year AFFO guidance to a $2.00 to $2.05 range, about 7% growth at the midpoint. For a net-lease landlord, that pace is fast, and it is not coming from financial engineering. The portfolio is 99.7% leased across 2,300 properties carrying $555.0 million of annualized base rent, with same-store rent rising 1.4% and contractual escalators averaging 1.7% a year. The growth is the spread between cheap rent acquired and the cost of the capital used to buy it, compounded by a high-occupancy book that almost never goes dark.

The underwriting is what makes the rent durable. Essential Properties leans on relationships rather than auctions: its senior team's "substantial experience, knowledge and relationships ... provide us with an extensive network of contacts that we believe allows us to originate" deals directly with operators. That sourcing produces long, defensive leases. The weighted average remaining lease term is 14.4 years, with only 5.2% of annualized base rent attributable to leases expiring before 2031, and the rent rolls through master leases that bundle multiple sites under one obligation. Roughly 91.6% of base rent comes from service-oriented and experience-based tenants, the kind whose business cannot be moved online. Fourteen years of contracted rent with built-in escalators is about as visible as a revenue stream gets.

The balance sheet supports the growth engine rather than constraining it. Net debt is about 6.3 times funds from operations with fixed-charge coverage of 4.7 times, and the dividend, declared at $0.31 per share, runs a 62% AFFO payout that left $40 million of retained free cash flow in the quarter. The company deployed $389 million into 126 properties in the first quarter and raised its full-year investment guidance to a $1.1 billion to $1.5 billion range. A REIT growing AFFO per share at a high-single-digit clip, with conservative leverage and a payout that funds part of its own expansion, is compounding the way the model rewards.

Bear Case

The price is paying for the growth to continue, and that growth has a financing assumption baked into it that the bear has to take seriously. Essential Properties grows by issuing equity and buying property: it raised $419 million of equity in the first quarter alone to fund $389 million of acquisitions, and the share count has been expanding at a double-digit annual rate. That is the entire model, and it works only as long as the company can buy rent at a yield comfortably above its cost of equity. The cost of equity the framework uses is about 9.2%, while the units yield roughly 6.3% on adjusted funds from operations. If the cost of capital rises or the spread on new deals compresses, the per-share AFFO growth that justifies the price slows, even if the existing rent roll is untouched. A growth REIT priced for continued accretive issuance is, at root, a bet on the capital markets staying cooperative.

The valuation makes that bet explicit. On the asset-value and earnings-power lenses the price sits well above where those methods land, justified instead by the peer-multiple and growth-discounted-cash-flow lenses. In plain terms, the price is not defended by the in-place real estate or the current earnings power; it is defended by the expectation that the portfolio keeps compounding. The most fragile assumption is not occupancy, which is near 100%; it is the durability of the acquisition spread that turns new equity into higher per-share cash flow.

The tenant base carries the other risk, and the company names it directly. Its properties are occupied by tenants that, in the 10-K's words, "compete in industries that depend upon discretionary spending by consumers," and a pullback in that spending could pressure the unit-level coverage that underpins the rent. The concentration in service and experience businesses is a feature in good times because those formats resist e-commerce, but it tilts the book toward consumer cyclicality. The long lease terms and master-lease structure cushion a single tenant default, yet a broad consumer slowdown hits many operators at once. The bear is not that the leases break tomorrow; it is that the price assumes both uninterrupted accretive growth and resilient consumer demand, and a stumble in either reprices a stock that trades above what its current assets and earnings support.

Valuation

What the price is betting on is continuation of growth, not a static rent stream. The units trade at roughly 16 times adjusted funds from operations, a yield near 6.3% on that cash flow, which is a premium to where slower net-lease peers price. The embedded assumption is that Essential Properties keeps converting fresh equity into higher per-share AFFO at the high-single-digit pace it just guided to. That is a bet on the spread between acquisition yields and cost of capital holding, more than a bet on any single building.

The methods split in a way that defines the name. The peer-multiple and cash-flow-growth lenses support the current price, while the asset-value and earnings-power lenses say it is expensive relative to what the in-place real estate and current earnings justify. That divergence is the signal: this is a growth REIT, and the static methods that price a portfolio as-is will structurally read it as rich because they do not credit the acquisition engine. The right comparison is to other external-growth net-lease names rather than to a mature, low-growth landlord, and against that frame the multiple is paying for a faster compounder rather than overpaying for a stagnant one.

Solvency is the variable that actually governs the thesis, because the growth runs on capital access. Net debt is about 6.3 times funds from operations with fixed-charge coverage of 4.7 times, conservative for the sector, and the 62% AFFO payout retained $40 million of free cash flow in the quarter to partially self-fund deals. The contracted cash flow behind it is unusually visible: a 14.4-year weighted average lease term with only 5.2% of base rent expiring before 2031, anchored by master leases. The most decisive point is the spread, not the leverage: as long as the company can buy rent at yields above its roughly 9% cost of equity, the per-share growth that the price requires is achievable. The price rests on that spread persisting, and the latest quarter, $389 million deployed at a still-accretive return, shows it currently does.

Catalysts

The Q1 2026 report was the central recent catalyst and it raised the bar on both growth and guidance. AFFO reached $105.8 million, or $0.50 per share, up 11% year over year, and the company lifted full-year AFFO-per-share guidance to a $2.00 to $2.05 range, roughly 7% growth at the midpoint. The portfolio ran at 99.7% leased with same-store rent up 1.4% and contractual escalators averaging 1.7% a year. The board declared a $0.31 per-share dividend at a 62% AFFO payout, retaining $40 million of free cash flow in the quarter.

Acquisition activity is the forward driver, and the first quarter set the pace. Essential Properties deployed $389 million into 126 properties and funded it with $419 million of equity raised, then increased full-year investment-volume guidance by $100 million to a new $1.1 billion to $1.5 billion range. The relationship-driven sourcing continues to feed the pipeline of service-oriented and experience-based operators that make up about 91.6% of base rent. The scale of equity issuance against acquisitions is the mechanism that drives per-share AFFO growth and the figure to track for accretion.

The two things to watch into the next prints are whether new acquisitions stay accretive, meaning deal yields hold above the cost of capital as the company issues equity to fund the raised guidance, and whether unit-level coverage among consumer-facing tenants holds if discretionary spending softens. Continued AFFO-per-share growth at the guided pace would confirm the acquisition spread remains intact.

Peer Cohorts (Per Segment, With Filing Citations)

Essential Properties (net-lease real estate) (reported)

• FCPT (Four Corners Property Trust, Inc.)
• FY2025 10-K: …the restaurant industry and accelerate our diversified growth and, in doing so, reduce our concentration with Darden. Operating Strategy Long-Term, Net Lease Structure: We intend to hold our properties for long-term investment. Our properties are leased to our tenants on a net lease basis with a weighted average…
• FY2025 10-K: …our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease…
• NNN (NNN REIT, INC.)
• FY2025 10-K: …and use restrictions of the property, • the geographic area and demographic characteristics of the community, • the local real estate market conditions, including potential for growth, redevelopment, market rents and existing or potential competing properties or retailers, • the title status of the property, • the…
• FY2025 10-K: …of outstanding and future lease payment collections. Estimates are sensitive to evaluations by management about current and future expectations of market and economic conditions. Actual results could differ from those estimates. 59 Note 2 - Real Estate : Real Estate - Portfolio Leases. At December 31, 2025, NNN's…
• ADC (Agree Realty Corporation)
• FY2025 10-K: AAP and is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company continues to evaluate the impact of the guidance. Note 3 - Leases Tenant Leases The Company is primarily focused on the ownership, acquisition, development and…
• FY2025 10-K: …the Operating Partnership, of which the Company is the sole general partner and in which the Company held a 99.7% common interest as of December 31, 2025. Refer to Note 1 -Organization in the notes to the consolidated financial statements in this Form 10-K for further information on the ownership structure. Under the…
• GLPI (Gaming and Leisure Properties, Inc.)
• FY2025 10-K: …Company under GAAP given the significant initial term of each of the leases. Real Estate Loans The Company may periodically loan funds to casino owner-operators for the purchase or construction of gaming related real estate. Loans for the construction or purchase of real estate assets of gaming related properties are…
• FY2025 10-K: …and other assets to us. As a result, this structure may potentially facilitate our acquisition of assets in a more efficient manner and may allow us to acquire assets that the owner would otherwise be unwilling to sell because of tax considerations. We believe that this flexibility may provide us an advantage in…
• OHI (OMEGA HEALTHCARE INVESTORS, INC.)
• FY2025 10-K: …and our operators. We typically seek substantial liquidity deposits, covenants regarding minimum working capital and net worth, liens on accounts receivable and other operating assets, and various provisions for cross-default, cross-collateralization and corporate and/or personal guarantees for our investments when…
• FY2025 10-K: …lease terms expiring after 2030. The majority of our triple-net leased real estate properties are leased under provisions of master lease agreements that govern more than one facility, and to a lesser extent, we lease facilities under single facility leases. Under our triple-net master leases, our operators are…
• LTC (LTC PROPERTIES INC)
• FY2025 10-K: …for reporting and decision-making purposes: real estate investments segment and seniors housing operating portfolio segment. Our real estate investments segment ("Real Estate Investments Segment") consists of owned real properties that are leased pursuant to non-cancelable triple-net operating leases ("NNN" or…
• FY2025 10-K: …portfolio by geographic location, operator, property classification and form of investment. We conduct and manage our business as two operating segments for internal reporting and internal decision-making purposes: real estate investments ("Real Estate Investments") segment which consists of our portfolio of owned…
• BRX (Brixmor Property Group Inc.)
• FY2025 10-K: …loans are presented using rates (including the impact of interest rate swaps), as of December 31, 2025. See Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" for a further discussion of these and other factors that could impact interest payments. Other Essential Expenditures We incur certain…
• FY2025 10-K: …evaluated the Operating Partnership and has determined it is not a VIE as of December 31, 2025. The Company acquires properties, from time to time, using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a "reverse 1031 exchange") and, as such, the properties are in the…
• REG (REGENCY CENTERS CORPORATION)
• FY2025 10-K: 90 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements December 31, 2025 (h) Lease Obligations The Company has certain properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties, which…
• FY2025 10-K: …applicable. The value of above-market leases is amortized as a reduction of Lease income over the remaining terms of the respective leases and the value of below-market leases is accreted to Lease income over the remaining terms of the respective leases, including below-market renewal options, if applicable. 87…

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

Q1 2026 earnings release