Back to top

Analyst Blog

On Aug 8, Zacks Investment Research upgraded Simon Property Group, Inc. (SPG - Analyst Report) to a Zacks Rank #2 (Buy). The upgrade of this retail real estate investment trust (REIT) came on the back of better-than-expected second-quarter 2013 results.

Why the Upgrade?

Consistent with its winning streak, Simon Property came up with a solid operating performance during the second quarter and easily outpaced funds from operations (FFO) estimates. Quarterly FFO per share was up 11.6% year over year and beat the Zacks Consensus Estimate by 1.93%, primarily due to an increase in minimum rent, overage rent and occupancy.

In particular, significant portfolio restructuring activity has been steering Simon Property to strengthen its footprint on national and international levels. It has been active in capitalizing on growth opportunities in some of the top global markets, with a focus on enhancing its Premium Outlets portfolio. As part of this strategy to expand in upscale locations across the world, recently Simon Property opened its first Premium Outlet Centre in Toronto, Canada.

Prompted by its strong fundamentals, Simon Property raised its FFO growth outlook for the second time in the year. The upward revision of the guidance also boosts investors’ confidence.

The stronger-than-anticipated results triggered an uptrend in the Zacks Consensus Estimates, as analysts became more constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that rose 0.7% to $8.73 for 2013 and 0.3% to $9.36 per share for 2014 in the past 30 days.

Additionally, the long-term earnings growth forecast for the company is 6.88%. Hence, the favorable estimate revisions, driven by positive second-quarter results and expansion efforts made way for the upgrade in the rank.

Other Stocks to Consider

Apart from Simon Property, the other stocks worth considering in the retail REIT industry include Acadia Realty Trust (AKR - Snapshot Report), Cedar Realty Trust, Inc. (CDR - Snapshot Report) and Realty Income Corp. (O - Snapshot Report), all carrying a Zacks Rank #2 (Buy).
 

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%