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What's in the Cards for Simon Property (SPG) in Q3 Earnings?
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Simon Property Group’s (SPG - Free Report) third-quarter 2022 results are scheduled to be out on Nov 1 before the opening bell. While the company’s quarterly results are likely to exhibit year-over-year growth in revenues, funds from operations (FFO) per share might display a decline.
In the last reported quarter, this Indianapolis, IN-based retail real estate investment trust (REIT) delivered a surprise of 1.72% in terms of FFO per share. The quarterly results reflected healthy operating performance and growth in occupancy levels. The retail REIT behemoth also raised the 2022 FFO per share outlook based on the quarterly results.
In the last four quarters, the company beat the Zacks Consensus Estimate on each occasion, the average surprise being 9.39%. This is depicted in the graph below:
Per a report from CBRE Group (CBRE - Free Report) , retail metrics remained robust in the third quarter, given the onset of the holiday season. The core retail sales, excluding gasoline and automobiles, climbed 8.2% from the prior-year period. The non-store retail sales grew 13.8%, marking the highest growth since second-quarter 2021.
The overall retail asking rent improved 2.5% year over year to a record high of $22.55 per square feet in the third quarter. The overall retail availability rate fell nearly a full percentage point year over year to 5%.
Retail space absorption decreased more than half year over year to 14.3 million square feet in the third quarter, per the CBRE Group report. However, it was 8% higher than the figure in third-quarter 2019.
The above-mentioned factors are likely to have played a key role in the third-quarter performance of retail REITs.
For Simon Property, which has wide exposure to different retail assets, including premium malls, lifestyle centers and other retail properties across the United States, an improving leasing environment and consumers’ increased preference for in-person shopping experience are expected to have aided its third-quarter cashflows.
Simon Property’s adoption of an omni-channel strategy and successful tie-ups with premium retailers are likely to have paid off well. Further, its efforts to explore the mixed-use development option, which has gained immense popularity in recent years, is anticipated to have enabled it to tap the growth opportunities in areas where people prefer to live, work and play.
Also, the company’s solid balance-sheet position is likely to have supported its acquisition and development activities during the quarter to be reported.
The Zacks Consensus Estimate for the third-quarter lease income is pegged at $1.214 billion, marginally up from $1.208 billion reported in the year-ago quarter. The consensus mark for management fees and other revenues is $28.17 million, up 4.3% from the prior-year quarter’s reported figure. In addition, the consensus estimate for quarterly revenues is presently pegged at $1.32 billion, indicating an increase of 1.7% year over year.
However, given the conveniences of online shopping, rising e-commerce adoption is still a concern for Simon Property. Also, the strengthening of the U.S. dollar might have been a deterrent.
Simon Property’s activities during the third quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for FFO per share has been unchanged over the past month and currently stands at $2.93. Moreover, the figure reflects a fall of 6.4% year over year.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for SPG this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: Simon Property has an Earnings ESP of +0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: SPG currently carries a Zacks Rank of 4 (Sell).
Here are some other stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Public Storage (PSA - Free Report) is slated to report quarterly numbers on Nov 1. PSA has an Earnings ESP of +1.34% and carries a Zacks Rank of 3.
Host Hotels & Resorts (HST - Free Report) is scheduled to report quarterly figures on Nov 2. HST has an Earnings ESP of +0.71% and a Zacks Rank of 3 currently.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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What's in the Cards for Simon Property (SPG) in Q3 Earnings?
Simon Property Group’s (SPG - Free Report) third-quarter 2022 results are scheduled to be out on Nov 1 before the opening bell. While the company’s quarterly results are likely to exhibit year-over-year growth in revenues, funds from operations (FFO) per share might display a decline.
In the last reported quarter, this Indianapolis, IN-based retail real estate investment trust (REIT) delivered a surprise of 1.72% in terms of FFO per share. The quarterly results reflected healthy operating performance and growth in occupancy levels. The retail REIT behemoth also raised the 2022 FFO per share outlook based on the quarterly results.
In the last four quarters, the company beat the Zacks Consensus Estimate on each occasion, the average surprise being 9.39%. This is depicted in the graph below:
Simon Property Group, Inc. Price and EPS Surprise
Simon Property Group, Inc. price-eps-surprise | Simon Property Group, Inc. Quote
Factors at Play
Per a report from CBRE Group (CBRE - Free Report) , retail metrics remained robust in the third quarter, given the onset of the holiday season. The core retail sales, excluding gasoline and automobiles, climbed 8.2% from the prior-year period. The non-store retail sales grew 13.8%, marking the highest growth since second-quarter 2021.
The overall retail asking rent improved 2.5% year over year to a record high of $22.55 per square feet in the third quarter. The overall retail availability rate fell nearly a full percentage point year over year to 5%.
Retail space absorption decreased more than half year over year to 14.3 million square feet in the third quarter, per the CBRE Group report. However, it was 8% higher than the figure in third-quarter 2019.
The above-mentioned factors are likely to have played a key role in the third-quarter performance of retail REITs.
For Simon Property, which has wide exposure to different retail assets, including premium malls, lifestyle centers and other retail properties across the United States, an improving leasing environment and consumers’ increased preference for in-person shopping experience are expected to have aided its third-quarter cashflows.
Simon Property’s adoption of an omni-channel strategy and successful tie-ups with premium retailers are likely to have paid off well. Further, its efforts to explore the mixed-use development option, which has gained immense popularity in recent years, is anticipated to have enabled it to tap the growth opportunities in areas where people prefer to live, work and play.
Also, the company’s solid balance-sheet position is likely to have supported its acquisition and development activities during the quarter to be reported.
The Zacks Consensus Estimate for the third-quarter lease income is pegged at $1.214 billion, marginally up from $1.208 billion reported in the year-ago quarter. The consensus mark for management fees and other revenues is $28.17 million, up 4.3% from the prior-year quarter’s reported figure. In addition, the consensus estimate for quarterly revenues is presently pegged at $1.32 billion, indicating an increase of 1.7% year over year.
However, given the conveniences of online shopping, rising e-commerce adoption is still a concern for Simon Property. Also, the strengthening of the U.S. dollar might have been a deterrent.
Simon Property’s activities during the third quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for FFO per share has been unchanged over the past month and currently stands at $2.93. Moreover, the figure reflects a fall of 6.4% year over year.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for SPG this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: Simon Property has an Earnings ESP of +0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: SPG currently carries a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Stocks That Warrant a Look
Here are some other stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Public Storage (PSA - Free Report) is slated to report quarterly numbers on Nov 1. PSA has an Earnings ESP of +1.34% and carries a Zacks Rank of 3.
Host Hotels & Resorts (HST - Free Report) is scheduled to report quarterly figures on Nov 2. HST has an Earnings ESP of +0.71% and a Zacks Rank of 3 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.