We assign a fundamental rating of 4 out of 10 to SRC. SRC was compared to 124 industry peers in the Diversified REITs industry. SRC scores excellent on profitability, but there are concerns on its financial health. While showing a medium growth rate, SRC is valued expensive at the moment.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year SRC was profitable.
SRC had a positive operating cash flow in the past year.

1.2 Ratios

SRC has a better Return On Assets (2.87%) than 74.40% of its industry peers.
The Return On Equity of SRC (5.52%) is better than 76.00% of its industry peers.
The Return On Invested Capital of SRC (3.14%) is better than 63.20% of its industry peers.
The Average Return On Invested Capital over the past 3 years for SRC is in line with the industry average of 3.05%.
The last Return On Invested Capital (3.14%) for SRC is above the 3 year average (2.96%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	2.87%
ROE	5.52%
ROIC	3.14%

ROA(3y)1.89%

ROA(5y)2.17%

ROE(3y)3.49%

ROE(5y)3.92%

ROIC(3y)2.96%

ROIC(5y)3.19%

1.3 Margins

SRC has a better Profit Margin (32.87%) than 87.20% of its industry peers.
In the last couple of years the Profit Margin of SRC has grown nicely.
With an excellent Operating Margin value of 44.35%, SRC belongs to the best of the industry, outperforming 88.80% of the companies in the same industry.
In the last couple of years the Operating Margin of SRC has grown nicely.
SRC has a better Gross Margin (95.85%) than 96.00% of its industry peers.
SRC's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	44.35%
PM (TTM)	32.87%
GM	95.85%

OM growth 3Y-3.89%

OM growth 5Y2.83%

PM growth 3Y6.81%

PM growth 5Y17.76%

GM growth 3Y-0.21%

GM growth 5Y0.51%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

SRC has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, SRC has more shares outstanding
Compared to 1 year ago, SRC has a worse debt to assets ratio.

2.2 Solvency

SRC has an Altman-Z score of 0.58. This is a bad value and indicates that SRC is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 0.58, SRC perfoms like the industry average, outperforming 49.60% of the companies in the same industry.
SRC has a Debt/Equity ratio of 0.85. This is a neutral value indicating SRC is somewhat dependend on debt financing.
SRC's Debt to Equity ratio of 0.85 is fine compared to the rest of the industry. SRC outperforms 64.00% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.85
Debt/FCF	N/A
Altman-Z	0.58

ROIC/WACC0.45

WACC6.93%

2.3 Liquidity

A Current Ratio of 0.61 indicates that SRC may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.61, SRC is doing worse than 77.60% of the companies in the same industry.
SRC has a Quick Ratio of 0.61. This is a bad value and indicates that SRC is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of SRC (0.58) is worse than 77.60% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.61
Quick Ratio	0.58

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The earnings per share for SRC have decreased by -7.41% in the last year.
The Earnings Per Share has been growing by 20.59% on average over the past years. This is a very strong growth
Looking at the last year, SRC shows a quite strong growth in Revenue. The Revenue has grown by 10.57% in the last year.
Measured over the past years, SRC shows a quite strong growth in Revenue. The Revenue has been growing by 10.47% on average per year.

EPS 1Y (TTM)-7.41%

EPS 3Y1%

EPS 5Y20.59%

EPS Q2Q%-53.7%

Revenue 1Y (TTM)10.57%

Revenue growth 3Y11.18%

Revenue growth 5Y10.47%

Sales Q2Q%5.74%

3.2 Future

SRC is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -7.61% yearly.
Based on estimates for the next years, SRC will show a small growth in Revenue. The Revenue will grow by 6.45% on average per year.

EPS Next Y-16.82%

EPS Next 2Y-17.44%

EPS Next 3Y-10.67%

EPS Next 5Y-7.61%

Revenue Next Year7.73%

Revenue Next 2Y5.01%

Revenue Next 3Y4.5%

Revenue Next 5Y6.45%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 24.18 indicates a rather expensive valuation of SRC.
Compared to the rest of the industry, the Price/Earnings ratio of SRC indicates a somewhat cheap valuation: SRC is cheaper than 70.40% of the companies listed in the same industry.
SRC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.60.
SRC is valuated quite expensively with a Price/Forward Earnings ratio of 30.43.
Based on the Price/Forward Earnings ratio, SRC is valued a bit cheaper than 76.00% of the companies in the same industry.
SRC is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.83, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	24.18
Fwd PE	30.43

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SRC is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	N/A
EV/EBITDA	14.94

4.3 Compensation for Growth

SRC has a very decent profitability rating, which may justify a higher PE ratio.
SRC's earnings are expected to decrease with -10.67% in the coming years. This may justify a cheaper valuation.

PEG (NY)N/A

PEG (5Y)1.17

EPS Next 2Y-17.44%

EPS Next 3Y-10.67%

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5. Dividend

5.1 Amount

SRC has a Yearly Dividend Yield of 6.33%, which is a nice return.
Compared to an average industry Dividend Yield of 6.82, SRC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 1.82, SRC pays a better dividend.

		Industry Rank	Sector Rank
Dividend Yield	6.33%

5.2 History

The dividend of SRC decreases each year by -6.14%.
SRC has been paying a dividend for at least 10 years, so it has a reliable track record.
SRC has decreased its dividend recently.

Dividend Growth(5Y)-6.14%

Div Incr Years1

Div Non Decr Years1

5.3 Sustainability

SRC pays out 154.84% of its income as dividend. This is not a sustainable payout ratio.
The Dividend Rate of SRC has been decling, while earnings will also be declining. This means the current dividend is most likely not sustainable.

DP154.84%

EPS Next 2Y-17.44%

EPS Next 3Y-10.67%

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Spirit Realty Capital Inc / SRC FAQ

Can you provide the ChartMill fundamental rating for Spirit Realty Capital Inc?

ChartMill assigns a fundamental rating of 4 / 10 to SRC.

What is the valuation status of Spirit Realty Capital Inc (SRC) stock?

ChartMill assigns a valuation rating of 2 / 10 to Spirit Realty Capital Inc (SRC). This can be considered as Overvalued.

What is the profitability of SRC stock?

Spirit Realty Capital Inc (SRC) has a profitability rating of 8 / 10.

Can you provide the financial health for SRC stock?

The financial health rating of Spirit Realty Capital Inc (SRC) is 1 / 10.

What is the earnings growth outlook for Spirit Realty Capital Inc?

The Earnings per Share (EPS) of Spirit Realty Capital Inc (SRC) is expected to decline by -16.82% in the next year.