It has been about a month since the last earnings report for Macerich (MAC - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Macerich 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 catalysts.
Macerich Q2 FFO, Revenues Miss, NOI Slips
Macerich reported second-quarter adjusted FFO per share of 39 cents which missed the Zacks Consensus Estimate of 46 cents. The figure also plunged 55.7% year over year. Adjusted FFO per share for the quarter excludes financing expense in relation to Chandler Freehold and loss on extinguishment of debt.
Results reflect the pandemic’s adverse impact and the related temporary closure of its properties as well as rent collection woes.
The company generated revenues of $178.6 million in the June-end quarter. The figure declined 21.7% year on year as well as missed the Zacks Consensus Estimate of $191 million.
The company noted that majority of its properties are now open. However, Queens Center and Kings Plaza in New York City have been closed since March 2020, while nine indoor California malls, which previously opened in May and early June, were closed for a second time in July pursuant to a statewide mandate.
Macerich is making negotiations with national and local tenants to secure rental payments, and collected roughly 46%, 58% and 66% of billings in the second quarter, June and July, respectively.
Moreover, the company noted that it has entered into several leases for new stores and concepts aggregating 1.3 million square feet for planned openings in mainly 2020 and 2021. It has slashed the planned 2020 development expends by roughly $90 million, though work continues on some select projects.
In March, Macerich withdrew the previously-issued guidance for 2020. It has not issued any updated outlook as of now due to the prevailing uncertainties.
Behind the Headlines
As of Jun 30, 2020, average rent per square foot rose 2.1% to $62.48 from $61.17 as of Jun 30, 2019. Mall tenant annual sales for the 12-month period ended Jun 30, 2020 decreased to $774 per square feet from $776 for the 12-month period ended Jun 30, 2019. Notably, the sales metric excludes the period of coronavirus closure for each tenant.
However, as of Jun 30, 2020, the mall portfolio occupancy shrunk 280 basis points year over year to 91.3%. Also, same-center net operating income (excluding lease termination income) slid 23.1% to $163 million from the prior-year number.
It exited second-quarter 2020 with $497.6 million of cash and cash equivalents on its balance sheet.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
At this time, Macerich has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise Macerich has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.