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Kimco Realty (KIM) to Report Q1 Earnings: What's in Store?

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Kimco Realty Corporation (KIM - Free Report) is slated to report first-quarter 2017 results on Apr 26, 2017 after the market closes.

Last quarter, this New Hyde Park, NY-based retail real estate investment trust reported in-line results. In the trailing four quarters, the company beat estimates on one occasion while posted in-line results in the other three. Overall, in the last one year, the company recorded an average beat of 30.88%. The graph below depicts this surprise history.

Shares of the company lost 10.9% in the last three months. The Zacks Consensus Estimate for first-quarter 2017 is currently pegged at 37 cents per share.

Let’s see how things are shaping up for Kimco prior to this announcement.

Factors to Consider

Kimco is continuing with its strategic 2020 Vision. The company is purchasing premium assets in key U.S. markets, carrying out joint-venture buyouts and making progress in its simplification efforts. Specifically, the company has been lowering the number of joint ventures. In fact, riding high on its portfolio transformation activities, it made acquisitions of $43.1 million in the first quarter. During the quarter, the company’s sales aggregated $113.2 million from dispositions. Of this, Kimco’s share was $65.8 million.

Kimco’s premium properties, located in high-growth areas with a presence of well-capitalized retailers in its tenant roster, augur well. However, declining mall traffic and store closures amid aggressive growth in online sales kept retail REITs, including Kimco, on tenterhooks.

Although encouraging for the long term, the earnings-dilution effect of high disposition activity cannot be averted. These might hurt the company’s growth momentum in the to-be-reported quarter.

Kimco’s activities during the quarter could not gain adequate analyst confidence. Consequently, the Zacks Consensus Estimate for funds from operations remained unchanged in the last 30 days.

Earnings Whispers

Our proven model does not conclusively show that Kimco will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at 37 cents, which translates into an Earnings ESP of 0.00%.

Zacks Rank: Kimco currently has a Zacks Rank #3. Though this increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter:

Piedmont Office Realty Trust, Inc. (PDM - Free Report) , expected to release first-quarter results on May 2, has an Earnings ESP of +2.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HCP Inc. (HCP - Free Report) , expected to release earnings on May 2, has an Earnings ESP of +2.08% and a Zacks Rank #3.

EPR Properties (EPR - Free Report) , expected to release earnings on May 2, has an Earnings ESP of +0.84% and a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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