UDR, Inc.

Methodology

This EPS-based method has fundamental limitations for UDR as a residential REIT, since depreciation distorts reported earnings despite stable cash flows from apartment rent collections. Investors should use FFO (Funds From Operations) or AFFO (Adjusted FFO) per share-based models instead of P/E ratios, as these metrics add back depreciation to reflect the economic reality that real estate typically appreciates rather than depreciates. The Peter Lynch framework is not appropriate for REIT valuation without significant modifications.

Methodology

Traditional PEG analysis is problematic for UDR given GAAP depreciation distortions that make EPS growth unreliable for measuring true business performance in apartment communities. If using PEG, investors must substitute FFO or AFFO growth for EPS growth, and even then should compare the result to FFO multiples of other residential REITs rather than treating it as a traditional PEG ratio. Price-to-FFO relative to same-store NOI growth provides more reliable valuation signals for apartment REITs than EPS-based PEG.

Methodology

While UDR pays a substantial dividend as required by REIT tax status, PEGY calculations using GAAP earnings remain misleading due to depreciation distortions that understate true profitability. Investors should evaluate dividend sustainability by examining FFO and AFFO payout ratios rather than relying on EPS-based PEGY. For apartment REITs like UDR, dividend yield combined with FFO growth and same-store NOI trends provides better total return analysis than traditional PEGY frameworks.