Value
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 3.3 |
| EV/EBITDA | 1.4 |
| p ocf | 7.2 |
| Analyst target | 6.0 |
- ▸P/OCF: 14.4x (FFO proxy — REITs gated off P/E)
ADC · Why this verdict
Why Agree Realty (ADC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Agree Realty runs a high-quality property portfolio with margins of 29%, free cash flow conversion of 203% of net income, and a Rule of 40 score of 78, but with only 2.2% headroom to the analyst consensus target and a reward-to-risk ratio of 0.61, the setup favors patience over adding capital at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company converts 203% of net income into free cash flow, carries margins of 29%, and scores 8 out of 9 on a broad financial-health assessment, reflecting a well-run portfolio with strong capital efficiency that consistently produces cash above reported earnings. Quality breakdown | Free cash flow conversion stays above 150% of net income and margins remain above 24% over the next four quarters. | ↑Improving |
| CounterRising property operating costs or higher interest expense from refinancing could compress both margins and cash conversion, eroding the quality premium that currently justifies a valuation premium to peers. | ||
With only 2.2% headroom to the analyst consensus target and a reward-to-risk ratio of 0.61, the current entry point offers more downside exposure than potential gain, leaving little margin of safety for new capital. Price targets | A pullback of sufficient magnitude to restore a reward-to-risk ratio above 1.5 would be needed before the setup becomes constructive for incremental buying. | ↑Improving |
| CounterIf analyst consensus targets are revised materially upward — for example on better-than-expected acquisition activity — the upside gap could widen and reward holders who stayed invested at current prices. | ||
Despite an attractive headline yield, the dividend has been characterized as potentially unsustainable relative to underlying cash flows, suggesting the income return may not be fully supported even in a stable environment. Catalyst breakdown | Funds from operations payout ratio improves to below 75% over the next 12 months, demonstrating clear dividend coverage and removing the yield-trap concern. | ↓Deteriorating |
| CounterFree cash flow conversion of 203% of net income indicates substantial cash-generation capacity; if the dividend is in fact well-covered by FFO, the sustainability concern may be overstated by trailing accounting metrics. | ||
Falling on-balance volume signals that sellers are absorbing buying interest at current levels, a pattern inconsistent with durable price appreciation even as the stock holds above its long-term moving average. Momentum breakdown | On-balance volume turns positive and shows consistent accumulation for at least 6 consecutive weeks, confirming a shift in the supply and demand balance. | →Stable |
| CounterVolume distribution can reverse quickly on institutional reallocation into defensive real estate names; the trend may not persist if sector rotation or a rate-cutting cycle brings fresh demand. | ||
The company converts 203% of net income into free cash flow, carries margins of 29%, and scores 8 out of 9 on a broad financial-health assessment, reflecting a well-run portfolio with strong capital efficiency that consistently produces cash above reported earnings.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow conversion stays above 150% of net income and margins remain above 24% over the next four quarters.
CounterRising property operating costs or higher interest expense from refinancing could compress both margins and cash conversion, eroding the quality premium that currently justifies a valuation premium to peers.
With only 2.2% headroom to the analyst consensus target and a reward-to-risk ratio of 0.61, the current entry point offers more downside exposure than potential gain, leaving little margin of safety for new capital.
↑ImprovingPrice targets
- Expectation
- A pullback of sufficient magnitude to restore a reward-to-risk ratio above 1.5 would be needed before the setup becomes constructive for incremental buying.
CounterIf analyst consensus targets are revised materially upward — for example on better-than-expected acquisition activity — the upside gap could widen and reward holders who stayed invested at current prices.
Despite an attractive headline yield, the dividend has been characterized as potentially unsustainable relative to underlying cash flows, suggesting the income return may not be fully supported even in a stable environment.
↓DeterioratingCatalyst breakdown
- Expectation
- Funds from operations payout ratio improves to below 75% over the next 12 months, demonstrating clear dividend coverage and removing the yield-trap concern.
CounterFree cash flow conversion of 203% of net income indicates substantial cash-generation capacity; if the dividend is in fact well-covered by FFO, the sustainability concern may be overstated by trailing accounting metrics.
Falling on-balance volume signals that sellers are absorbing buying interest at current levels, a pattern inconsistent with durable price appreciation even as the stock holds above its long-term moving average.
→StableMomentum breakdown
- Expectation
- On-balance volume turns positive and shows consistent accumulation for at least 6 consecutive weeks, confirming a shift in the supply and demand balance.
CounterVolume distribution can reverse quickly on institutional reallocation into defensive real estate names; the trend may not persist if sector rotation or a rate-cutting cycle brings fresh demand.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.3 |
| ROA | 1.6 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.9 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Rule of 40 | 9.5 |
| Piotroski F | 10.0 |
- ▸Strong margins: 30%
- ▸Excellent cash conversion: 198% FCF/NI
- ▸Rule of 40: 76 (elite)
- ▸Strong Piotroski F-Score: 9/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.7 |
| EPS growth | 5.6 |
Momentum
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 4.5 |
| Volume | 2.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.8 |
| Analyst rating | 7.4 |
| Price target | 7.4 |
Insider
6.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 5.0 |
- ▸Modest insider buying — $4,142,870 (0.050% of mkt cap)
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.6 |
| quality rank | 3.5 |
| growth rank | 8.3 |
- ▸Industry growth leader
- ▸Conservative debt levels
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.6 |
| support resistance | 4.4 |
| 52w position | 6.4 |
Risk (lower is worse)
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| volatility | 7.4 |
| put call | 10.0 |
| implied vol | 7.0 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 7.8 |
| news risk | 6.0 |
- ▸Above max pain $55
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.2 |
| dividend safety | 4.8 |
| news activity | 6.0 |
- ▸Dividend: 4.8%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:4.5>=4.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:103d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:1.1<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- MOMENTUM:4.5<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
1.13
Upside
+5.7%
Downside
5.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 52
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.1<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.13 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.7, Quality at 7.5, and Insider at 6.5; the weakest are Momentum at 4.5, Technical at 5.1, and Value at 5.2. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.13 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Cash Flow Quality
Trip ifOperating margin falls below 20% for 2 consecutive quarters.
- P2Thin Risk Reward At Target
Trip ifAnalyst consensus price target rises more than 15% above current price, restoring headroom to take-profit above 12% and improving the reward-to-risk ratio above 1.5.
- P3Dividend Sustainability Concern
Trip ifFFO payout ratio falls below 70% for 2 consecutive quarters, confirming the dividend is clearly covered and the sustainability concern is resolved.
- P4Volume Distribution Pressure
Trip ifOn-balance volume rises above its prior 6-week average for 6 consecutive weeks, confirming a sustained shift from distribution to accumulation.