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Why Is Federal Realty Investment Trust (FRT) Up 1.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Federal Realty Investment Trust (FRT - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Federal Realty Investment Trust 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.

Federal Realty Beats on Q2 FFO, Ups '21 View, Hikes Dividend

Federal Realty’s second-quarter 2021 FFO per share of $1.41 handily surpassed the Zacks Consensus Estimate of $1.16. This also compares favorably with the year-ago quarter tally of 77 cents.

Results reflect better-than-anticipated revenues. The retail REIT has also raised its guidance for 2021 and 2022 FFO per share, and as well as the dividend.

Quarterly revenues of $231.6 million topped the consensus mark of $219.9 million and also exceeded the year-ago quarter tally by 31.4%.

According to Donald C. Wood, the company’s chief executive officer,"Our all-time high leasing volumes with best-in-class, relevant tenants coupled with our new acquisitions and existing development pipeline set our company and our assets up to be more dominant, more relevant and therefore more valuable in a post-COVID world."

It has also collected about 94% of total second-quarter 2021 billed recurring rents as of Jul 28, 2021.

Quarter in Details

During the reported quarter, Federal Realty signed 133 leases for 576,782 square feet of retail space. On a comparable space basis, the company signed 124 leases for 558,490 square feet of space at an average rent of $37.34 per square foot. This denotes cash-basis rollover growth of 8%, 18% on a straight-line basis.

As of Jun 30, the REIT’s overall portfolio was 92.7% leased, denoting a sequential expansion of 90 basis points.The company reported a 310-basis-point spread between leased and occupied.

During the second quarter, Federal Realty acquired 4 assets, aggregating 1.76 million square feet on 125 acres of land, at a gross value of $407 million, of which Federal owns an average 80% interest.

Balance Sheet

Federal Realty exited second-quarter 2021 with cash and cash equivalents of $304.3 million, down from the $798.3 million recorded at the end of 2020. Along with undrawn availability under its $1-billion revolving credit facility, the company’s liquidity amounted to $1.3 billion.

Outlook

Federal Realty raised its guidance for both 2021 and 2022. For 2021, the company now projects FFO per share of $5.05-$5.15.

For 2022, the REIT now estimates FFO per share of $5.30 to $5.50.

Dividend Update

Concurrent with the second-quarter earnings release, Federal Realty announced a hike in its regular quarterly cash dividend to $1.07 per share from the $1.06 per share paid earlier. The new dividend indicates an annual rate of $4.28 per share. The dividend will be paid out on Oct 15, to shareholders of record as of Sep 22, 2021. The latest hike marks the 54th consecutive year of common dividend increases by the company.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Federal Realty Investment Trust has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Federal Realty Investment Trust has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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