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CubeSmart (CUBE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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CubeSmart (CUBE)

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Intrinsic Value (DCF)

Current$39.14
→
Intrinsic$79.74
+104%
$50.10$79.74$135.97
Market implies 10% growth for 5 years
DCF analysis suggests CUBE could have 104% upside at 25% growth — verify assumptions match your view.
At $39, the market prices in 10% annual cash flow growth — a moderate expectation aligned with historical trends (25%).
Range: Bear $50 → Bull $136. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$101$110$120$131
10%$67$73$80$87
12%$48$52$57$63
14%$36$39$43$47

Bull Case

  • Bull case ($136) offers 247% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (10%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($50) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year FFO Projection

Year 1$746.10M
Year 2$932.63M
Year 3$1.17B
Year 4$1.46B
Year 5$1.82B
Terminal$26.80B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$596.88MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is CUBE stock undervalued or overvalued?
🟢 UNDERVALUED

CUBE trades at $39.14 vs. our DCF-derived intrinsic value of $63.80, implying +75% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of CUBE's future cash flows. The bear case ($37.33) still suggests upside, providing margin of safety.

What is CUBE's intrinsic value?

Using a 5-year DCF model: Base FCF of $597M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.98B net debt and dividing by 0.23B shares: Bear $37.33 | Base $63.80 | Bull $102.78. Current price $39.14 implies +75% to base case.

How is CUBE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($17.47B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.