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Why Is Simon Property (SPG) Down 3.1% Since the Last Earnings Report?

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More than a month has gone by since the last earnings report for Simon Property Group, Inc. (SPG - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Simon Property Q2 Result Solid, View and Dividend Up

Simon Property reported second-quarter 2017 FFO of $2.47 per share, which surpassed the Zacks Consensus Estimate of $2.44. However, the FFO figure came in lower than $2.63 per share reported in the prior-year quarter.

Results highlight improved property performance and growth in revenues. The company also raised its full-year outlook and announced a hike in quarterly dividend.

During the quarter, the company posted revenues of $1.36 billion, which beat the Zacks Consensus Estimate of $1.33 billion. The figure compared favorably with the year-ago figure of $1.32 billion.

Quarter in Detail

For the U.S. Malls and Premium Outlets portfolio, occupancy was 95.2% as of Jun 2017. Base minimum rent per square feet rose 3.3% year over year to 52.10 as of Jun 30, 2017. Further, leasing spread per square foot for the trailing 12-month period ended Jun 30, 2017, increased 12.9% to $8.13.

Total portfolio net operating income (NOI) growth for the quarter was 5.0%. Moreover, comparable property NOI growth for the same period came in at 4.4%.

At the end of the quarter, Simon Property had redevelopment and expansion projects in progress at 25 properties across the U.S. and Canada.

The company exited the second quarter with cash and cash equivalents of $488.6 million compared with $560.1 million at the prior-year end.

Additionally, as of Jun 30, 2017, Simon had around $6.5 billion of liquidity. This comprised cash on hand, including its share of joint-venture cash, and available capacity under its revolving credit facilities.

Moreover, during the quarter, the company repurchased over 1.5 million shares of its common stock.

2017 Outlook Raised

Simon Property raised its full-year 2017 FFO per share guidance and projects it to be in the range of $11.14–$11.22. This marks a 4 cent per share increase from the mid-point of the prior guidance range, after taking into consideration the 36 cents per share charge on the extinguishment of debt.

Dividend Hike

Simon Property announced a quarterly dividend of $1.80 per share, marking an increase of 2.9% sequentially and 9.1% year over year. The new dividend will be paid on Aug 31 to stockholders of record on Aug 17, 2017.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in  fresh estimates. There has been one revision higher for the current quarter compared to two lower.

Simon Property Group, Inc. Price and Consensus

VGM Scores

At this time, Simon Property's stock has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of D on the value side, putting it in the bottom 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 for growth and momentum investors based on our style scores.

Outlook

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 expect in-line returns from the stock in the next few months.




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