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Prologis (PLD) Down 7.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prologis 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.
Prologis Tops Q4 FFO Estimates on Occupancy, Rent Growth
Prologis has reported fourth-quarter 2021 core FFO per share of $1.12, beating the Zacks Consensus Estimate of $1.10. It also compares favorably with the year-ago quarter’s figure of 95 cents.
The results reflect low vacancies and solid increases in rental revenues. Further, this industrial REIT has issued its 2022 outlook.
Prologis generated rental revenues of $1.07 billion, up from the prior-year quarter’s $987.8 million. The Zacks Consensus Estimate for the same was pegged at $1.06 billion. Total revenues were $1.28 billion, up from the year-ago quarter’s $1.11 billion.
Per Hamid R. Moghadam, chairman and chief executive officer of the company, "Demand for our 1 billion square foot global portfolio shows no signs of slowing and we are positioned ideally to meet our customers' most critical real estate needs."
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.4% in the fourth quarter, expanding 80 basis points (bps) from the third quarter of 2021. Moreover, the company’s owned and managed portfolio was 98.2% leased as of Dec 31, 2021.
In the quarter under review, 55.1 million square feet of leases commenced in the company’s owned and managed portfolio, with 44.3 million square feet in the operating portfolio and 10.8 million square feet in the development portfolio. The retention level was 75.8% in the quarter.
Prologis’ share of net effective rent change was 33.0% in the October-December quarter, up 510 bps sequentially. Cash rent change was 19.6%. Cash same-store net operating income (NOI) grew 7.5%, driven by the U.S. business at 8.1% and the International business at 5.3%.
The company’s share of building acquisitions amounted to $329 million, with a weighted average stabilized cap rate of 4.3% in the reported quarter. Development stabilization aggregated $1.05 billion, while development starts totaled $992 million, with 39.0% being build to suit. PLD’s total dispositions and contributions were $1.74 billion, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.1%.
Liquidity
Prologis exited the fourth quarter of 2021 with cash and cash equivalents of $556.1 million. Its liquidity amounted to $5.0 billion in cash and availability on its credit facilities.
Debt, as a percentage of total market capitalization, was 13.5%. The company's weighted average interest rate on its share of the total debt was 1.7%, with a weighted average term of 10.0 years. The combined investment capacity of Prologis and its open-ended ventures, in line with their current ratings, is roughly $15.5 billion. The company and its co-investment ventures issued $2.9 billion of debt in the fourth quarter at a weighted average interest rate of 1.1%.
Outlook
Prologis provided its 2022 core FFO per share guidance in the range of $5.00-$5.10. The company expects average occupancy of 96.5-97.5%. Cash same-store NOI (Prologis share) is projected in the range of 6-7%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Prologis 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 F on the value side, putting it in the bottom 20% quintile 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Prologis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Prologis (PLD) Down 7.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prologis 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.
Prologis Tops Q4 FFO Estimates on Occupancy, Rent Growth
Prologis has reported fourth-quarter 2021 core FFO per share of $1.12, beating the Zacks Consensus Estimate of $1.10. It also compares favorably with the year-ago quarter’s figure of 95 cents.
The results reflect low vacancies and solid increases in rental revenues. Further, this industrial REIT has issued its 2022 outlook.
Prologis generated rental revenues of $1.07 billion, up from the prior-year quarter’s $987.8 million. The Zacks Consensus Estimate for the same was pegged at $1.06 billion. Total revenues were $1.28 billion, up from the year-ago quarter’s $1.11 billion.
Per Hamid R. Moghadam, chairman and chief executive officer of the company, "Demand for our 1 billion square foot global portfolio shows no signs of slowing and we are positioned ideally to meet our customers' most critical real estate needs."
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.4% in the fourth quarter, expanding 80 basis points (bps) from the third quarter of 2021. Moreover, the company’s owned and managed portfolio was 98.2% leased as of Dec 31, 2021.
In the quarter under review, 55.1 million square feet of leases commenced in the company’s owned and managed portfolio, with 44.3 million square feet in the operating portfolio and 10.8 million square feet in the development portfolio. The retention level was 75.8% in the quarter.
Prologis’ share of net effective rent change was 33.0% in the October-December quarter, up 510 bps sequentially. Cash rent change was 19.6%. Cash same-store net operating income (NOI) grew 7.5%, driven by the U.S. business at 8.1% and the International business at 5.3%.
The company’s share of building acquisitions amounted to $329 million, with a weighted average stabilized cap rate of 4.3% in the reported quarter. Development stabilization aggregated $1.05 billion, while development starts totaled $992 million, with 39.0% being build to suit. PLD’s total dispositions and contributions were $1.74 billion, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.1%.
Liquidity
Prologis exited the fourth quarter of 2021 with cash and cash equivalents of $556.1 million. Its liquidity amounted to $5.0 billion in cash and availability on its credit facilities.
Debt, as a percentage of total market capitalization, was 13.5%. The company's weighted average interest rate on its share of the total debt was 1.7%, with a weighted average term of 10.0 years. The combined investment capacity of Prologis and its open-ended ventures, in line with their current ratings, is roughly $15.5 billion. The company and its co-investment ventures issued $2.9 billion of debt in the fourth quarter at a weighted average interest rate of 1.1%.
Outlook
Prologis provided its 2022 core FFO per share guidance in the range of $5.00-$5.10. The company expects average occupancy of 96.5-97.5%. Cash same-store NOI (Prologis share) is projected in the range of 6-7%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Prologis 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 F on the value side, putting it in the bottom 20% quintile 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Prologis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.