Inflation and interest rate hikes have inflicted a lot of damage in the last few months. Central banks are trying to do what they can to calm down demand and slow price increases.
Some companies have been hit hard by the difficult economic situation, while others are barely over the impacts of COVID-19.
So while share prices are down, it can be very interesting when a director decides to buy shares.
Directors may decide to sell shares for a number of different reasons, but the reason to invest in the market is usually because of just one factor – the director thinks the business is good value.
Here's why this S&P/ASX 200 Index (ASX: XJO) share could be an underrated buy.
Buy signal for this ASX 200 share?
Scentre Group (ASX: SCG) has been through plenty of volatility since the start of COVID-19.
It was announced that director Ilana Atlas recently bought 50,000 Scentre shares on the market at an average price of $2.935 per security. That translates into a total investment of around $147,000, bringing the director's total ownership to 130,856 Scentre shares.
This investment comes after Scentre, the owner of Westfield shopping centres in Australia and New Zealand, unveiled its FY22 results a couple of weeks ago.
It revealed that its funds from operations (FFO) – essentially the net rental profit – increased by 20.6% to $1.04 billion. The FFO was 20.06 in per-security terms. It also announced that its distribution would be 15.75 cents per security, up 10.5%. Both the FFO and distribution were more than guided.
In 2022, it saw 480 million customer visits, up by 67 million compared to 2021. When it announced its result, Scentre revealed that in 2023 to date it had seen 70 million customer visits, an increase of more than 10 million compared to the same period in 2022.
The business noted that its portfolio occupancy increased to 98.9% at 31 December 2022, up from 98.7% at the end of 2021.
Looking ahead
The ASX 200 share gave guidance for the year ahead, revealing that it's expecting FFO for 2023 to be in the range of 20.75 cents to 21.25 cents per security, an increase of between 3.4% to 5.9% for the year.
The distribution is expected to be at least 16.50 cents per security, which would represent an increase of 4.8% for the year. At the current Scentre share price of $3.02, that distribution guidance represents a yield of 5.2%.
