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Why Is Simon Property (SPG) Up 3.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Simon Property (SPG - Free Report) . Shares have added about 3.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Simon Property 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.

Simon Property Q2 FFO Beats on Healthy NOI Growth

Simon Property reported second-quarter 2018 FFO of $2.98 per share, which surpassed the Zacks Consensus Estimate of $2.91. The FFO per share figure also came in 20.6% higher than the year-ago tally of $2.47.

Results highlight increase in base minimum rent per square foot and leasing spread per square foot at its U.S. malls and Premium Outlets. Simon Property also raised its outlook for 2018.

During the reported quarter, the company posted revenues of around $1.39 billion, which outpaced the Zacks Consensus Estimate of $1.38 billion. The revenue figure also compares favorably with the year-ago number of $1.36 billion.

Inside the Headline Numbers

For the U.S. Malls and Premium Outlets portfolio, occupancy was 94.7% as of Jun 30, 2018, expanding 10 basis points (bps) from the prior-quarter tally. Retailer sales per square foot came in at $646 for the trailing 12-month period, marking growth of 4.6%. Base minimum rent per square feet rose 3.3% year over year to $53.84 as of Jun 30, 2018. Further, leasing spread per square foot for the trailing 12-month period ended Jun 30, 2018, increased 10.7% to $7.32.

Total portfolio net operating income (NOI) growth for the six-month period ended Jun 30, 2018, came in at 4.5%. Comparable-property NOI growth for the same period came in at 2.3%.

At the end of the reported quarter, Simon Property had redevelopment and expansion projects, including the addition of new anchors, in progress at several properties across the United States, Canada, Europe and Asia.

The company exited second-quarter 2018 with cash and cash equivalents of $714.2 million compared with nearly $1.5 billion reported at end of December 2017.

Additionally, as of Jun 30, 2018, Simon had more than $7 billion of liquidity. This comprised cash on hand, including its share of joint-venture cash and available capacity under its revolving credit facilities.

In addition, the company repurchased 514,659 shares of its common stock during the June-end quarter.

Outlook

Simon Property raised its outlook for 2018. The company, now, projects FFO per share of $12.05-$12.13 as compared to the prior guidance of $11.95-$12.05, reflecting an increase of 9 cents at the mid-point and an estimated growth of 7.5-8.2% from 2017 FFO per share of 11.21.

Dividend Update

Simon Property announced a quarterly dividend of $2 per share, denoting an increase of 11.1% year over year. The dividend will be paid on Aug 31, to stockholders of record on Aug 17, 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Simon Property has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Simon Property has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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