The estimated intrinsic value of KE Holdings Inc. (BEKE) using a Price-to-Funds From Operations (P/FFO) model is $57.73 (based on the recommended P/FFO method), compared to the current stock price of $16.50. This suggests the stock may be undervalued by 249.9% relative to its intrinsic value.

For Real Estate Investment Trusts (REITs), standard DCF models can be misleading because depreciation — a large non-cash charge — distorts net income. Instead, SharesGrow uses a Price-to-FFO (Funds From Operations) model: Intrinsic Value = FFO Per Share × 17 (sector-average P/FFO multiple). FFO adds back depreciation to net income, providing a more accurate picture of a REIT's recurring cash-generating ability — the industry-standard metric for REIT valuation.

The valuation uses a CAPM-derived discount rate of 6.03% (CAPM-derived from beta of -0.53). For comparison, the standard 20-year DCF model produces: Operating Cash Flow (OCF): $40.02 | Free Cash Flow (FCF): $34.59 | Net Income (NI): $40.90.

• High debt relative to cash flow. Our Discounted Cash Flow (DCF) model deducts net debt from the present value of future cash flows, which significantly reduces equity value per share. Analyst price targets typically do not subtract debt in the same way.
• Using Trailing Twelve Months (TTM) data. Our model is using the most recent four quarters of data, which may not yet reflect the full earnings trajectory that analysts are forecasting. If the company is in a growth phase, TTM cash flows may understate future potential.