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Analyst Blog

Shares of DDR Corp. (DDR - Analyst Report) reached a new 52-week high, touching $19.03 in the first half of the trading session on May 7. The closing price of this retail real estate investment trust (REIT) on May 7 was $18.91, representing a solid year-to-date return of 20.6%. The trading volume for the session was 2.03 million shares.

Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock may not sustain this momentum going forward based on its current estimates revision trends. However, the company has strong fundamentals and expected year-over-year earnings growth of 6.71% for 2013.

Factors to Consider

Impressive first-quarter 2013 results on the back of its consistently strong portfolio restructuring activity as well as successful execution of its long-term strategy of improving the balance sheet by reducing leverage – were the primary growth drivers for DDR.

However, DDR has a significant development pipeline, which increases its operational risks.In addition, excess retail space in a number of its markets and the rise in consumer purchases through catalogs and the Internet could hurt the demand for it’s’ properties.

On Apr 30, DDR reported first-quarter 2013 operating FFO (funds from operations) per share of 27 cents. This was in line with the Zacks Consensus Estimate and surpassed the year-ago figure of 24 cents. Strategic acquisitions made in the past two years aided the year-over-year growth.

Moreover, DDR has delivered positive earnings surprises in 2 of the last 4 quarters with an average beat of 4.01%.

Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 FFO remained unchanged at $1.10. For 2014, the Zacks Consensus Estimate decreased 0.8% to $1.17 per share.

Other better performing REITs include the Host Hotels & Resorts Inc. (HST - Analyst Report), Public Storage (PSA - Analyst Report) and Acadia Realty Trust (AKR - Snapshot Report). All these stocks carry a Zacks Rank #2.

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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