Intrinsic Value Altarea SCA (ALTA.PA)

• Previous Close: €116.20
• Intrinsic Value: €55.44
• Upside potential: -52%

Stock Valuation Context

Business Model And Market Position

Altarea SCA is a leading French real estate developer and investor, operating across three core markets: Retail, Housing, and Business real estate. The company specializes in mixed-use urban renewal projects, leveraging its integrated expertise in design, development, marketing, and property management to deliver tailored real estate solutions. Its diversified portfolio and strong presence in France position it as a key player in large-scale urban transformation initiatives, combining development agility with long-term investment stability. Altarea’s market leadership is reinforced by its inclusion in the SBF 120 index, reflecting its prominence in the French real estate sector. The company’s ability to execute complex, mixed-use projects provides a competitive edge, catering to evolving urban demands while maintaining a balanced risk profile. Its dual role as developer and investor allows for recurring income streams alongside development profits, enhancing resilience across market cycles.

Revenue Profitability And Efficiency

Altarea reported revenue of €2.71 billion for the period, though net income was subdued at €6.1 million, reflecting sector-wide pressures or project timing. Operating cash flow stood at €432.3 million, indicating robust operational performance, while capital expenditures were modest at €26.9 million, suggesting disciplined investment. The diluted EPS of €0.28 underscores earnings challenges amid a high-debt environment.

Earnings Power And Capital Efficiency

The company’s operating cash flow demonstrates solid earnings power, but net income margins remain thin, likely due to interest expenses or development cycle delays. With €778.9 million in cash, Altarea maintains liquidity, though its total debt of €2.74 billion signals leveraged growth. The balance between development returns and recurring income will be critical for improving capital efficiency.

Balance Sheet And Financial Health

Altarea’s financial health is marked by €778.9 million in cash against €2.74 billion in total debt, indicating a leveraged but manageable position. The REIT structure typically supports stable cash flows, but high debt levels necessitate careful liquidity management. The company’s ability to service debt will depend on project execution and rental income stability.

Growth Trends And Dividend Policy

Growth is driven by mixed-use urban projects, though recent net income suggests cyclical headwinds. A dividend of €16 per share reflects a commitment to shareholder returns, supported by operating cash flow. Future growth hinges on France’s urban renewal demand and Altarea’s ability to monetize developments efficiently.

Valuation And Market Expectations

With a market cap of €2.24 billion and a beta of 1.039, Altarea trades with moderate volatility, aligned with sector peers. Investors likely price in recovery potential in development margins and stable income from its investment portfolio. Valuation metrics should be weighed against debt levels and project pipeline visibility.

Strategic Advantages And Outlook

Altarea’s integrated model and urban renewal focus provide strategic advantages in a fragmented market. The outlook depends on France’s real estate demand and the company’s ability to navigate interest rate impacts. Its dual developer-investor role offers flexibility, but execution and debt management will be key to sustaining long-term value.

Sources

Company filings, Euronext Paris, SBF 120 index data