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Taubman (TCO) Down 2.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Taubman Centers (TCO - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

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

Taubman Centers Q2 FFO and Revenues Lag Estimates

Taubman Centers reported second-quarter 2020 adjusted FFO (AFFO) per share of 41 cents, missing the Zacks Consensus Estimate of 64 cents. The figure also declined 56.4% from the year-ago quarter’s reported number of 94 cents.

The pandemic-led interruptions, including widespread center closures during most of the second quarter, hindered results. In fact, the closure of properties negatively impacted lease cancellation income and sales-based rent.

Adjusted revenues (consisting of rental revenues, overage rents, and revenues from management, leasing, and development services for consolidated businesses) were $113.8 million, lagging the Zacks Consensus Estimate of $143 million. Moreover, the reported figure slid from $149.6 million reported in second-quarter 2019.

Quarter in Detail

Comparable center net operating income at the company’s beneficial interest (excluding lease cancellation income and using constant foreign exchange rates) declined 25.3% year over year.

Trailing 12-month sales per square foot in the United States was $866. Also, average rent per square foot in U.S. comparable centers for the quarter was $60.35; marking a 5.9% decrease from the year-ago period’s $64.13. In Asia, sales per square foot improved 4.3% in the second quarter.

As of Jun 30, 2020, leased space in U.S. comparable centers was 93.8%, down 1.1% from Jun 30, 2019. Additionally, ending occupancy in U.S. comparable centers of 91.5% was down 0.3% year over year at the end of the reported quarter.

Liquidity

Taubman Centers exited second-quarter 2020 with consolidated cash of $241 million and $119 million available on its lines of credit.

In March, the company borrowed $350 million on its $1.1-billion primary unsecured revolving line of credit to boost its liquidity and improve financial flexibility. In late June, Taubman Centers repaid $100 million, reducing the outstanding balance to $870 million as of the second-quarter end.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -20.69% due to these changes.

VGM Scores

Currently, Taubman has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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. It's no surprise Taubman has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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