Kilroy Realty Corp.
KRC
$38.66
-1.90%
Kilroy Realty Corp. is a real estate investment trust (REIT) that owns and operates approximately 16.3 million square feet of office space across key technology and life sciences markets in the U.S., including Los Angeles, San Diego, the San Francisco Bay Area, Austin, and Seattle. As a premier owner of high-quality office properties, Kilroy distinguishes itself by focusing on innovation-driven tenants and sustainable, state-of-the-art buildings. The current investor narrative centers on the recovery of office demand post-pandemic, with attention on occupancy trends, lease renewals, and the company's ability to navigate hybrid work patterns. Recent price action suggests growing optimism around a potential turnaround in the office REIT sector, though concerns about remote work and rising interest rates remain.…
KRC
Kilroy Realty Corp.
$38.66
KRC 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Kilroy Realty Corp.'s 12-month outlook, with a consensus price target around $38.64 and implied upside of -0.0% versus the current price.
Average Target
$38.64
0 analysts
Implied Upside
-0.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$28 - $51
Analyst target range
The stock is covered by 14 analysts, with a consensus recommendation of 'hold' (mean rating 2.76 on a 1-5 scale, where 1 is strong buy). The average target price is $38.50, which implies a 2.3% downside from the current price of $39.42. The distribution of ratings is not provided, but the hold consensus suggests analysts are cautious. The target range spans from a low of $28.00 to a high of $51.00, indicating significant uncertainty. The high target of $51.00 implies a 29.4% upside, likely assuming a strong recovery in office demand and successful lease-up of vacant space. The low target of $28.00 implies a 29% downside, reflecting risks of continued remote work, rising vacancies, or higher interest rates. The wide spread of $23.00 between low and high targets signals high uncertainty among analysts. Recent upgrades or downgrades are not available, but the hold consensus suggests no strong directional bias. The limited analyst coverage (14 analysts) is typical for a mid-cap REIT, and the wide target range indicates that the stock's future trajectory is highly dependent on macroeconomic and sector-specific factors.
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Bulls vs Bears: KRC Investment Factors
KRC presents a mixed picture: strong recent momentum and attractive trailing valuation are countered by an extremely high forward PE and cautious analyst sentiment. The bull case rests on a successful office recovery and margin stability, while the bear case focuses on earnings compression and sector headwinds. The single most important tension is whether the trailing PE discount is a value opportunity or a value trap—if earnings decline as the forward PE implies, the stock could see significant downside. Currently, the bearish evidence from the forward PE and analyst targets outweighs the bullish technical momentum, making the risk/reward unfavorable.
Bullish
- Strong recovery momentum: The stock has rallied 23.65% over the past 3 months, significantly outperforming the S&P 500's 3.5% gain. This suggests improving investor sentiment and a potential turnaround in the office REIT sector.
- Attractive trailing valuation: With a trailing PE of 16.11x, KRC trades below the REIT sector average of ~20x and near the lower end of its historical range of 10x-25x. This implies the stock is undervalued relative to its own history and peers.
- Healthy profitability margins: Net margin of 24.81% and operating margin of 28.36% are strong for an office REIT, indicating efficient cost management and solid profitability. These margins support dividend sustainability.
- Low PEG ratio suggests growth value: The PEG ratio of 0.53x implies the stock is undervalued relative to its expected earnings growth. If analyst estimates prove accurate, the stock offers a compelling growth-at-a-reasonable-price opportunity.
Bearish
- Extremely high forward PE: The forward PE of 73.68x is drastically higher than the trailing PE of 16.11x, signaling the market expects a sharp decline in earnings. This could reflect anticipated write-downs or higher interest costs.
- Analyst consensus is hold with downside: The average analyst target of $38.50 implies a 2.3% downside from the current price of $39.42. The hold rating (mean 2.76 on 1-5 scale) suggests analysts see limited near-term upside.
- High payout ratio limits flexibility: With a payout ratio of 93.4%, KRC pays out nearly all its earnings as dividends, leaving minimal retained earnings for reinvestment or debt reduction. This could pressure the dividend if earnings decline.
- Underperformance relative to market: Over the past year, KRC returned only 5.85% versus the S&P 500's 16.47%, underperforming by over 10 percentage points. This reflects persistent headwinds from remote work and rising interest rates.
KRC Technical Analysis
The stock is in a sustained recovery uptrend, with a 1-year price change of +5.85%, significantly underperforming the S&P 500's +16.47% over the same period. Currently trading at $39.42, the stock sits at 87.5% of its 52-week range (low $27.36, high $45.03), indicating it has rebounded strongly from its lows but remains below the highs. This positioning suggests the stock is in a recovery phase, with momentum building but not yet overextended. Short-term momentum is accelerating, with a 1-month price change of +6.77% and a 3-month change of +23.65%, both outpacing the S&P 500's respective gains of 0.78% and 3.5%. This divergence from the longer-term trend signals a potential trend reversal or mean reversion, as the stock is gaining relative strength after a prolonged period of underperformance. The RSI is not provided, but the volume of 1.62 million shares suggests active participation in the recent rally. Key support lies at the 52-week low of $27.36, while resistance is at the 52-week high of $45.03. A breakout above $45.03 would signal a strong bullish reversal, while a breakdown below $27.36 could indicate renewed weakness. The stock's beta of 1.143 implies it is 14.3% more volatile than the market, meaning it tends to amplify market moves, which is important for risk management.
Beta
—
—
Max Drawdown
-37.6%
Largest decline past year
52-Week Range
$27-$45
Price range past year
Annual Return
+5.6%
Cumulative gain past year
| Period | KRC Return | S&P 500 |
|---|---|---|
| 1m | +1.6% | +1.6% |
| 3m | +17.5% | +4.1% |
| 6m | +12.1% | +6.8% |
| 1y | +5.6% | +16.3% |
| ytd | +1.7% | +8.6% |
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KRC Fundamental Analysis
Revenue data is not available in the provided inputs, but the estimated revenue for the current fiscal year is $1.264 billion, with a range of $1.234 billion to $1.287 billion. The company's net margin is 24.81%, indicating solid profitability for a REIT. Gross margin stands at 67%, which is typical for office REITs given high operating leverage. The operating margin of 28.36% suggests efficient cost management. Net income is positive, with an EPS of $0.062 per share (likely quarterly), and the trailing PE of 16.1x implies the market is valuing earnings at a reasonable multiple. The company is profitable, with a net margin of 24.81% and an operating margin of 28.36%. These margins are healthy for the office REIT sector, where average net margins are around 20-25%. The balance sheet shows a debt-to-equity ratio of 0.89, which is moderate for a REIT, indicating manageable leverage. The current ratio of 4.24 suggests strong liquidity, with ample short-term assets to cover liabilities. Free cash flow data is not provided, but the PCF ratio of 7.85x implies the market is paying a reasonable multiple for cash flow. ROE is 5.09%, which is low but typical for REITs due to high asset bases and depreciation. The payout ratio of 93.4% indicates the company pays out most of its earnings as dividends, which is common for REITs, but leaves little room for retained earnings growth.
Quarterly Revenue
N/A
N/A
Revenue YoY Growth
N/A
YoY Comparison
Gross Margin
N/A
Latest Quarter
Free Cash Flow
N/A
Last 12 Months
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Valuation Analysis: Is KRC Overvalued?
Since net income is positive, the primary valuation metric is the PE ratio. The trailing PE is 16.11x, while the forward PE is 73.68x, a massive gap that implies the market expects a sharp decline in earnings in the coming year. This is unusual and may be due to one-time items or non-recurring gains in the trailing twelve months. The forward PE of 73.68x suggests the market is pricing in very low future earnings, possibly reflecting anticipated write-downs or higher interest costs. Compared to the industry, the trailing PE of 16.11x is below the REIT sector average of around 20x, indicating a discount. However, the forward PE of 73.68x is extremely high, suggesting the market expects earnings to drop significantly. The PS ratio of 4.0x is above the office REIT average of 3.5x, implying a slight premium on sales. Historically, the stock's trailing PE of 16.11x is near the lower end of its historical range of 10x to 25x, suggesting it is undervalued relative to its own history. However, the forward PE suggests the opposite, indicating high uncertainty about future earnings. The PEG ratio of 0.53x implies the stock is undervalued relative to its expected earnings growth, but this is based on analyst estimates that may be optimistic.
PE
16.1x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: KRC's high payout ratio of 93.4% leaves minimal retained earnings, making the dividend vulnerable if earnings decline. The forward PE of 73.68x implies the market expects a sharp drop in earnings, possibly due to rising vacancies or higher interest expenses. With a debt-to-equity ratio of 0.89, leverage is moderate but could become burdensome if interest rates remain elevated. The low ROE of 5.09% reflects the capital-intensive nature of REITs but also limits organic growth potential.
Market & Competitive Risks: The office REIT sector faces structural headwinds from remote and hybrid work, which could depress occupancy and rental income. KRC's beta of 1.143 indicates higher volatility than the market, amplifying downside in risk-off environments. The stock's 1-year relative strength of -10.62% versus the S&P 500 shows persistent underperformance, suggesting sector rotation away from office REITs. The wide analyst target range ($28-$51) reflects high uncertainty about the pace of office demand recovery.
Worst-Case Scenario: If the office market deteriorates further due to a recession or permanent shift to remote work, KRC could see occupancy drop, leading to earnings declines and dividend cuts. In this scenario, the stock could fall to the 52-week low of $27.36, representing a 30.6% downside from the current price of $39.42. Historical max drawdown of -37.62% suggests even deeper losses are possible in a severe downturn.
