In recent years, the German real estate market has attracted many international investors. The market has been expensive, but low inflation rates and higher rental incomes have led to a boom in the sector.
The real estate market in Europe is now being impacted by the realities of current macroeconomic pressures, with house prices already falling. Higher mortgage rates are also hampering the home buying environment. According to forecasts by Deutsche Bank, prices could fall by up to 25%.
Around town SA (DE:AT1) and Vonovia (DE:VNA) are the top two trending real estate companies in Germany according to the TipRanks database. Despite their dismal stock market performance, these companies posted strong earnings numbers, along with stable dividends. Analysts predict a sharp rise in their share price.
Here we used the TipRanks Trend Stocks tool to recover these shares on the German market. This tool helps select stocks that have been on the analyst’s radar over the past few days.
Let’s see what works for these two companies.
Around town SA
Based in Luxembourg, Aroundtown SA has residential and office space at sites in Germany, the Netherlands, London and elsewhere.
So far this year, Aroundtown stock lost more than half of its value. Record double-digit inflation and interest rate hikes have rattled the company’s stock price.
On the contrary, the company has proven its operational strength in its results for the first nine months of 2022, with a solid performance in the face of several headwinds. Total revenue increased by 28% to 1.2 billion euros, compared to 935 million euros for the corresponding period in 2021. Rental income grew by 19% to 916 million euros. The company has disposed of numerous mature and non-core assets for 1.1 billion euros since the start of the year, giving it the upper hand with more cash. The sale proceeds are sufficient for the company to repay its debts until 2025.
What the company lacks in share price growth, it more than makes up for in dividend payouts. He has an impressive dividend yield of 9.6% compared to the industry average of 2.03%. In 2022, the company confirmed its forecast of €0.23 to €0.25 in dividends per share.
Aroundtown SA Stock Price Forecast
According to the consensus of analysts from TipRanks, Aroundtown stock has a moderate buy rating, with six recommendations to buy, six to hold and two to sell.
The average AT1 target price is €3.21, which is a 37% change from the current price level. The price has a low and high prediction of €2 and €5.2, respectively.
Vonovia SE
Vonovia SE focuses more on residential real estate. The company owns more than 5,00,000 apartments in Germany, Sweden and Austria.
From the company the stock has fallen 54% since the start of the year. However, the financial numbers paint a promising picture of future growth. Vonovia recorded a 31.4% increase in total revenue of 4.6 billion euros for first nine months of 2022. The total housing portfolio decreased by 3.4% to 5,49,010 units during this period.
The company’s merger with Deutsche Wohnen in 2021 was successful, and the expected synergy is 90 million euros in 2023 and 105 million euros per year from 2024. This will strengthen the liquidity position of business, which is essential in today’s business environment. .
Looking ahead, the company remains confident in its stable outlook and expects revenue of between €6.8 billion and €7.4 billion in 2023.
the the dividend yield for Vonovia is 7.75%, and it is known for generously rewarding its shareholders. In 2021, the board approved a dividend of €1.66 per share.
Is Vonovia a good deed?
According to TipRanks analyst consensus, Vonovia stock has a strong buy rating, with 11 buy recommendations.
The VNA target price is €38.67, which shows a huge upside potential of 80% from the current level.
Conclusion
These two companies operate in a difficult environment, but still managed to satisfy shareholders with higher profits and dividends. These businesses have well-diversified portfolios across different assets and locations and a strong hold on their tenant base, which will help them stay afloat in stormy weather. From the analyst’s point of view, stock prices should also recover over the long term.