It has been about a month since the last earnings report for SL Green Realty Corporation (SLG - Free Report) . Shares have lost about 1.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is SLG due for a breakout? 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 drivers.
SL Green Q1 FFO Beats Estimates, Revenues Decline
SL Green reported first-quarter 2018 FFO of $1.66 per share, beating the Zacks Consensus Estimate of $1.65. The figure also came in higher than the year-ago FFO per share of $1.57.
Results reflect a year-over-year rise in investment income and same-store cash NOI.
However, rental revenues of $215.4 million in the reported quarter missed the Zacks Consensus Estimate of $256 million. Also, the figure declined 23.4% year over year.
Quarter in Detail
For the quarter, same-store cash NOI, including the share of same-store cash NOI from unconsolidated joint ventures, rose 7.4% year over year. Notably, consolidated property same-store cash NOI increased 4.6%.
In the Manhattan portfolio, SL Green signed 28 office leases for 375,813 square feet of space during the quarter. As of Mar 31, 2018, Manhattan same-store occupancy, inclusive of leases signed but not yet commenced, was 95.6%, up 20 basis points (bps) from the end of the prior quarter. Importantly, in the first quarter, the mark-to-market on signed Manhattan office leases was 10.4% higher over the previous fully-escalated rents on the same spaces.
On the other hand, in the Suburban portfolio, SL Green signed 19 office lease deals for 157,485 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced, was 86.6% as of Mar 31, 2018, shrinking 60 bps from the end of the prior quarter. Moreover, in the quarter under review, mark-to-market on signed suburban office leases came in just 1.4% higher than the previously fully-escalated rents on the same spaces.
SL Green exited the first quarter with cash and cash equivalents of nearly $288.8 million, up from $127.9 million recorded at the end of 2017.
During the reported quarter, SL Green repurchased 3.9 million shares of common stock under its previously-announced $1.5-billion share-repurchase plan. The shares were bought back at an average price of $97 per share.
Additionally, the company originated new debt and preferred equity investments, aggregating $224.5 million in the quarter, all of which were retained at a yield of 8.6%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been two revisions higher for the current quarter compared to three lower.
At this time, SLG has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. The stock was also 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 solely for momentum based on our styles scores.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, SLG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.