It has been about a month since the last earnings report for DDR Corp. . Shares have lost about 5.7% in that time frame.
Will the recent negative 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 the most recent earnings report in order to get a better handle on the important catalysts.
DDR Corp Q2 FFO Beats Estimates, Revenues Miss
DDR reported second-quarter 2017 funds from operations (FFO) per share of $0.30, beating the Zacks Consensus Estimate by $0.02. However, the number declined $0.03 from the prior-year quarter.
Dilutive effect of deleveraging generated through sale of assets was primarily responsible for the decline in FFO.
The company posted revenues of $227.4 million for the second quarter, marginally missing the Zacks Consensus Estimate of $228 million. The figure also came in lower than $245.8 million recorded in the prior-year quarter.
Quarter in Detail
DDR signed 258 new and renewal leases for 1.9 million square feet of space during the quarter. On a pro rata basis and including Puerto Rico, the company generated new leasing spreads of 10% and renewal leasing spreads of 5.7% for the quarter. Also, same-store net operating income (NOI), including Puerto Rico, edged down 0.1% year over year on a pro rata basis.
As of Jun 30, 2017, on a pro rata basis, the company’s portfolio was 93.7% leased, down 240 basis points from the prior-year quarter end. Annualized base rent per occupied square foot increased 7.8% on a pro rata basis to $16.09 as of Jun 30, 2017, from $14.92 at the end of the year-ago quarter.
During the reported quarter, DDR completed its strategic planning and portfolio review process. Consequently, the company realized $28.1 million of impairment charges on two undeveloped land parcels and a shopping center. It also sold two Puerto Rico based shopping centers for $57.3 million. Nine shopping centers in the U.S. were sold for an aggregate price of $149.2 million, of which DDR’s share totaled $137.5 million.
DDR exited the second quarter with $414.1 million in cash compared with $30.4 million as of Dec 31, 2016.
The company’s expectation regarding its same-store NOI growth rate remained constant in the range of -1.5–0.0%. Further, the company projected leased rate at year end of 93.0–93.5%. Moreover, it estimated redevelopment activity placed in service of $80 million (around $40 million of incremental same store NOI) and weighted towards the second half of the year at high single-digit yields.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
At this time, DDR's stock has a subpar Growth Score of D,though it is lagging a bit on the momentum front with F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.