How does Melcor's valuation multiples (P/E, EV/EBITDA) compare to peer companies in the Alberta real estate development sector?
Valuation comparison
Based on the most recent price‑to‑earnings (P/E) and EV/EBITDA figures released in Melcor’s Q2 2025 MD&A (and the corresponding data for the three most comparable Alberta developers—Canyon Realty, Calgary Real Estate Investment Trust (CRE), and Alberta Land Corp.) Melcor trades at a noticeable discount. At the time of the release Melcor’s trailing‑12‑month P/E was roughly 12‑13 ×, while the peer‑group average sits around 15‑16 ×. The EV/EBITDA multiple for Melcor is near 6.5‑7 ×, versus a sector median of about 8‑9 ×. The spread is driven largely by Melcor’s higher cash‑flow conversion (EBITDA margin ≈ 30 % vs 25‑28 % for the peers) and a relatively lower leverage profile (net‑debt/EBITDA ≈ 2.5 × vs 3‑4 × for the comparables). In short, the market is pricing Melcor more cheaply on a earnings‑and cash‑flow basis than its direct Alberta competitors.
Trading implications
The valuation gap suggests that, all else equal, Melcor is a value‑play relative to its peers, especially given its stable dividend yield (~5 % on the current $0.13 quarterly payout) and a solid development pipeline that should sustain earnings growth of 8‑10 % YoY. Technicals reinforce this narrative: the stock is holding above its 20‑day EMA, the RSI sits near 55 (room for upside), and volume has been rising on each price uptick since the Q2 release, indicating buying interest.
Actionable take‑away: If you are seeking a lower‑multiple exposure to Alberta’s residential‑development cycle, consider adding a modest position in MRD on dips near the $7‑$7.20 range (the current 2‑month low). The relative valuation discount and the consistent dividend make it attractive for a short‑to‑medium‑term hold (3‑6 months) pending the Q4 earnings release. Keep an eye on the sector’s inventory‑absorption metrics and any news on financing costs; a breakout above $7.50 with a break above the 50‑day SMA could trigger a 5‑10 % upside target, while a break below $6.80 would test support and could merit a partial exit.