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Key Factors to Impact Prologis (PLD) This Earnings Season
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Prologis, Inc. (PLD - Free Report) is slated to report third-quarter 2022 earnings on Oct 19 before the bell. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on three occasions and missed on the other, the average beat being 0.71%.
Let’s see how things have shaped up before this announcement.
Factors at Play
Despite economic headwinds and uncertainty and recession woes in the third quarter, U.S. industrial market fundamentals remained strong and steady, per a Cushman & Wakefield (CWK - Free Report) report, with “heightened levels of absorption” and rents scaling new highs.
There was a net absorption of 108.2 million square feet (msf) of space in the September-end quarter, a level consistent with strong demand. It marks the eighth straight quarter where absorption surpassed the 100 msf mark. Moreover, the new leasing activity reached 163.1 msf in the third quarter.
The U.S. industrial vacancy rate remained “tight” at 3.2%, denoting a 20-basis point (bps) quarter-over-quarter uptick. Moreover, each region in the United States once again reported vacancy rates sub-4%, with the lowest being the West region at only 2.5%.
With elevated demand and high occupancy rates, rental rates continued to scale to new heights. The U.S. overall industrial asking rental rate ended the third quarter at $8.70 per square foot, denoting a 4% sequential increase and a 22% annual surge. It marked the strongest year-over-year growth rate recorded, per the CWK report.
Prologis is well-poised to benefit from this favorable trend, given its capacity to offer modern logistics facilities at strategic in-fill locations. PLD is anticipated to have witnessed healthy demand on the fast adoption of e-commerce, with leasing activity getting support in the to-be-reported quarter.
Moreover, with global supply chains transforming for faster fulfillment and resilience, Prologis is likely to have captured favorable fundamentals with its differentiated customer offerings and robust investment activity in the to-be-reported quarter.
Prologis’ expansion efforts through acquisitions and developments in recent years are likely to have boosted the top line in the to-be-reported quarter. In addition, PLD is likely to have gained from its industry-leading cost structure.
Prologis has decent balance sheet strength to fuel its growth endeavors. A market leader, this REIT has the ability to raise capital at favorable rates. It is likely to have maintained financial strength with liquidity during the period in discussion.
The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $1.13 billion, suggesting an 8.9% year-over-year jump.
The Zacks Consensus Estimate for the quarterly FFO per share of $1.72 calls for a 65.4% increase year over year.
However, with the asset category being attractive, there is a development boom in many markets. Per the CWK report, development activity picked up pace in the third quarter, with 148.2 msf of industrial facilities being delivered throughout the United States, the highest quarterly total on record.
Also, the industrial construction pipeline reached another all-time high of 716.9 msf in the third quarter, 2.6% ahead of the previous high a quarter ago. The high supply is likely to have intensified competition during the September-end quarter.
Here Is What Our Quantitative Model Predicts:
Prologis does not have the right combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
Earnings ESP: The Earnings ESP for Prologis is -2.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are two stocks from the REIT sector — Equity Residential (EQR - Free Report) and Highwoods Properties, Inc. (HIW - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Equity Residential is slated to report quarterly numbers on Oct 25. EQR has an Earnings ESP of +0.40% and carries a Zacks Rank of 2 (Buy) presently.
Highwoods Properties, Inc., scheduled to report quarterly numbers on Oct 25, has an Earnings ESP of +1.45% and carries a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Key Factors to Impact Prologis (PLD) This Earnings Season
Prologis, Inc. (PLD - Free Report) is slated to report third-quarter 2022 earnings on Oct 19 before the bell. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on three occasions and missed on the other, the average beat being 0.71%.
This is depicted in the graph below:
Prologis, Inc. Price and EPS Surprise
Prologis, Inc. price-eps-surprise | Prologis, Inc. Quote
Let’s see how things have shaped up before this announcement.
Factors at Play
Despite economic headwinds and uncertainty and recession woes in the third quarter, U.S. industrial market fundamentals remained strong and steady, per a Cushman & Wakefield (CWK - Free Report) report, with “heightened levels of absorption” and rents scaling new highs.
There was a net absorption of 108.2 million square feet (msf) of space in the September-end quarter, a level consistent with strong demand. It marks the eighth straight quarter where absorption surpassed the 100 msf mark. Moreover, the new leasing activity reached 163.1 msf in the third quarter.
The U.S. industrial vacancy rate remained “tight” at 3.2%, denoting a 20-basis point (bps) quarter-over-quarter uptick. Moreover, each region in the United States once again reported vacancy rates sub-4%, with the lowest being the West region at only 2.5%.
With elevated demand and high occupancy rates, rental rates continued to scale to new heights. The U.S. overall industrial asking rental rate ended the third quarter at $8.70 per square foot, denoting a 4% sequential increase and a 22% annual surge. It marked the strongest year-over-year growth rate recorded, per the CWK report.
Prologis is well-poised to benefit from this favorable trend, given its capacity to offer modern logistics facilities at strategic in-fill locations. PLD is anticipated to have witnessed healthy demand on the fast adoption of e-commerce, with leasing activity getting support in the to-be-reported quarter.
Moreover, with global supply chains transforming for faster fulfillment and resilience, Prologis is likely to have captured favorable fundamentals with its differentiated customer offerings and robust investment activity in the to-be-reported quarter.
Prologis’ expansion efforts through acquisitions and developments in recent years are likely to have boosted the top line in the to-be-reported quarter. In addition, PLD is likely to have gained from its industry-leading cost structure.
Prologis has decent balance sheet strength to fuel its growth endeavors. A market leader, this REIT has the ability to raise capital at favorable rates. It is likely to have maintained financial strength with liquidity during the period in discussion.
The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $1.13 billion, suggesting an 8.9% year-over-year jump.
The Zacks Consensus Estimate for the quarterly FFO per share of $1.72 calls for a 65.4% increase year over year.
However, with the asset category being attractive, there is a development boom in many markets. Per the CWK report, development activity picked up pace in the third quarter, with 148.2 msf of industrial facilities being delivered throughout the United States, the highest quarterly total on record.
Also, the industrial construction pipeline reached another all-time high of 716.9 msf in the third quarter, 2.6% ahead of the previous high a quarter ago. The high supply is likely to have intensified competition during the September-end quarter.
Here Is What Our Quantitative Model Predicts:
Prologis does not have the right combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
Earnings ESP: The Earnings ESP for Prologis is -2.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PLD currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are two stocks from the REIT sector — Equity Residential (EQR - Free Report) and Highwoods Properties, Inc. (HIW - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Equity Residential is slated to report quarterly numbers on Oct 25. EQR has an Earnings ESP of +0.40% and carries a Zacks Rank of 2 (Buy) presently.
Highwoods Properties, Inc., scheduled to report quarterly numbers on Oct 25, has an Earnings ESP of +1.45% and carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.