EPRT Stock Forecast & Price Target

Essential Properties Realty Trust Inc. demonstrates a strong financial performance, highlighted by sector-leading adjusted funds from operations (AFFO) growth, projected at a compound annual growth rate (CAGR) of approximately 9.0% for 2024 to 2026, significantly outpacing the sector average of 3.5%. The company maintains one of the lowest dividend payout ratios in the real estate investment trust space, supporting a solid earnings growth trajectory, while also benefiting from favorable conditions such as declining borrowing costs, which could improve its weighted average cost of capital (WACC). Furthermore, EPRT's aggressive investment strategy, underscored by an impressive $1.3 billion annual investment volume projection, positions the company well for sustained profitability, as evidenced by a record acquisition GAAP cap rate of 10.0% and rising lease escalations.

Essential Properties Realty Trust Inc has experienced a year-to-date share price decline of 2.6%, significantly underperforming its peer group, which has gained 13.0%, leading to a compression in its valuation multiple compared to competitors. The use of free cash flow (FCF) metrics suggests that the company's valuation aligns with management's mid-5.0% growth range but still indicates a less favorable outlook given the expected 7% growth for 2026 compared to the sector average of 3.5%. Additionally, the challenging environment of rising and volatile interest rates poses a risk to external growth prospects, contributing to a negative sentiment surrounding the stock's future performance.