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Simon (SPG) Likely to Beat Q3 Earnings: Stock to Gain?
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Retail real estate investment trust (“REIT”) Simon Property Group Inc. (SPG - Free Report) is expected to report third-quarter 2016 results on Oct 26, before the market opens. Last quarter, the company delivered a 0.38% positive surprise.
In the trailing four quarters, Simon Property posted an average positive surprise of 4.77%, beating estimates on all occasions. The Zacks Consensus Estimate for third-quarter funds from operations (“FFO”) is currently pegged at $2.68.
Let’s see how things have shaped up for this announcement.
Our proven model shows that Simon Property is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to beat estimates, and Simon Property has the right mix.
Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate Estimate of $2.69 and the Zacks Consensus Estimate of $2.68, is +0.37%. This is a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: Simon Property’s Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of a positive surprise this season.
Conversely, we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What's Driving the Better-than-Expected Earnings?
Indianapolis, IN-based Simon Property enjoys a diversified exposure to retail assets across the U.S. In addition to this, its international presence aids sustainable long-term growth in comparison to its domestically focused peers. The company is constantly restructuring its portfolio and aiming premium acquisitions and redevelopments. This continued in the third quarter too.
Per a recent CBRE Group, Inc. study, during the third quarter, average availability of retail space was 10.4%, down 20 basis points sequentially. However, demand for retail space in the country continues to grow as new construction remains relatively muted and retailers are combining their online and bricks-and-mortar operations. This indicates a continuation of a gradual, five-year recovery in the U.S. retail-property market.
Stocks to Consider
Here are two other REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Armada Hoffler Properties, Inc. (AHH - Free Report) , slated to release earnings results on Nov 1, has an Earnings ESP of +4.17% and a Zacks Rank #3.
Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Simon (SPG) Likely to Beat Q3 Earnings: Stock to Gain?
Retail real estate investment trust (“REIT”) Simon Property Group Inc. (SPG - Free Report) is expected to report third-quarter 2016 results on Oct 26, before the market opens. Last quarter, the company delivered a 0.38% positive surprise.
In the trailing four quarters, Simon Property posted an average positive surprise of 4.77%, beating estimates on all occasions. The Zacks Consensus Estimate for third-quarter funds from operations (“FFO”) is currently pegged at $2.68.
Let’s see how things have shaped up for this announcement.
SIMON PROPERTY Price and EPS Surprise
SIMON PROPERTY Price and EPS Surprise | SIMON PROPERTY Quote
Why a Likely Positive Surprise?
Our proven model shows that Simon Property is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to beat estimates, and Simon Property has the right mix.
Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate Estimate of $2.69 and the Zacks Consensus Estimate of $2.68, is +0.37%. This is a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: Simon Property’s Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of a positive surprise this season.
Conversely, we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What's Driving the Better-than-Expected Earnings?
Indianapolis, IN-based Simon Property enjoys a diversified exposure to retail assets across the U.S. In addition to this, its international presence aids sustainable long-term growth in comparison to its domestically focused peers. The company is constantly restructuring its portfolio and aiming premium acquisitions and redevelopments. This continued in the third quarter too.
Per a recent CBRE Group, Inc. study, during the third quarter, average availability of retail space was 10.4%, down 20 basis points sequentially. However, demand for retail space in the country continues to grow as new construction remains relatively muted and retailers are combining their online and bricks-and-mortar operations. This indicates a continuation of a gradual, five-year recovery in the U.S. retail-property market.
Stocks to Consider
Here are two other REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Post Properties Inc. , slated to release earnings results on Oct 31, has an Earnings ESP of +1.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Armada Hoffler Properties, Inc. (AHH - Free Report) , slated to release earnings results on Nov 1, has an Earnings ESP of +4.17% and a Zacks Rank #3.
Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>