VNO

We rate VORNADO REALTY TRUST (VNO) as Avoid with a composite score of 31.8/100 at a current price of $27.89. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in value (38th percentile) and stability (32th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (14th percentile) and investment (29th percentile) tempers our overall conviction. We assign a Narrow Moat rating (40/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

VORNADO REALTY TRUST holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 31.8/100 places it at rank #4390 in our full 7,333-stock universe. At $7.6B in market capitalization, VORNADO REALTY TRUST is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 1%, though momentum at the 14th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 13% (-3.5pp vs sector) and net margins of 51.4%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $27.89, VORNADO REALTY TRUST is trading at a premium to fundamental value. Our value factor score of 38/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 6.1x (a 49% discount to the sector median of 11.9x), EV/EBITDA of 11.0x (at a premium), P/B of 0.9x, P/S of 3.1x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to VORNADO REALTY TRUST. The stock presents a balanced risk profile: below-average price stability (32th percentile) and weak quality scores (29th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (32th percentile); weak quality scores (29th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 32th percentile and quality factor at the 29th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our medium uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate VORNADO REALTY TRUST's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 14.8%, and the balance sheet is managed within acceptable parameters (D/E: 37%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; VORNADO REALTY TRUST falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.87% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, VORNADO REALTY TRUST receives a Avoid rating with a composite score of 31.8/100 (rank #4390 of 7,333). Our quantitative framework assigns a Narrow Moat (40/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 29/100.

Our analysis does not support a constructive view on VORNADO REALTY TRUST at this time. The combination of the current quantitative profile, medium uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.