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Macerich (MAC) Down 2.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Macerich (MAC - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Macerich 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.

Macerich Q2 FFO Beats Estimates, Revenues Fall Y/Y

Macerich delivered second-quarter 2018 funds from operations (FFO) per share (excluding costs related to shareholder activism) of 96 cents, in line with the Zacks Consensus Estimate. However, the figure came in lower than the prior-year tally of 98 cents.

Results were backed by robust growth in re-leasing spreads and tenant sales growth. Yet, the company recorded lower portfolio occupancy.

The company posted revenues of $234.5 million for the quarter, handily surpassing the Zacks Consensus Estimate of $214.2 million. However, the figure came in 5.2% lower than the prior-year figure.

Quarter in Detail

As of Jun 30, 2018, mall portfolio occupancy shrunk 10 basis points (bps) year over year to 94.3%. Mall tenant annual sales increased 7.1% year over year to $692 per square feet. Re-leasing spreads for the quarter ended Jun 30, 2018, increased 12.3%. Average rent per square foot ascended 4% to $58.84 from $56.60 as of Jun 30, 2017.

Also, same-center net operating income for the reported quarter inched up 1.4% from the prior-year period.

As of Jun 30, 2018, Macerich’s cash and cash equivalents summed $92.4 million, up from $91 million reported as of Dec 31, 2017.

Guidance

Macerich revised its guidance for 2018. The retail REIT expects FFO per share of $3.69-$3.79, up from the previous band of $3.92-$4.02. The company also expects FFO per share, excluding costs related to shareholder activism, in the range of $3.82 to $3.92 for 2018.

This is backed by the same-center NOI growth rate projection of 1.5-2% and lease termination revenues of $15 million. Additionally, the company anticipates asset dispositions in 2018 to impact the bottom line by 5 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Macerich has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Macerich has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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