It has been about a month since the last earnings report for Duke Realty Corporation (DRE - Free Report) . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Duke Realty Q2 FFO Beats Estimates, Revenues Miss
Duke Realty’s second-quarter 2017 core FFO per share of $0.32 surpassed the Zacks Consensus Estimate of $0.30. The figure also came in $0.02 higher than the year-ago figure.
Results reflect improved operational performance from increased occupancy and rental rate growth. Moreover, the company substantially accomplished the prior disclosed sale of its medical office business, generating $2.45 billion in proceeds to date, with the residual properties expected to close during the third quarter.
Total rental and related revenue for the quarter was $165.8 million, up approximately 5% year over year. However, the figure missed the Zacks Consensus Estimate of $185 million.
Quarter in Detail
Duke Realty leased around 4.6 million square feet of space in the quarter. The company’s tenant retention for the quarter was 71.5%. Moreover, it registered same-property net operating income growth of 3.6% year over year, driven by rental rate increase. In fact, the company reported overall rent growth on new and renewal leases of 18.7%.
As of Jun 30, 2017, the company’s total occupancy, including properties under development, was 93.5%, down 240 basis points (bps) from the prior-quarter end. In-service occupancy as of the same date was 96.0%, down 190 bps from the prior-quarter end.
Notably, the company concluded the reported quarter with a solid development pipeline aggregating 10.9 million square feet, total expected project costs of $774 million and 65% pre-leased.
Duke Realty exited the quarter with $76.3 million of cash and cash equivalents, significantly up from $12.6 million as of Dec 31, 2016.
Duke Realty provided 2017 revised guidance for core FFO per share of $1.20–$1.26.
It also raised its projections for acquisitions and development starts to the range of $700 million–$1.1 billion and $700–$900 million, respectively.
Concurrent with its earnings release, Duke Realty announced a quarterly cash dividend on common stock of $0.19 per share. The second-quarter dividend will be paid on Aug 31 to shareholders of record as of Aug 16, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
At this time, Duke Realty's stock has a poor Growth Score of F, while it is doing a bit better on the momentum front with D. The stock was allocated a grade of F on the value side, putting it in the lowest 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.
Our style scores indicate investors will probably be better served looking elsewhere.
While estimates have been trending upward for the stock, the magnitude of this revision has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.