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Will E-commerce Boom Continue to Dampen GGP's FFO in Q2?
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GGP Inc. is slated to report second-quarter 2018 results on Jul 31, before the market opens. The company’s results will likely reflect year-over-year growth in revenues and a decline in funds from operations (FFO) per share.
This retail real estate investment trust’s (REIT) first-quarter 2018 FFO per share of 35 cents missed the Zacks Consensus Estimate of 37 cents. The figure also came in lower than the prior-year quarter tally of 36 cents. Notably, results reflected decline in same-store net operating income (NOI). The company also lagged on revenues in Q1.
Over the preceding four quarters, the company surpassed estimates in two occasions, missed in another and met in the other. It delivered an average positive surprise of 2.75% during this period. The graph below depicts this surprise history:
General Growth Properties, Inc. Price and EPS Surprise
Let’s see how things have shaped up for this announcement.
Factors to Consider
With its acquisition by Brookfield Property Partners L.P. on track; on Jul 26, GGP announced receiving common stockholders’ approval for the same.
Notably, retail REITs like Kimco Realty (KIM - Free Report) , Taubman Centers , The Macerich Company (MAC - Free Report) and GGP continue to be affected by the lackluster retail real estate market. In fact, store closures and retailer bankruptcies continue to linger in the retail real estate space. Although retail landlords are making concerted efforts to boost productivity of retail assets by trying to grab attention from new and productive tenants, and disposing the non-productive ones, the national retail vacancy rate marginally increased to 10.2% in the second quarter, underlining store closures of bankrupt toy retailer, Toys “R” Us Inc., per data form Reis, while national average asking rents edged 0.2% higher.
Amid these, the Zacks Consensus Estimate of $3.4 million for GGP’s overage rents underscores a steep fall from the prior-quarter reported figure of $6.2 million. Further, the Zacks Consensus Estimate for minimum rents of $373 million highlights only a marginal sequential rise.
In the previous quarter, the company reported tenant recoveries to the tune of $157 million. This is expected to have increased to $160 million in the April-June quarter.
GGP’s development and redevelopment activities also put its profitability at risk. While an extensive pipeline is expected to be a notable growth driver, we think that it also increases operational risks, exposing the company to rising construction costs, entitlement delays and lease-up risks. This, in turn, might impact its bottom-line growth.
In fact, the Zacks Consensus Estimate for FFO per share for the to-be-reported quarter is pegged at 36 cents and reflects a projected year-over-year decline of 10%. Furthermore, GGP’s activities during the quarter could not gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share remained unchanged over the past month.
Earnings Whispers
Our proven model does not conclusively show that GGP will likely beat FFO estimates this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: GGP has an Earnings ESP of -1.41%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Will E-commerce Boom Continue to Dampen GGP's FFO in Q2?
GGP Inc. is slated to report second-quarter 2018 results on Jul 31, before the market opens. The company’s results will likely reflect year-over-year growth in revenues and a decline in funds from operations (FFO) per share.
This retail real estate investment trust’s (REIT) first-quarter 2018 FFO per share of 35 cents missed the Zacks Consensus Estimate of 37 cents. The figure also came in lower than the prior-year quarter tally of 36 cents. Notably, results reflected decline in same-store net operating income (NOI). The company also lagged on revenues in Q1.
Over the preceding four quarters, the company surpassed estimates in two occasions, missed in another and met in the other. It delivered an average positive surprise of 2.75% during this period. The graph below depicts this surprise history:
General Growth Properties, Inc. Price and EPS Surprise
General Growth Properties, Inc. Price and EPS Surprise | General Growth Properties, Inc. Quote
Let’s see how things have shaped up for this announcement.
Factors to Consider
With its acquisition by Brookfield Property Partners L.P. on track; on Jul 26, GGP announced receiving common stockholders’ approval for the same.
Notably, retail REITs like Kimco Realty (KIM - Free Report) , Taubman Centers , The Macerich Company (MAC - Free Report) and GGP continue to be affected by the lackluster retail real estate market. In fact, store closures and retailer bankruptcies continue to linger in the retail real estate space. Although retail landlords are making concerted efforts to boost productivity of retail assets by trying to grab attention from new and productive tenants, and disposing the non-productive ones, the national retail vacancy rate marginally increased to 10.2% in the second quarter, underlining store closures of bankrupt toy retailer, Toys “R” Us Inc., per data form Reis, while national average asking rents edged 0.2% higher.
Amid these, the Zacks Consensus Estimate of $3.4 million for GGP’s overage rents underscores a steep fall from the prior-quarter reported figure of $6.2 million. Further, the Zacks Consensus Estimate for minimum rents of $373 million highlights only a marginal sequential rise.
In the previous quarter, the company reported tenant recoveries to the tune of $157 million. This is expected to have increased to $160 million in the April-June quarter.
GGP’s development and redevelopment activities also put its profitability at risk. While an extensive pipeline is expected to be a notable growth driver, we think that it also increases operational risks, exposing the company to rising construction costs, entitlement delays and lease-up risks. This, in turn, might impact its bottom-line growth.
In fact, the Zacks Consensus Estimate for FFO per share for the to-be-reported quarter is pegged at 36 cents and reflects a projected year-over-year decline of 10%. Furthermore, GGP’s activities during the quarter could not gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share remained unchanged over the past month.
Earnings Whispers
Our proven model does not conclusively show that GGP will likely beat FFO estimates this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: GGP has an Earnings ESP of -1.41%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: GGP has a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>