A month has gone by since the last earnings report for Simon Property (SPG Quick QuoteSPG - Free Report) . Shares have added about 14.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Simon Property due for a pullback? 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.

Simon Property Q3 FFO and Revenues Miss Estimates

Simon Property’s third-quarter 2020 FFO per share of $2.05 missed the Zacks Consensus Estimate of $2.25. The reported figure also plunged 32.8% from the year-ago quarter’s $3.05.

Further, the company generated revenues of $1.06 billion during the quarter, lagging the Zacks Consensus Estimate of $1.12 billion. The revenue figure also comes in 25.1% lower than the prior-year quarter reported tally.

Results reflect the coronavirus pandemic’s adverse impact on the company’s domestic and international operations, with an impact of $1.10 per share, mainly on reduced revenues. However, these negatives were partly offset by roughly 23 cents per share from cost-reduction moves.

The company noted that all of its U.S. retail properties are presently open. However, during the third quarter, seven retail properties in California were temporarily closed on Jul 15 because of a restrictive governmental order. While six of these properties reopened on Aug 31, the seventh property reopened on Oct 7 on the easing of governmental restrictions in Los Angeles.

Finally, as of Nov 6, Simon Property’s rent collections from U.S. retail portfolio, amounted to 72% of its net billed rents for the second quarter and 85% of its net billed rents for the third.

“Despite COVID-19, we are encouraged by the increases we are seeing in shopper traffic, retailer sales and tenant rent collections across our portfolio” noted David Simon, the company’s chairman, chief executive officer and president.

Inside the Headline Numbers

For the U.S. Malls and Premium Outlets portfolio, occupancy was 91.4% as of Sep 30, 2020, shrinking 330 basis points, year on year. Base minimum rent per square feet was $56.13 as of Sep 30, 2020, up 2.9% year on year.

Comparable property NOI for the reported quarter fell 24.4% and portfolio NOI declined 22.4%. Reduced revenues from agreed upon tenant rent abatements, higher provisions for uncollectible rents, lower sales-based rents and a reduction in ancillary property income, including Simon Brand Ventures sponsorship income, chiefly resulted in this decrease, though cost-reduction efforts provided some support.

Portfolio Update

During the September-end quarter, the company accomplished the redevelopment of former department store spaces at Broadway Square and Cape Cod Mall. Moreover, the 110,000-square-foot phase V expansion of Rinku Premium Outlets (Izumisano, (Osaka, Japan) opened during the third quarter, resulting in Rinku Premium Outlets becoming western Japan's largest outlet center. Notably, Simon enjoys 40% ownership of this center.

Construction is on for some redevelopment and new development projects in the United States and internationally that are nearing completion. The company’s share of the remaining required cash funding is roughly $140 million for these projects that are slated for completion by the end of 2021.

Balance Sheet Position

Simon Property exited third-quarter 2020 with more than $9.7 billion of liquidity. This comprised $1.5 billion of cash on hand, including its share of joint-venture cash, as well as $8.2 billion of available capacity under its revolving credit facilities and term loan, net of $623 million outstanding under its U.S. commercial paper program.

During the reported quarter, the company accomplished a three tranche senior notes offering, aggregating $2 billion. It used cash on hand and proceeds from the offering for repayment of $2.5 billion outstanding under its credit facilities.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.16% due to these changes.

VGM Scores

Currently, Simon Property has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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. It's no surprise Simon Property has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.