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Why Is Prologis (PLD) Up 8.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prologis 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 Q4 FFO Tops Estimates, Occupancy Remains High
Prologis reported fourth-quarter 2018 core FFO per share of 80 cents, beating the Zacks Consensus Estimate by a penny. Results also compare favorably with the year-ago figure of 67 cents. Notably, core FFO per share included 5 cents per share of net promote income.
The company witnessed solid top-line growth in the quarter, while period-end occupancy remained high. Moreover, this industrial REIT issued its guidance for 2019 core FFO per share.
The company generated rental revenues of $679.2 million, which surpassed the Zacks Consensus Estimate of $663.5 million. The revenue figure also compares favorably with the year-ago tally of $550.6 million.
Quarter in Detail
At the end of the reported quarter, occupancy level in the company’s owned and managed portfolio was 97.5%, expanding 30 basis points (bps) year over year. Specifically, occupancy of its portfolio in Europe was at 98%.
During the fourth quarter, 35 million square feet of leases commenced in its owned and managed portfolio, which is flat compared with the year-ago period. However, average lease term in the quarter was a record 83 months, noted the company.
Prologis’ share of net effective rent change was 25.6% in the Oct-Dec quarter compared with 23.5% recorded a year ago. The figure reflects a record globally and for the United States, it came in at 33.1%. Cash rent change was 10.8%, as against 12.7% recorded in the year-earlier quarter.
Cash same-store net operating income (NOI) registered 4.5% growth compared with the 5.1% increase reported in the comparable period last year. This was led by 5.9% growth reported in the U.S. portfolio.
In fourth-quarter 2018, Prologis’ share of building acquisitions amounted to $320 million, with a weighted average stabilized cap rate of 5.1%. Development stabilization aggregated $551 million, while development starts totaled $930 million, with 42.3% being build-to-suit. Furthermore, the company’s total dispositions and contributions came in at $1.1 billion, with weighted average stabilized cap rate (excluding land and other real estate) of 5.3%.
Liquidity
Finally, the company exited 2018 with cash and cash equivalents of $343.9 million, down from $447.0 million recorded at the end of the previous year. Prologis ended the year with leverage of 25% on a market capitalization basis and debt-to-adjusted EBITDA of 4.2x. Notably, during the Dec-end quarter, the company and its co-investment ventures accomplished $1.4 billion of refinancings, with a weighted average rate of 2.3% and term of 7.7 years.
Following the quarter end, the company recast and upsized its global line of credit, bringing the total liquidity to $4.0 billion.
Outlook
Prologis offered its core FFO per share outlook for full-year 2019. The company projects core FFO per share in the range of $3.12-$3.20. Further, it estimates 2019 year-end occupancy of 96.0-97.5% and cash Same-Store NOI (Prologis share) of 3.75-4.75%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Prologis has a nice Growth Score of B, a grade with the same score on the 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prologis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Prologis (PLD) Up 8.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prologis 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 Q4 FFO Tops Estimates, Occupancy Remains High
Prologis reported fourth-quarter 2018 core FFO per share of 80 cents, beating the Zacks Consensus Estimate by a penny. Results also compare favorably with the year-ago figure of 67 cents. Notably, core FFO per share included 5 cents per share of net promote income.
The company witnessed solid top-line growth in the quarter, while period-end occupancy remained high. Moreover, this industrial REIT issued its guidance for 2019 core FFO per share.
The company generated rental revenues of $679.2 million, which surpassed the Zacks Consensus Estimate of $663.5 million. The revenue figure also compares favorably with the year-ago tally of $550.6 million.
Quarter in Detail
At the end of the reported quarter, occupancy level in the company’s owned and managed portfolio was 97.5%, expanding 30 basis points (bps) year over year. Specifically, occupancy of its portfolio in Europe was at 98%.
During the fourth quarter, 35 million square feet of leases commenced in its owned and managed portfolio, which is flat compared with the year-ago period. However, average lease term in the quarter was a record 83 months, noted the company.
Prologis’ share of net effective rent change was 25.6% in the Oct-Dec quarter compared with 23.5% recorded a year ago. The figure reflects a record globally and for the United States, it came in at 33.1%. Cash rent change was 10.8%, as against 12.7% recorded in the year-earlier quarter.
Cash same-store net operating income (NOI) registered 4.5% growth compared with the 5.1% increase reported in the comparable period last year. This was led by 5.9% growth reported in the U.S. portfolio.
In fourth-quarter 2018, Prologis’ share of building acquisitions amounted to $320 million, with a weighted average stabilized cap rate of 5.1%. Development stabilization aggregated $551 million, while development starts totaled $930 million, with 42.3% being build-to-suit. Furthermore, the company’s total dispositions and contributions came in at $1.1 billion, with weighted average stabilized cap rate (excluding land and other real estate) of 5.3%.
Liquidity
Finally, the company exited 2018 with cash and cash equivalents of $343.9 million, down from $447.0 million recorded at the end of the previous year. Prologis ended the year with leverage of 25% on a market capitalization basis and debt-to-adjusted EBITDA of 4.2x. Notably, during the Dec-end quarter, the company and its co-investment ventures accomplished $1.4 billion of refinancings, with a weighted average rate of 2.3% and term of 7.7 years.
Following the quarter end, the company recast and upsized its global line of credit, bringing the total liquidity to $4.0 billion.
Outlook
Prologis offered its core FFO per share outlook for full-year 2019. The company projects core FFO per share in the range of $3.12-$3.20. Further, it estimates 2019 year-end occupancy of 96.0-97.5% and cash Same-Store NOI (Prologis share) of 3.75-4.75%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Prologis has a nice Growth Score of B, a grade with the same score on the 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prologis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.