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Why Should You Add Prologis (PLD) to Your Portfolio Now?
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Amid an e-commerce boom, growth in industries and companies opting for consolidation of operations for improving supply chain efficiencies and shifting closer to large population centers, demand for logistics infrastructure and efficient distribution networks has been rising. This is aiding growth of the industrial real estate market.
Therefore, it is the right time to add a few industrial REITs to your portfolio. Today, we bring one such stock – Prologis Inc. (PLD - Free Report) – that continues to depict robust fundamentals and improving prospects.
The company’s occupancy and leasing volumes remained high in third-quarter 2016. It witnessed broad-based demand across customer segments, driven by e-commerce, automotive, consumer products and construction supplies. In addition, Prologis remains focused on bolstering its liquidity.
Further, this Zacks Rank #2 (Buy) stock has risen over 20.1% year to date, compared with just 3.8% gain of the Zacks categorized REIT and Equity Trust - Other industry.
Why a Solid Choice?
Revenue Strength: Prologis’ top line has exhibited strength for the past several quarters. In fact, since first-quarter 2015 through third-quarter 2016, the company reported better-than-expected revenue figures in six out of seven quarters.
Further, the company’s projected sales growth of 9.4% for 2016 is ahead of the industry’s expected growth rate of 4.7%, signaling brighter days ahead.
Cash Flow Growth: Prologis enjoyed a historical cash flow growth (3–5 years) of 27.49%, which comfortably exceeded the industry’s growth of 17.7%. Also, its current cash flow growth of 31.94% is way ahead of the industry’s rate of 14.82%.
FFO per Share Growth: Prologis’ has witnessed 16.4% growth in funds from operations (FFO) per share over the last three to five years against 5.0% of that of the industry. Further, FFO per share are estimated to grow at the rate of 15.1% for 2016, which is way ahead of the industry average of 5.2%. Also, FFO per share is expected to grow at a rate of 3.3% in 2017.
Strong Leverage: The debt-to-equity ratio for Prologis is 0.62 compared with the industry average of 0.86. This highlights greater financial stability for the company and lesser risk for shareholders.
Additionally, earlier this month, S&P Global Ratings raised the company’s rating to A- from BBB+. The rating outlook is stable, per news published by MarketWatch.com. The upgrade is backed by this industrial REIT’s sturdy performance. The company has a diversified real estate portfolio and has room for rent growth. Moreover, the rating agency acknowledged the company’s efficient financial policies that have helped in reduction in debt.
Notably, the rating upgrade enhances its creditworthiness in the market and is likely to boost investors’ confidence in the stock. In fact, such moves provide companies an opportunity to enjoy reduced costs on debts and better access to capital.
Mack-Cali’s 2016 FFO per share estimates ascended 1.4%, over the past 30 days, to $2.19. Also, its share price is up 20.6% year to date.
DCT Industrial delivered an average positive surprise of 5.18%, over the trailing four quarters. Moreover year to date, its share price is up 24.9%.
Seritage Growth Properties’ current-year FFO estimates inched up 0.9% to $2.34 per share, over the past 60 days. Further, its share price is up 5.9% year to date.
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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Why Should You Add Prologis (PLD) to Your Portfolio Now?
Amid an e-commerce boom, growth in industries and companies opting for consolidation of operations for improving supply chain efficiencies and shifting closer to large population centers, demand for logistics infrastructure and efficient distribution networks has been rising. This is aiding growth of the industrial real estate market.
Therefore, it is the right time to add a few industrial REITs to your portfolio. Today, we bring one such stock – Prologis Inc. (PLD - Free Report) – that continues to depict robust fundamentals and improving prospects.
The company’s occupancy and leasing volumes remained high in third-quarter 2016. It witnessed broad-based demand across customer segments, driven by e-commerce, automotive, consumer products and construction supplies. In addition, Prologis remains focused on bolstering its liquidity.
Further, this Zacks Rank #2 (Buy) stock has risen over 20.1% year to date, compared with just 3.8% gain of the Zacks categorized REIT and Equity Trust - Other industry.
Why a Solid Choice?
Revenue Strength: Prologis’ top line has exhibited strength for the past several quarters. In fact, since first-quarter 2015 through third-quarter 2016, the company reported better-than-expected revenue figures in six out of seven quarters.
Further, the company’s projected sales growth of 9.4% for 2016 is ahead of the industry’s expected growth rate of 4.7%, signaling brighter days ahead.
Cash Flow Growth: Prologis enjoyed a historical cash flow growth (3–5 years) of 27.49%, which comfortably exceeded the industry’s growth of 17.7%. Also, its current cash flow growth of 31.94% is way ahead of the industry’s rate of 14.82%.
FFO per Share Growth: Prologis’ has witnessed 16.4% growth in funds from operations (FFO) per share over the last three to five years against 5.0% of that of the industry. Further, FFO per share are estimated to grow at the rate of 15.1% for 2016, which is way ahead of the industry average of 5.2%. Also, FFO per share is expected to grow at a rate of 3.3% in 2017.
Strong Leverage: The debt-to-equity ratio for Prologis is 0.62 compared with the industry average of 0.86. This highlights greater financial stability for the company and lesser risk for shareholders.
Additionally, earlier this month, S&P Global Ratings raised the company’s rating to A- from BBB+. The rating outlook is stable, per news published by MarketWatch.com. The upgrade is backed by this industrial REIT’s sturdy performance. The company has a diversified real estate portfolio and has room for rent growth. Moreover, the rating agency acknowledged the company’s efficient financial policies that have helped in reduction in debt.
Notably, the rating upgrade enhances its creditworthiness in the market and is likely to boost investors’ confidence in the stock. In fact, such moves provide companies an opportunity to enjoy reduced costs on debts and better access to capital.
Key Picks
Other favorably placed stocks in the real estate space include Mack-Cali Realty Corp. , DCT Industrial Trust Inc. and Seritage Growth Properties (SRG - Free Report) . All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mack-Cali’s 2016 FFO per share estimates ascended 1.4%, over the past 30 days, to $2.19. Also, its share price is up 20.6% year to date.
DCT Industrial delivered an average positive surprise of 5.18%, over the trailing four quarters. Moreover year to date, its share price is up 24.9%.
Seritage Growth Properties’ current-year FFO estimates inched up 0.9% to $2.34 per share, over the past 60 days. Further, its share price is up 5.9% year to date.
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.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>