A month has gone by since the last earnings report for Taubman Centers . Shares have added about 16.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Taubman 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 catalysts.
Taubman Centers Q3 FFO Tops Estimates, Revenues Dip Y/Y
Taubman Centers reported third-quarter 2020 adjusted FFO (AFFO) per share of 60 cents, surpassing the Zacks Consensus Estimate of 58 cents. However, the figure declined 30.2% from the year-ago quarter’s reported figure of 86 cents.
The pandemic-led disruptions, including widespread mall closures, tenant bankruptcies and uncollected rent, resulted in year-over-year declines.
Adjusted revenues (consisting of rental revenues, overage rents, and revenues from management, leasing, and development services for consolidated businesses) were $123.8 million, outpacing the Zacks Consensus Estimate of $119 million. However, the figure declined from $147 million reported in third-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) slumped 29% year over year. A year-over-year increase in uncollectible tenant revenues resulted in comparable center net operating income decline.
Average rent per square foot in U.S. comparable centers for the quarter was $59.28, marking a 6.4% decrease from the year-ago period’s $63.36. Trailing 12-month sales per square foot in the United States was $790, down 19.4% year over year. In Asia, sales per square foot improved modestly during the third quarter.
As of Sep 30, 2020, leased space in U.S. comparable centers was 92.6%, down 3% from Sep 30, 2019. Additionally, ending occupancy in U.S. comparable centers of 89.9% was down 2.7% year over year at the end of the reported quarter.
Taubman Centers exited third-quarter 2020 with cash and cash equivalents of $256.5 million; up from 102.8 million reported as of December 2019 end.
Total liquidity, including cash on hand and borrowing capacity under its lines of credit, was $455 million at the end of the July-September period, up $90 million from the second quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
At this time, Taubman has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 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.