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Key Factors to Impact Prologis (PLD) This Earnings Season
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Prologis, Inc. (PLD - Free Report) is slated to report fourth-quarter 2022 earnings on Jan 18 before the bell. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on three occasions and missed the same on the other, the average beat being 1.36%. This is depicted in the graph below:
Let’s see how things have shaped up before this announcement.
Factors at Play
Despite the recent slowdown in demand, 2022 appeared a solid year for the U.S. industrial market, per the Cushman & Wakefield (CWK - Free Report) report.
There was a net absorption of 107.3 million square feet (msf) of space in the December-end quarter, down 9.4% from the third quarter. This stemmed from slowing demand amid economic headwinds and historically tight market conditions. However, it marked the ninth straight quarter where absorption surpassed the 100 msf mark.
Moreover, for the third year in succession, the U.S. industrial market inked more than 700 msf of new leasing volume, with 757 msf signed throughout 2022. Although the U.S. industrial vacancy rate moved up 20 basis points (bps) from the prior quarter to 3.3%, vacancy is still 140 bps lower than what it was pre-pandemic and remains more than 300 bps lower than its 10-year average of 6.5%.
Though asking rents increased in 2022, these exhibited signs of moderation in recent quarters. While the average industrial asking rental rate climbed just 1.0% sequentially to $8.81 per square foot, it surged 18.6% year over year. This marked the strongest year in history for annual rental rate growth, per the CWK report.
PLD is well-poised to benefit from this favorable trend, given its capacity to offer modern logistics facilities at strategic in-fill locations. Moreover, with global supply chains transforming for faster fulfillment and resilience, Prologis is likely to have captured favorable fundamentals with its differentiated customer offerings and solid investment activity in the to-be-reported quarter.
Prologis’ expansion efforts through acquisitions and developments in recent years are likely to have boosted the top line in the to-be-reported quarter. In addition, PLD is likely to have gained from its industry-leading cost structure.
Moreover, Prologis has decent balance sheet strength to fuel its growth endeavors. A market leader, this industrial REIT has the ability to raise capital at favorable rates. It is likely to have maintained financial strength with liquidity during the period in discussion.
The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $1.41 billion, suggesting a 31.5% year-over-year jump. The Zacks Consensus Estimate for the quarterly FFO per share of $1.21 calls for an 8.04% increase year over year.
However, with the asset category being attractive, there is a development boom in many markets. Per the CWK report, in the fourth quarter, new deliveries remained elevated, with 143.6 msf of industrial product completing construction. Consequently, supply outpaced demand for the second straight quarter and on an annual basis. The high supply is likely to have intensified competition during the December-end quarter.
For the full-year 2022, Prologis expected core FFO per share in the range of $5.12-$5.14. The company expects average occupancy in the band of 97.25-97.75% and cash same-store NOI (Prologis share) at 8.50-8.75%.
For the full year, the Zacks Consensus Estimate for FFO per share has risen a cent to $5.13 over the past month. The figure indicates a 23.6% increase year over year on revenues of $4.76 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Prologis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.
Prologis currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are some other stocks from the REIT sector — Host Hotels & Resorts, Inc. (HST - Free Report) , STAG Industrial, Inc. (STAG - Free Report) and SL Green Realty Corp. (SLG - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Key Factors to Impact Prologis (PLD) This Earnings Season
Prologis, Inc. (PLD - Free Report) is slated to report fourth-quarter 2022 earnings on Jan 18 before the bell. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on three occasions and missed the same on the other, the average beat being 1.36%. This is depicted in the graph below:
Prologis, Inc. Price and EPS Surprise
Prologis, Inc. price-eps-surprise | Prologis, Inc. Quote
Let’s see how things have shaped up before this announcement.
Factors at Play
Despite the recent slowdown in demand, 2022 appeared a solid year for the U.S. industrial market, per the Cushman & Wakefield (CWK - Free Report) report.
There was a net absorption of 107.3 million square feet (msf) of space in the December-end quarter, down 9.4% from the third quarter. This stemmed from slowing demand amid economic headwinds and historically tight market conditions. However, it marked the ninth straight quarter where absorption surpassed the 100 msf mark.
Moreover, for the third year in succession, the U.S. industrial market inked more than 700 msf of new leasing volume, with 757 msf signed throughout 2022. Although the U.S. industrial vacancy rate moved up 20 basis points (bps) from the prior quarter to 3.3%, vacancy is still 140 bps lower than what it was pre-pandemic and remains more than 300 bps lower than its 10-year average of 6.5%.
Though asking rents increased in 2022, these exhibited signs of moderation in recent quarters. While the average industrial asking rental rate climbed just 1.0% sequentially to $8.81 per square foot, it surged 18.6% year over year. This marked the strongest year in
history for annual rental rate growth, per the CWK report.
PLD is well-poised to benefit from this favorable trend, given its capacity to offer modern logistics facilities at strategic in-fill locations. Moreover, with global supply chains transforming for faster fulfillment and resilience, Prologis is likely to have captured favorable fundamentals with its differentiated customer offerings and solid investment activity in the to-be-reported quarter.
Prologis’ expansion efforts through acquisitions and developments in recent years are likely to have boosted the top line in the to-be-reported quarter. In addition, PLD is likely to have gained from its industry-leading cost structure.
Moreover, Prologis has decent balance sheet strength to fuel its growth endeavors. A market leader, this industrial REIT has the ability to raise capital at favorable rates. It is likely to have maintained financial strength with liquidity during the period in discussion.
The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $1.41 billion, suggesting a 31.5% year-over-year jump. The Zacks Consensus Estimate for the quarterly FFO per share of $1.21 calls for an 8.04% increase year over year.
However, with the asset category being attractive, there is a development boom in many markets. Per the CWK report, in the fourth quarter, new deliveries remained elevated, with 143.6 msf of industrial product completing construction. Consequently, supply outpaced demand for the second straight quarter and on an annual basis. The high supply is likely to have intensified competition during the December-end quarter.
For the full-year 2022, Prologis expected core FFO per share in the range of $5.12-$5.14. The company expects average occupancy in the band of 97.25-97.75% and cash same-store NOI (Prologis share) at 8.50-8.75%.
For the full year, the Zacks Consensus Estimate for FFO per share has risen a cent to $5.13 over the past month. The figure indicates a 23.6% increase year over year on revenues of $4.76 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Prologis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.
Prologis currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are some other stocks from the REIT sector — Host Hotels & Resorts, Inc. (HST - Free Report) , STAG Industrial, Inc. (STAG - Free Report) and SL Green Realty Corp. (SLG - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
Host Hotels & Resorts is slated to report quarterly numbers on Feb 15. HST has an Earnings ESP of +1.75% and carries a Zacks Rank of 3 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
STAG Industrial, scheduled to report quarterly numbers on Feb 15, has an Earnings ESP of +2.89% and carries a Zacks Rank of 2.
SL Green Realty, slated to release quarterly numbers on Jan 25, has an Earnings ESP of +2.03% and carries a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.