PHILLIPS EDISON & COMPANY, INC. (PECO): what the price assumes

Generated: 2026-08-08 · Exported: 2026-08-09 · Source: https://boothcheck.com/report/PECO

Headline

Field	Value
Ticker	PECO
Company	PHILLIPS EDISON & COMPANY, INC.
Current price	$41.59/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	reit
Implied FFO growth	-3.2%
Price-to-FFO	14.2x
FFO yield	7.1%

Solve inputs: computed at a 9% cost of equity with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range

Reference	Value
vs own history	-0.27σ
cohort percentile (of 105 peers)	49
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	4.23x	4	expensive
Earnings	2.90x	4	expensive
Relative	1.28x	6	expensive
Growth	0.89x	5	justifies

Families that justify the price: 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 7.7%); the inversion above states its own rate.

Per-Model Detail (n=19)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$89.31	0.47x	yes	FCF base $0.4B, growth 8% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection
DCF Exit Multiple	Growth	$67.77	0.61x	yes	Exit EV/EBITDA: 29.4x / 31.4x / 33.4x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$50.33	0.83x	yes	P/E 27.14x (blended: static sector reference 35x + trailing (TTM) 15x), scenarios: 22.7x / 27.1x / 31.6x (bear / base = reference held flat / bull), EV/EBITDA 23.42x
Simple DDM	Growth	$39.23	1.06x	yes	DPS $1.18, g=6.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$18.63	2.23x	yes	Stage 1: 0% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$11.16	3.73x	yes	BV/sh $17.06, ROE (TTM) 6.1%, ke 9.3%
Two-Stage Excess Return	Asset	$8.80	4.73x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$46.94	0.89x	yes	Rev $0.8B, growth 8% (input: historical growth; tapered), Terminal P/S: 6.4x / 7.7x / 9.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$32.52	1.28x	yes	FFO/share $2.71, growth 0% (input: historical FFO/share growth, 10y median), PEG=86.42 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$8.50	4.89x	yes	BV $17.06 + 5yr PV of (ROE (TTM) 6.1% − Kₑ 9.3%) × BV; BV grows 3.9%/yr
Graham Number	Asset	$32.25	1.29x	yes	√(22.5 × FFO/share $2.71 × BVPS $17.06) — Graham's conservative floor
EV/EBITDA Relative	Relative	$20.13	2.07x	yes	EBITDA $0.26B × sector EV/EBITDA 20.0x
FCF Yield	Earnings	$10.80	3.85x	yes	FCF $365.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$9.86	4.22x	yes	SBC-adj FCF $0.35B (FCF $0.37B − SBC $0.01B) capitalized at Kₑ
Ben Graham Formula	Earnings	$21.42	1.94x	yes	FFO/share $2.71 × (8.5 + 2×0.5%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$32.37	1.28x	yes	Revenue $0.75B × sector P/S 6.0x
PEG Fair Value	Relative	$13.55	3.07x	yes	FFO/share $2.71 × (PEG 1.5 × growth 0.5% (input: historical FFO/share growth, 10y median)) → PE 0.7x
Earnings Yield	Earnings	$29.30	1.42x	yes	FFO/share $2.71 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	$38.16	1.09x	yes	FFO/share $2.71 × 14.1x P/FFO (route cohort median, n=85); FFO $0.38B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 139M
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

Unit	Role	Valuation basis	Revenue	Reported profit	Value evidence	Status
Real Estate Properties	operating	enterprise	0.7B reported-currency	—	withheld	unresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Field	Value
Funds from operations (trailing)	$377.7m
Share count CAGR (dilution)	1.9%
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

• Phillips Edison owns grocery-anchored neighborhood centers where the anchor is a supermarket people visit weekly, and the model shows in the numbers: same-center leased occupancy of 97.3% and renewal rent spreads of 21.2% in Q1 2026.
• The clearest risk is leverage against a slow-growth asset: net debt of about $2.49 billion sits at roughly 6.6 times funds from operations, so the dividend and the $400 to $500 million acquisition program both lean on capital markets staying open at workable rates.
• Watch the same-center NOI line, guided to 3 to 4 percent for 2026, and the next core FFO print: management raised full-year core FFO guidance to roughly 5.8 percent growth at the midpoint, and the gap between that and the flat-to-declining funds the price assumes is the whole question.

Bull Case

Grocery is the part of retail that the internet never took. People buy food every week, they want it fresh, and they want it close, and that simple fact is the foundation under every Phillips Edison center. The anchor tenant is a supermarket, and the shop space around it fills with the dry cleaner, the nail salon, the urgent-care clinic, and the quick-service restaurant that benefit from a steady stream of shoppers who already had a reason to drive over. That is a different business from the enclosed mall or the power center built around a category killer. The traffic is non-discretionary, it recurs, and it does not wait for a sale.

The leasing numbers are where the model proves itself. Same-center leased occupancy ran 97.3% in the first quarter of 2026, which is close to the practical ceiling for a shopping-center portfolio, and the spreads on new business were the more telling figure: comparable renewal leases signed at a 21.2% rent increase and comparable new leases at a 36.2% increase. Those spreads are what pricing power looks like in real estate. When a tenant whose lease is expiring agrees to pay a fifth more to stay, and a new tenant agrees to pay a third more than the prior occupant did, the landlord is not discounting to keep the lights on. It is collecting on space that the market values above what the in-place rent reflects, and that embedded gap converts to NOI as leases roll.

That conversion is the compounding engine. Management guides same-center NOI growth of 3 to 4 percent for 2026 and frames it as a durable pace, with the leasing mix shifting toward renewals that carry higher economics over time. On top of organic growth, the company is buying: $400 to $500 million of gross acquisitions planned for 2026 at PECO's share, deployed into the same grocery-anchored format it already knows how to operate. Internal growth plus accretive external growth is the formula that produced 6.2% core funds-from-operations-per-share growth in the first quarter and a full-year guide of roughly 5.8% at the midpoint.

The capital returned to shareholders has tracked that growth. The board raised the monthly dividend 5.7% in September 2025, the fifth straight annual increase and the second in a row above five percent. A REIT that can raise its payout mid-single-digits every year while keeping occupancy near full and signing double-digit renewal spreads is doing the unglamorous thing well, which in this corner of real estate is the whole job.

Bear Case

Start with the debt, because for a REIT that grows by acquisition the balance sheet is the governor on everything else. Net debt sits near $2.49 billion against funds from operations of roughly $378 million, which is about 6.6 times. That is a normal number for a shopping-center REIT, but normal is not the same as harmless. The acquisition program that drives a chunk of the growth story, $400 to $500 million planned for 2026, has to be funded, and a REIT funds with some mix of retained cash it mostly does not have after the dividend, new equity, and new debt. When the cost of that debt rises, the math on each new center gets thinner, and the accretion the bull case leans on shrinks toward the cost of capital.

Now read what the price already assumes, because it is the opposite of demanding. At today's price the stock trades at about 14.4 times adjusted funds from operations, the funds-from-operations figure net of the recurring capital it takes to keep the centers leasable, for an adjusted-FFO yield near 6.9%. Inverted, that price embeds essentially no growth in adjusted funds from operations from here, a slightly negative path on the engine's read. So the bear case is not that the market is pricing in a fantasy. It is the reverse problem. The price is paying a full mid-six multiple for a business whose adjusted cash generation the market expects to flatline, which means the entire return has to come from the dividend yield holding and the multiple not slipping. There is little growth cushion priced in to absorb a bad year.

That is the fragility. If same-center NOI growth fades from the 3-to-4 percent guide toward the low end or below, or if a couple of grocery anchors go dark in a weak format and the shop space around them empties, the adjusted-FFO line does not just miss a growth target, it has to defend a multiple that already assumes no help from growth. The plain funds-from-operations figure looks cheaper at about 13.6 times, but that gross number flatters the picture because it adds back the recurring maintenance capital a shopping center genuinely needs to keep tenants signing those renewal spreads. The adjusted figure is the honest one, and on the adjusted figure the price is paying full freight for stability.

The countervailing strengths are real and worth stating plainly. Fixed-charge coverage near 14.6 times says the company can service its obligations with wide room, and the dividend is well covered out of funds from operations. Share count has crept up only modestly, around two percent a year, so dilution is not eating the per-share story. This is not a balance sheet in trouble. It is a balance sheet that works fine in the current rate environment and gets squeezed in a worse one, attached to a price that has already spent the growth it might otherwise lean on.

Valuation

The right lens for a grocery-anchored REIT is adjusted funds from operations, the cash the centers throw off after the recurring capital it takes to keep them leasable, and on that lens Phillips Edison trades at about 14.4 times. That works out to an adjusted-FFO yield near 6.9%. Plain funds from operations, the gross figure before that maintenance capital, sits at about 13.6 times for a 7.4% yield, and it is the starting point the adjusted number refines rather than a separate valuation in its own right. The adjusted multiple is the one that matters, because it reflects what the buyer actually keeps.

What that multiple is betting is unusually modest. Inverted, today's price embeds essentially no growth in adjusted funds from operations from here, a slightly negative trajectory on the math. That is not a price reaching for a growth story. It is a price paying for a yield and assuming the cash generation roughly holds, which puts the weight of the return on the dividend and on the multiple staying put rather than on the business accelerating. Set against management's guide of mid-single-digit core FFO growth and 3-to-4 percent same-center NOI, the market is crediting the company with less forward growth than it is currently delivering.

The methods that triangulate this price split cleanly, and the split is the signal. Measured against asset value and against trailing earnings power, the price looks expensive, both of those lenses land well below today's level. That is the normal shape for a REIT, because real-estate depreciation guts reported earnings and the asset-value lens reads conservatively against a portfolio whose leasing economics are improving faster than book value moves. Measured against peer multiples and against a growth-aware cash-flow read, the price is supported, both of those land at or slightly above today's level. The pattern is a REIT the market prices on cash yield and peer comparison rather than on book or GAAP earnings, which is the correct frame for the format.

Solvency rounds it out and bears on the downside directly. Net debt near $2.49 billion runs about 6.6 times funds from operations, ordinary for the sector, and fixed-charge coverage near 14.6 times leaves wide room to service obligations. Share count has grown only modestly, around two percent a year, so the per-share story is not being diluted away. The balance sheet is sound at current rates and tightens at higher ones, which is the variable that most directly governs whether the acquisition-fueled growth the price assumes away ever shows up at all.

Catalysts

The most recent print set the tone. In the first quarter of 2026 Phillips Edison reported Nareit FFO of $0.67 per diluted share and core FFO of $0.69, with core FFO per share up 6.2% year over year and same-center NOI up 3.5%. On the back of it, management raised the full-year 2026 outlook, lifting the core FFO guide to roughly 5.8% growth at the midpoint and reiterating same-center NOI growth of 3 to 4 percent. The quarter also showed the leasing engine running hot, with same-center leased occupancy at 97.3% and renewal rent spreads of 21.2%.

The forward items to watch are the acquisition pace and the rate backdrop behind it. The company reaffirmed gross acquisitions of $400 to $500 million at its share for 2026, the external-growth lever that supplements organic NOI. How accretive that deployment turns out to be depends on financing cost, which makes each refinancing and each new debt issuance a real swing factor for the per-share growth rate. On capital returns, the September 2025 dividend increase of 5.7% was the fifth consecutive annual raise, and the cadence of monthly distributions continues. Analyst price targets have clustered near the current quote, with one recent update landing around $40, reflecting a stock the street reads as roughly fairly priced for its growth and yield rather than a clear bargain or an obvious short.

Peer Cohorts (Per Segment, With Filing Citations)

Real Estate Properties (reported)

• SKT (TANGER INC)
• FY2025 10-K: …Acquisitions of Real Estate In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, we account…
• FY2025 10-K: …We continue to monitor facts and circumstances and events in future periods that could affect inputs such as the expected holding period, operating cash flow forecasts and capitalization rates, utilized to determine whether an impairment charge is necessary. We can provide no assurance that material impairment…
• BRX (Brixmor Property Group Inc.)
• 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…
• FY2025 10-K: …and successfully integrate, operate, reposition, or redevelop such properties is subject to several risks. We may be unable to acquire desired properties because of competition from other real estate investors, including from other well-capitalized REITs and institutional investment funds. Even if we are able to…
• REG (REGENCY CENTERS CORPORATION)
• FY2025 10-K: …in Cash flows provided by operating activities in the accompanying Consolidated Statements of Cash Flows. Cash distributions from the sale of a property or loan proceeds received from the placement of debt on a property included in Investments in real estate partnerships are presented in Cash flows provided by…
• FY2025 10-K: …various real estate partnerships, of which 18 are consolidated. These partnerships were formed for the purpose of owning and operating real estate properties. The Company's partners in these arrangements include institutional investors, real estate developers or operators, and passive investors (collectively, the…
• KIM (KIMCO REALTY CORPORATION)
• FY2025 10-K: …for over 65 years. The Company has not engaged, nor does it expect to retain, any REIT advisors in connection with the operation of its properties. The Company's ownership interests in real estate consist of its consolidated portfolio and portfolios where the Company owns an economic interest, such as properties in…
• FY2025 10-K: …for such properties. The Company's estimated fair values of these assets were primarily based upon estimated sales prices from signed contracts or letters of intent from third-party offers, which were less than the carrying value of the assets. See Footnote 18 of the Notes to Consolidated Financial Statements for…
• UE (URBAN EDGE PROPERTIES)
• FY2025 10-K: …the property when completed. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of redeveloped property, the excess is charged to impairment expense. The capitalization period begins when redevelopment activities are under way and ends when…
• FY2025 10-K: …from tenant expense reimbursements, which provide for the recovery of all or a portion of the operating expenses, common area maintenance expenses, real estate taxes, insurance and capital improvements of the respective property and amounted to $ 130.7 million, $ 118.5 million and $ 103.7 million for the years ended…
• WPC (W. P. Carey Inc.)
• FY2025 10-K: Member wpc:RealEstateSubjectToOperatingLeaseMember wpc:MesquiteTexasMember 2025-09-18 2025-09-18 0001025378 srt:RetailSiteMember wpc:RealEstateSubjectToOperatingLeaseMember wpc:KissimmeeFloridaMember 2025-09-23 0001025378 srt:RetailSiteMember wpc:RealEstateSubjectToOperatingLeaseMember wpc:KissimmeeFloridaMember…
• FY2025 10-K: 01025378 wpc:RealEstateSubjectToOperatingLeaseMember wpc:NetLeaseSelfStorageFacilitiesInRaleighNCAndMountPleasantSCMember 2025-01-01 2025-12-31 0001025378 wpc:RealEstateSubjectToOperatingLeaseMember wpc:WarehouseFacilitiesInMcHenryILMember 2025-12-31 0001025378 wpc:RealEstateSubjectToOperatingLeaseMember…
• INVH (Invitation Homes Inc.)
• FY2025 10-K: …located primarily in 16 core markets across the United States as of December 31, 2025: • Acquisition of Real Estate Assets: Upon acquisition, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business…
• FY2025 10-K: In addition, we may have no source of funding to repair or reconstruct the damaged home, and we cannot assure that any such sources of funding will be available to us for such purposes in the future. We may have difficulty selling our real estate investments, and our ability to distribute all or a portion of the net…
• ESS (ESSEX PROPERTY TRUST, INC.)
• FY2025 10-K: …properties for investment purposes, it does not believe that its occasional transfers or disposals of property should be treated as prohibited transactions. However, if the Internal Revenue Service successfully contends that certain transfers or disposals of properties by the Company are prohibited transactions, then…
• FY2025 10-K: …statements. For all remaining consolidated properties and selected assets with the Company's co-investments, the Company has obtained limited third party seismic insurance. A number of purported class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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, 8-K April 2026 · company 2026 acquisition guidance · Q1 2026 earnings release · Q1 2026 earnings call, April 2026 · 2026 acquisition guidance · company dividend announcement, September 2025 · company dividend announcements, 2025-2026 · analyst note, 2026