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Prologis (PLD) Up 3.5% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Prologis, Inc. (PLD - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Prologis Q2 FFO Beats Estimates, Outlook Raised

Prologis reported second-quarter 2017 core FFO per share of $0.84, beating the Zacks Consensus Estimate of $0.78. It also improved from the year-ago quarter figure of $0.60. Results reflect growth in rents and high occupancy.

Further, this industrial REIT raised its core FFO per share outlook for full-year 2017 amid solid operating fundamentals and higher net promote income.

The company posted revenues of $766.2 million, which beat the Zacks Consensus Estimate of $658.7 million. The figure compared favorably with the prior-year number of $602.2 million.

Quarter in Detail

At the end of the second quarter, occupancy level in the company’s owned and managed portfolio was 96.2%, expanding 10 basis points (bps) year over year. The increase in occupancy in the U.S. portfolio was 70 bps from the prior-year quarter.

During the quarter under review, Prologis signed 47 million square feet of leases in its owned and managed portfolio compared with 49 million square feet in the year-ago period.

Prologis' share of net effective rent change was 24.0% in the reported quarter compared with 17.8% recorded a year ago. The figure was led by the U.S., which recorded an impressive 29.0% growth. Cash rent change was 11.2%, as against 7.9% in the year-ago quarter.

Net effective same-store net operating income (NOI) registered 4.6% growth compared with 6.1% increase reported in the prior-year period. This was driven by 5.2% growth reported in the U.S. Cash same-store NOI climbed 7.2% compared with 5.3% reported in the year-ago period, reflecting 8.0% growth in the U.S. portfolio.

In second-quarter 2017, Prologis' share of building acquisitions amounted to $37 million, development stabilization aggregated $560 million, while development starts totaled $897 million. Further, the company’s total dispositions and contributions were $410 million.

Liquidity

Prologis ended the quarter with $3.7 billion of liquidity. In addition, during the reported quarter, the company and its co-investment ventures accomplished $2.9 billion of financings, mainly denominated in sterling and yen. Finally, the company exited second-quarter 2017 with cash and cash equivalents of $271.4 million, down from $395.8 million at the end of the prior quarter.

Outlook Raised

Prologis raised core FFO per share outlook for full-year 2017. The company now projects core FFO per share in the range of $2.78–$2.82, up from $2.72–$2.78 guided earlier, reflecting an increase of $0.05 at the mid-point.

The company anticipates net effective same store net operating income (NOI) (Prologis share) to grow at 4.75–5.25% compared to the previous outlook of 4.50–5.25%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to one lower.

Prologis, Inc. Price and Consensus

 

Prologis, Inc. Price and Consensus | Prologis, Inc. Quote

VGM Scores

At this time, Prologis' stock has an average score of C on both growth and momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is suitable for momentum and growth investors.

Outlook

While estimates have been broadly trending upward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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