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If You Invested $1000 in Prologis a Decade Ago, This is How Much It'd Be Worth Now

·4 min read

How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Prologis (PLD) ten years ago? It may not have been easy to hold on to PLD for all that time, but if you did, how much would your investment be worth today?

Prologis' Business In-Depth

With that in mind, let's take a look at Prologis' main business drivers.

Prologis Inc. is a leading industrial real estate investment trust (REIT) that acquires, develops, operates and manages industrial real estate space in the Americas, Asia and Europe. The company principally targets investments in distribution facilities for customers who are engaged in global trade and depend on efficient movement of goods through the global supply chain.

As of Jun 30, 2022, Prologis owned or had investments in properties and development projects aggregating around 1.0 billion square feet of space in 19 countries either on a wholly owned basis or through co-investment ventures. Modern distribution facilities are being leased by the company to around 5,800 customers. These customers belong to two main categories: business-to-business and retail/online fulfillment.

The company has been actively banking on its growth opportunities through acquisitions and developments. Since the ProLogis–AMB merger in 2011 through year-end 2020, this industrial REIT has accomplished investment transactions aggregating more than $131.4 billion across 30 global markets. These investments comprise a wide array, including the largest M&A transactions in the real estate sector as well as individual off-market deals of less than $5 million.

In the second quarter of 2022, Prologis’ share of building acquisitions amounted to $846 million, with a weighted average stabilized cap rate (excluding other real estate) of 3.9% in the reported quarter. Development stabilization aggregated $817 million, while development starts totaled $1.67 billion, with 25.6% being build-to-suit.

In June 2022, Prologis entered into a definitive merger agreement to acquire Duke Realty in an all-stock transaction valued at $26 billion, including the assumption of debt. The transaction is expected to be completed in fourth-quarter 2022, subject to customary closing conditions. Per the agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share owned.

Note**: All EPS numbers presented in this report represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Bottom Line

Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Prologis ten years ago, you're likely feeling pretty good about your investment today.

A $1000 investment made in August 2012 would be worth $4,154.31, or a gain of 315.43%, as of August 16, 2022, according to our calculations. This return excludes dividends but includes price appreciation.

In comparison, the S&P 500 gained 205.73% and the price of gold went up 5.84% over the same time frame.

Going forward, analysts are expecting more upside for PLD.

Prologis’ second-quarter 2022 results show an improvement in average occupancy and rent growth driven by the rising demand for its high-quality facilities in key markets. Also, favorable industrial real estate industry trends and a robust balance-sheet position are expected to fuel its near-term performance. Along with the fast adoption of e-commerce, this asset category is poised to gain from a likely rise in inventory levels. In June, Prologis announced that it will acquire Duke Realty in an all-stock transaction valued at $26 billion, including the assumption of debt. However, the rising supply of industrial real estate in several markets might fuel competition. The stock has underperformed the industry in the past six months. The recent estimate revision for 2022 funds from operations (FFO) per share does not indicate a favorable outlook.

The stock has jumped 16.09% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 6 higher, for fiscal 2022; the consensus estimate has moved up as well.
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