Ushering in good news for Weingarten Realty Investors (WRI - Free Report) , Moody’s Investor Services, the rating arm of Moody’s Corp. (MCO - Free Report) , upgraded the company’s senior unsecured rating to Baa1 from Baa2 and its preferred stock to Baa2 from Baa3 with a stable outlook.
The rating upgrade came on the back of Weingarten's five year strategic plan on transforming its portfolio, which includes the shift in its focus to core markets, non-core asset dispositions and boosting occupancy levels, apart from maintaining the improvement in its financial metrics and a decent balance sheet.
Further, the rating agency expects Weingarten to adhere to a conservative business model while preserving its current EBITDA margins and occupancy levels. Also, its financial profile is expected to improve with progress in key metrics like fixed charge, secured debt and net debt/EBITDA. All these are reflected in the company’s stable outlook.
We believe that the rating upgrade is a major positive for this retail real estate investment trust (REIT) as it enhances the company’s creditworthiness in the market and is likely to boost investor confidence in the stock.
Specifically, an improvement in creditworthiness enables a company to enjoy reduced costs on its debts and better access to capital. This, in turn, improves the company’s financial flexibility and offers means to pursue growth strategies.
Notably, Weingarten came up with an earnings surprise of 1.82% in the last reported quarter. Moreover, the P/CF ratio for Weingarten is 9.41. This is quite impressive because investors generally look for a reading under 20. Also, the industry average for this metric is 16.63, which means that Weingarten has beaten its peers in this regard as well.
Weingarten currently carries a Zacks Rank #2 (Buy). Investors interested in the retail REIT sector may consider other stocks like Regency Centers Corporation (REG - Free Report) and Simon Property Group Inc. (SPG - Free Report) . Both stocks carry the same rank as Weingarten.
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