Agree Realty Corp (ADC) Executive Summary Agree Realty Corp is a retail‑focused real estate investment trust that owns and leases shopping centers and presents as a cash‑generative, low‑leverage property operator. The company shows clear strengths in earnings and cash generation: five‑year diluted EPS compounded at about 17.46% (5‑year EPS CAGR = 0.1746) while five‑year revenue‑per‑share compound
Agree Realty Corp is a retail‑focused real estate investment trust that owns and leases shopping centers and presents as a cash‑generative, low‑leverage property operator.
The company shows clear strengths in earnings and cash generation: five‑year diluted EPS compounded at about 17.46% (5‑year EPS CAGR = 0.1746) while five‑year revenue‑per‑share compound growth ran roughly 27.77% (5‑year Rev/Share CAGR = 0.2777), and three‑year EPS CAGR is about 10.26% (3‑yr EPS CAGR = 0.1026) — see EPS Diluted & Revenue per Share and Revenue & EPS Growth. Profitability and cash metrics are strong: trailing net margin is roughly 35.04% and operating margin about 26.70% (most recent margins), and free cash flow margin is about 48.43% with operating cash flow (TTM) of $504.1M versus trailing net income of $204.3M, indicating consistent cash conversion (cash conversion ratio ~2.47) — see Profit Margin Trends, Earnings Quality Analysis, and Revenue & Net Income. Leverage is conservative with debt‑to‑equity near 0.0570 and a reported net‑debt metric of 0.0000.
There are, however, notable areas of concern. Return on equity has drifted lower: the latest multi‑year ROE observations sit at about 3.3% (trailing ROE) and ROE growth has been negative (ROE growth indicator = -0.2656), reflecting diminishing returns on equity — see Return on Equity (ROE). Revenue‑per‑share momentum recently softened, with one‑year revenue‑per‑share growth at -5.5% and revenue per share slipping from $5.44 in 2024 to $5.14 in 2025 even as EPS rose to $1.80 — see EPS Diluted & Revenue per Share and Revenue & Net Income. Capital allocation also shows heavy investing outflows (Investing Cash Flow TTM -$1.54B) partially funded by financing inflows (Financing Cash Flow TTM $1.05B), which increases sensitivity to external capital markets — see Strategic Capital Allocation.
Key fundamentals to watch going forward are same‑store/top‑line per‑share revenue growth and its trajectory versus EPS (monitor EPS Diluted & Revenue per Share and Revenue & EPS Growth), trends in operating cash flow relative to net income and FCF margin (see Earnings Quality Analysis), the path of ROE and ROE growth (see Return on Equity (ROE)), the company’s investing versus financing cash flow balance (see Strategic Capital Allocation), and the evolving P/E multiple (most recent P/E 40.0x) as reflected in Price-to-Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
AGREE REALTY CORP's reported revenue in the most recent quarters rises into late 2025, with quarterly revenue of $146.9M on , $148.8M on and $287.5M on . Earlier points in the dataset include a 2024 full-year revenue of $617.1M and quarterly amounts such as $126.6M on , showing higher absolute revenue levels in the most recent quarters, with a pronounced increase in the quarter ending versus the two prior quarters.
Net income in the dataset peaks most recently at $204.3M for the period ending ; prior net income observations include $152.4M for and mid‑range quarterly figures (for example, $41.7M and $41.5M in ). The latest figures for each metric are: the most recent quarterly revenue was $287.5M. The most recent net income was $204.3M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Analyzing long-term margin stability and competitive positioning
AGREE REALTY CORP's most recent margins show gross margin of 34.3%, operating margin of 26.7%, and net profit margin of 35.0% for the period ending 2025-12-31. Notably, the latest reported net margin (35.0%) slightly exceeds the reported gross margin (34.3%) and both exceed the operating margin (26.7%) in the most recent period.
Over the longer sample, gross margin has declined from an anomalously high 96.9% in 2014 and 58.4% in 2013 to 49.3% in 2018 and 34.3% in 2025, while net margin moved from 45.2% in 2013 to 39.3% in 2018 and 35.0% in 2025, indicating a downward movement since the earlier peaks. The most recent gross margin was 34.3%, operating margin was 26.7%, and net profit margin was 35.0%.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Agree Realty Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
AGREE REALTY CORP's trailing twelve‑month operating cash flow and net income show a multi‑year upward trend. Operating cash flow rose from $61.7M at the end of 2016 to $504.1M at the end of 2025, with notable step‑ups between 2020 ($143.0M) and 2021 ($246.3M) and continued increases each year through 2025. Net income also increased over the period, from $45.1M in 2016 to $204.3M in 2025, with a visible rise from $91.4M in 2020 to $152.4M in 2022 and onward to the 2025 level.
Throughout the sample the operating cash flow TTM has been higher than net income TTM, and the absolute gap widened particularly after 2020 as operating cash flow accelerated faster than reported net income. The most recent trailing twelve‑month Operating Cash Flow was $504.1M and the most recent trailing twelve‑month Net Income was $204.3M.
Key Findings:
Recent trailing twelve‑month operating cash flow: $504.1M
Recent trailing twelve‑month net income: $204.3M
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
AGREE REALTY CORP's trailing twelve-month Return on Equity shows a downward trend across the provided history. ROE rose from 6.0% at 2011-12-31 to a peak of 8.7% at 2017-03-31, then fell to 6.4% for 2017 year-end and continued lower to 4.7% at 2018-12-31, 3.6% at 2020-12-31 and 3.3% at 2022-12-31.
The most recent data points indicate ROE remains near the lower end of the series, representing a 5.4 percentage-point decline from the 2017 peak to the latest observation. The most recent trailing twelve-month Return on Equity was 3.3% as of 2022-12-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
AGREE REALTY CORP's operating cash flow (TTM) has increased consistently over the period shown, rising from $93.2M in 2018 to $504.1M in 2025. The most pronounced step-ups occurred after 2020 (from $143.0M to $246.3M in 2021) and continued through 2023–2025 as operating cash rose from $391.6M (2023) to $432.0M (2024) and then to $504.1M (2025).
Investing cash flow has been a persistent outflow, peaking in magnitude at -$1.62B in 2022, moderating to -$1.27B in 2023 and -$885.4M in 2024, then widening again to -$1.54B in 2025.
Financing cash flow has been positive in recent years, at $869.0M in 2023, declining to $445.3M in 2024, and increasing to $1.05B in 2025.
Most recent trailing-twelve-month values: Operating Cash Flow (TTM) $504.1M; Investing Cash Flow (TTM) -$1.54B; Financing Cash Flow (TTM) $1.05B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
AGREE REALTY CORP’s trailing P/E has trended materially lower over the period shown. The ratio fell from very high levels in the early 2010s (297.1x at 2011–12–31 and 182.5x at 2012–03–31) through the mid-2010s (167.3x at 2013–12–31, 116.2x at 2016–12–31) with a modest rebound into 2018 (115.3x at 2018–12–31) before resuming a downward path.
More recently the P/E contracted steadily: 82.6x at 2020–12–31, 52.5x at 2022–12–31 and 40.0x at 2025–12–31, indicating lower multiples in the latest observations relative to earlier years. The most recent Price-to-Earnings ratio was 40.0x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.