The estimated intrinsic value of Modiv Industrial, Inc. (MDV) using a Price-to-Funds From Operations (P/FFO) model is $25.64 (based on the recommended P/FFO method), compared to the current stock price of $15.58. This suggests the stock may be undervalued by 64.6% 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 4.09% (CAPM-derived from beta of -0.26). For comparison, the standard 20-year DCF model produces: Operating Cash Flow (OCF): $1,579.11 | Free Cash Flow (FCF): $1,526.23 | Net Income (NI): $126.42.

• Stock-Based Compensation (SBC) inflates Operating Cash Flow. This company's OCF is more than double its Net Income, while Free Cash Flow is close to OCF (low CapEx). The large OCF-to-NI gap is primarily from Stock-Based Compensation being added back to OCF. SBC is a real cost — it dilutes shareholders by issuing new shares. Our DCF model uses Net Income as the base instead of OCF, which accounts for the true dilution cost. If you see the OCF method showing a much higher IV, this is why — it overstates value by ignoring SBC dilution.
• 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.
• Aggressive growth rate from low-base recovery. The company's earnings are recovering from a very low or near-zero base, which produces an extremely high percentage growth rate (CAGR). Our model caps growth at 40%, but even this rate compounded over 20 years significantly inflates the Intrinsic Value (IV). Analysts typically use absolute earnings targets rather than extrapolating high recovery-phase growth rates, which is why their price target is much lower. Consider manually lowering the growth rate (g₁) to a more sustainable long-term level.