Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Dream Industrial Real Estate Investment Trust (TSE:DIR.UN). Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Dream Industrial Real Estate Investment Trust’s Improving Profits
Over the last three years, Dream Industrial Real Estate Investment Trust has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don’t think the percent growth rate is particularly meaningful. As a result, I’ll zoom in on growth over the last year, instead. It’s good to see that Dream Industrial Real Estate Investment Trust’s EPS have grown from CA$1.09 to CA$1.22 over twelve months. That’s a 12% gain; respectable growth in the broader scheme of things.
One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Dream Industrial Real Estate Investment Trust’s EBIT margins were flat over the last year, revenue grew by a solid 34% to CA$220m. That’s a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
While it’s always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Dream Industrial Real Estate Investment Trust’s balance sheet strength, before getting too excited.
Are Dream Industrial Real Estate Investment Trust Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.
It’s a pleasure to note that insiders spent CA$4.4m buying Dream Industrial Real Estate Investment Trust shares, over the last year, without reporting any share sales whatsoever. And so I find myself almost expectant, and certainly hopeful, that this large outlay signals prescient optimism for the business. It is also worth noting that it was Non-Independent Trustee Michael Cooper who made the biggest single purchase, worth CA$4.0m, paying CA$13.45 per share.
It’s me that Dream Industrial Real Estate Investment Trust insiders are buying the stock, but that’s not the only reason to think leader are fair to shareholders. Specifically, the CEO is paid quite reasonably for a company of this size. I discovered that the median total compensation for the CEOs of companies like Dream Industrial Real Estate Investment Trust with market caps between CA$1.3b and CA$4.2b is about CA$2.9m.
The CEO of Dream Industrial Real Estate Investment Trust only received CA$610k in total compensation for the year ending December 2018. That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I’d also argue reasonable pay levels attest to good decision making more generally.
Does Dream Industrial Real Estate Investment Trust Deserve A Spot On Your Watchlist?
One positive for Dream Industrial Real Estate Investment Trust is that it is growing EPS. That’s nice to see. Like chocolate chips in vanilla ice cream, the insider buying, and modest CEO pay, make it better. The sum of all that, for me, points to a quality business, and a genuine prospect for further research. Of course, just because Dream Industrial Real Estate Investment Trust is growing does not mean it is undervalued. If you’re wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
As a growth investor I do like to see insider buying. But Dream Industrial Real Estate Investment Trust isn’t the only one. You can see a a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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What $500,000 buys in today's Canadian real estate market – Regina Leader-Post
Article content continued
Killarney Road, New Brunswick
80 Jenkins Drive ($499,900)
Located a four-minute drive from Fredericton, this New Brunswick home is reminiscent of a New England farmhouse. The five-bedroom, 3.5 bathroom two-storey features red cedar shingles and tiled floors and, in the kitchen, red shaker cabinetry with accent glass doors, stone backsplash, porcelain floors and new appliances. The kitchen opens to a formal dining room with red pine plank floors. A spacious living room and den/potential bedroom complete the main level. The upper level offers a newly refinished bathroom with porcelain floors, tub/shower with white subway tile and three bedrooms. A large master comes with a private ensuite, complete with large vanity, soaker tub, tile shower and porcelain floors. The recently finished lower level includes a generous-sized family room, two more large bedrooms, and a third full bathroom, also with tub/shower with white subway tile. Outside, a back deck and two covered front porches look out on a landscaped yard.
#202-2410 Rue Ste-Catherine E. ($499,700)
This two-bedroom, one-bath Montreal condo offers 1,232 square feet of open space with large bedrooms and a private 20′ x 8′ terrace. It’s located in the Ville Marie neighbourhood, home to Montreal’s central business district.
#1112 -1420 Dupont St. ($499,900)
Located in the Junction Triangle in Toronto’s West End, this one-bedroom, one-bathroom condo features exposure to an abundance of natural light. Panoramic views of the city are on display from the bedroom and balcony. Freshly painted with upgraded bedroom storage and glass roller door, the unit is near shops and grocery stores as well as subway and transit. Parking included.
RESAAS Enters Commercial Real Estate Industry – Canada NewsWire
VANCOUVER, BC, Jan. 26, 2021 /CNW/ – RESAAS Services Inc. (TSXV: RSS) (OTCQB: RSASF), a technology platform for the real estate industry, is pleased to announce the launch of its dedicated Platform for the Global Commercial Real Estate industry.
- Global Commercial Real Estate industry valued at $16 Trillion*.
- RESAAS Platform already proven to collect valuable Residential real estate data.
- RESAAS will duplicate its data-gathering Platform for the Commercial industry.
- New business division significantly expands RESAAS’ recurring revenue.
- RESAAS operates in 161 countries and supports near 500,000 Residential Agents.
“RESAAS’ success within Residential real estate has empowered licensed Agents to collaborate successfully. The RESAAS Platform, the first of its kind, remains unique in its position to enable the entire industry, regardless of location or Brokerage, to share unique real estate data,” said RESAAS CEO, Tom Rossiter.
“RESAAS is revolutionizing the Commercial Real Estate industry, providing Agents, Brokers and Firms with a proven Platform to share unique data. RESAAS’ Microsoft-powered Commercial Platform will unlock an entirely new revenue stream for the Company.”
RESAAS Commercial will be White-Labeled for large Commercial Real Estate Firms and Brokerages. RESAAS Commercial will benefit from RESAAS’ proven experience working with leading Residential real estate firms such as RE/MAX (NYSE: RMAX) and Keller Williams Realty.
About RESAAS Services Inc.
RESAAS is a technology platform that enables real estate brokerages, franchises and associations to bring real-time communication, new business opportunities and unique data to their agents on a global basis.
Visit www.resaas.com for more information.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The statements made in this news release may contain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from RESAAS Services Inc.’s expectations and projections.
SOURCE RESAAS SERVICES INC.
For further information: Don Mosher, RESAAS Services Inc., Tel: +1 (604) 617-5448, Email: [email protected]
How likely is a Canadian real estate crash in 2021? – Mortgage Broker News
Ah, the Canadian housing crash. Always just around the corner, yet never seeming to materialize. People write and talk about the derailing of the real estate gravy train so frequently that a person could be forgiven for thinking some portion of the population is secretly rooting for it to happen.
So, what then to make of Lowestrates.ca’s report: Will the Canadian Housing Market Crash in 2021?
To the credit of authors Lisa Coxon and Zandile Chiwanza, the report tries to present the possibility of a housing crash from opposing angles – one arguing the unlikelihood of a crash and the other saying a crash has “already started”.
Why a crash isn’t likely
For the pro-crash perspective, Coxon and Chiwanza lean heavily on the fact that both corporations and households are more indebted now than they were in 1990, the last time the Canadian housing bubble was said to have popped due to a recession. While debt levels in Canada are far higher today than they were 30 years ago, interest rates are also far lower. According to Statistics Canada, the conventional rate on a five-year mortgage was 13.35% in 1990, which would give borrowers far less breathing room in the case of financial disruption. And lest we forget, the recession triggered by COVID-19, deemed “the deepest but shortest recession in history”, is technically already over.
Even taking into account the inflated prices homeowners are paying now compared to 1990, few experts see a wave of delinquencies, defaults, or foreclosures hitting the Canadian market in 2021.
“Generally speaking, we’ve seen a flat pattern coming out of [mortgage] deferrals in terms of consumer delinquency overall,” Matt Fabian of TransUnion told MBN. “Certainly, with mortgages, we’re actually seeing a little bit of a drop in delinquency rates.”
But Coxon and Chiwanza argue that the end of programs like mortgage deferrals and government wage subsidies leave the market at risk. They turn to Hilliard MacBeth’s, author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, comments on the condo market for confirmation that trouble is already brewing.
“‘It’s showing up in the condo market first,” it is stated. “There’s a huge surplus in the condo market, both on condos for rent and condos for sale. And then related to that, there’s a huge number of new purpose-built rentals either on the market or are about to hit the market.’”
Here is where theories of a market crash typically start breaking down, in this author’s opinion. They assume, possibly because Canada’s population is as modest as it is, that the Canadian real estate market is a tiny, self-contained ecosystem where a single pollutant can contaminate the entire thing. That’s not the case. There is no “Canadian real estate market.”
The condo market and the detached market are entirely separate entities. The price of one does not directly impact the price of the other. Sure, if home prices grow too quickly buyers will be forced to start purchasing condos, a trend that will drive condo prices up; but the phenomenon doesn’t work the other way. If condo prices fall, that has no impact on the prices of other housing types. Has anyone reading this article seen evidence that Canada’s falling condo prices slowed the growth of townhouse, detached, or semi-detached prices in 2020?
It’s also important to keep in mind that local real estate markets in Canada are insulated by geography. Falling home prices in Alberta, for instance, will not affect prices in any other province. Why would they?
A nationwide housing crash would require a financial calamity – think 2008 in the US – that threatens the livelihoods (and mortgages) of many of the country’s homeowners, forcing tens of thousands of them spread across every major Canadian real estate market to sell their homes simultaneously, thereby dragging home values down in each one. Those values would then have to be brought low enough that homeowners holding on to their properties would see the entirety of their equity wiped out and be forced to sell into a tanking market. That’s not likely to happen in communities where home values have risen by 5-10% annually over the last several years, and there is no shortage of those.
To be fair, MacBeth isn’t the only person expecting prices to drop. The Real Estate Investment Network recently released a report encouraging investors to prepare for a rise in delinquencies and foreclosures in the third quarter of 2021.
“Housing prices are the last to be affected,” by factors such as decreased economic growth, higher unemployment, and falling immigration numbers, REIN’s Jennifer Hunt said. “They’re lagging indicators. So yes, you’re seeing in many cities in Canada these frothy markets. But that’s exactly the behaviour we look for in a market that is entering a slump.”
A more probable outcome
Even LowestRates.ca CEO Justin Thouin isn’t expecting anything resembling a crash to hit Canadian real estate in 2021.
“Personally, I don’t think we’re going to see a crash,” Thouin told MBN, but added that the amount of debt being carried by Canadians does pose a threat to their ability to pay their mortgages.
“If I were to be most concerned, it would be in the prairies, specifically in Alberta, where the economy is far worse off than the rest of Canada,” he said.
In Thouin’s opinion, low interest rates will continue protecting homeowners from delinquency, while the rebound in immigration and employment expected by many in 2021 should help the economy recover from what has already been almost a full year of COVID-19-related nausea.
This more optimistic view is the predominant theme in LowestRates.ca’s report, which includes Moody’s Analytics economist Abhilasha Singh’s view that home prices in Canada could fall this year, but only by 5% or so.
“‘We expect home prices to fall,’ said Singh. ‘But the recovery is going to be very quick, especially after looking at the results of the vaccines.’”
She told LowestRates that a crash isn’t on the cards.
“We are expecting a modest correction,” she said. “But not a crash.”
New coronavirus variants pose major risk to the global economy, IMF warns – CTV News
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