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Simon Property (SPG) to Post Q3 Earnings: What Lies Ahead?
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Simon Property Group (SPG - Free Report) is scheduled to report third-quarter 2018 results on Oct 25, before the market opens. The company’s results are anticipated to reflect year-over-year rise in funds from operations (FFO) per share.
In the last reported quarter, this Indianapolis, IN-based retail real estate investment trust (REIT) delivered a positive surprise in terms of FFO per share. In addition, over the trailing four quarters, the company exceeded the Zacks Consensus Estimate in three occasions and met in the other, the average beat being 1.04%. This is depicted in the graph below:
Let’s see how things are shaping up for this announcement.
Factors to Influence Q3 Results
The U.S. retail real estate industry has been reeling under pressure from store closures and retailer bankruptcies, and the recent data from Reis shows that the regional mall vacancy rate jumped to 9.1% in the third quarter, from 8.6% in the prior quarter and 8.3% a year ago. For Neighborhood and Community malls, the vacancy rate was 10.2% in the quarter under review, unchanged sequentially, and up from 10.0% in Q3 2017.
Nonetheless, Simon Property is taking every step to counter the challenging situation and has been actively restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments. Particularly, for the past five years, Simon Property has been investing billions to transform its properties aimed at creating multi-use destination to drive footfall at the company’s properties. The company’s transformational plan includes addition of hotels, restaurants, residences, offices and luxury stores.
Further, the company is undertaking strategic measures to help online retailers fortify their physical presence, besides taking steps to support omni-channel strategy. These concerted efforts make its shopping malls appealing, and the company is well poised to effectively leverage the improving spending habits of wealthier customers amid improving economy and job market gains. Therefore, these efforts will be conducive to revenue growth in the to-be-reported quarter.
The Zacks Consensus Estimate for third-quarter revenues is currently pinned at $1.42 billion, reflecting a projected increase of 0.9% year over year. Moreover, the Zacks Consensus Estimate for FFO per share for the quarter is $3.02, indicating 4.5% rise from the year-ago quarter.
However, the company’s activities during the quarter were inadequate to gain analysts’ confidence. As such, the Zacks Consensus Estimate for the quarter remained unchanged in the last 30 days.
Furthermore, although the company is striving to counter the choppy retail real estate environment through various initiatives, implementation of such measures requires a decent upfront cost and therefore, will limit any robust growth in profit margins in the near term.
Earnings Whispers
Our proven model does not conclusively show that Simon Property is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Simon Property has an Earnings ESP of -0.22%.
Zacks Rank: Simon Property’s Zacks Rank of 2 (Buy) increases the predictive power of ESP. However, we also need to have a positive ESP to be confident about a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Welltower Inc. (WELL - Free Report) , slated to release third-quarter results on Oct 30, has an Earnings ESP of +1.06% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , scheduled to release earnings on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Image: Bigstock
Simon Property (SPG) to Post Q3 Earnings: What Lies Ahead?
Simon Property Group (SPG - Free Report) is scheduled to report third-quarter 2018 results on Oct 25, before the market opens. The company’s results are anticipated to reflect year-over-year rise in funds from operations (FFO) per share.
In the last reported quarter, this Indianapolis, IN-based retail real estate investment trust (REIT) delivered a positive surprise in terms of FFO per share. In addition, over the trailing four quarters, the company exceeded the Zacks Consensus Estimate in three occasions and met in the other, the average beat being 1.04%. This is depicted in the graph below:
Simon Property Group, Inc. Price and EPS Surprise
Simon Property Group, Inc. Price and EPS Surprise | Simon Property Group, Inc. Quote
Let’s see how things are shaping up for this announcement.
Factors to Influence Q3 Results
The U.S. retail real estate industry has been reeling under pressure from store closures and retailer bankruptcies, and the recent data from Reis shows that the regional mall vacancy rate jumped to 9.1% in the third quarter, from 8.6% in the prior quarter and 8.3% a year ago. For Neighborhood and Community malls, the vacancy rate was 10.2% in the quarter under review, unchanged sequentially, and up from 10.0% in Q3 2017.
Nonetheless, Simon Property is taking every step to counter the challenging situation and has been actively restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments. Particularly, for the past five years, Simon Property has been investing billions to transform its properties aimed at creating multi-use destination to drive footfall at the company’s properties. The company’s transformational plan includes addition of hotels, restaurants, residences, offices and luxury stores.
Further, the company is undertaking strategic measures to help online retailers fortify their physical presence, besides taking steps to support omni-channel strategy. These concerted efforts make its shopping malls appealing, and the company is well poised to effectively leverage the improving spending habits of wealthier customers amid improving economy and job market gains. Therefore, these efforts will be conducive to revenue growth in the to-be-reported quarter.
The Zacks Consensus Estimate for third-quarter revenues is currently pinned at $1.42 billion, reflecting a projected increase of 0.9% year over year. Moreover, the Zacks Consensus Estimate for FFO per share for the quarter is $3.02, indicating 4.5% rise from the year-ago quarter.
However, the company’s activities during the quarter were inadequate to gain analysts’ confidence. As such, the Zacks Consensus Estimate for the quarter remained unchanged in the last 30 days.
Furthermore, although the company is striving to counter the choppy retail real estate environment through various initiatives, implementation of such measures requires a decent upfront cost and therefore, will limit any robust growth in profit margins in the near term.
Earnings Whispers
Our proven model does not conclusively show that Simon Property is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Simon Property has an Earnings ESP of -0.22%.
Zacks Rank: Simon Property’s Zacks Rank of 2 (Buy) increases the predictive power of ESP. However, we also need to have a positive ESP to be confident about a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Regency Centers Corporation (REG - Free Report) , scheduled to release earnings on Oct 25, has an Earnings ESP of +0.21% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Welltower Inc. (WELL - Free Report) , slated to release third-quarter results on Oct 30, has an Earnings ESP of +1.06% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , scheduled to release earnings on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>