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Pebblebrook Hotel Trust (PEB) Intrinsic Value

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

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Pebblebrook Hotel Trust (PEB)

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Intrinsic Value (DCF)

Current$12.13
→
Intrinsic$14.44
+19%
$3.66$14.44$34.94
Market implies 6% growth for 5 years
PEB shows 19% potential upside using 8% growth — reasonable if fundamentals hold.
At $12, the market prices in only 6% growth — below historical 8%, suggesting low expectations.
Range: Bear $4 → Bull $35. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$21$24$28$33
10%$9$12$14$17
12%$3$5$7$9
14%$0$0$2$3

Bull Case

  • Bull case ($35) offers 188% upside at 10% growth, 9% discount
  • 16% margin of safety vs. base case estimate
  • Market-implied growth (6%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($4) implies 70% downside at 6% growth, 12% discount
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5-Year FFO Projection

Year 1$243.31M
Year 2$262.78M
Year 3$283.80M
Year 4$306.50M
Year 5$331.02M
Terminal$4.87B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$225.29MTTM 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 PEB stock undervalued or overvalued?
🟢 UNDERVALUED

PEB trades at $12.13 vs. our DCF-derived intrinsic value of $14.44, implying +22% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of PEB's future cash flows. The bear case ($5.03) still suggests upside, providing margin of safety.

What is PEB's intrinsic value?

Using a 5-year DCF model: Base FCF of $225M, projected at 8.0% 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 $2.36B net debt and dividing by 0.12B shares: Bear $5.03 | Base $14.44 | Bull $27.03. Current price $12.13 implies +22% to base case.

How is PEB's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% 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 ($4.09B).

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: 18.2x.