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PS Business Parks (PSB) Up 3.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for PS Business Parks (PSB - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PS Business Parks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

PS Business Parks Tops Q3 FFO & Revenue Estimates

PS Business Parks reported third-quarter 2018 core FFO of $1.64 per share, beating the Zacks Consensus Estimate of $1.60. The figure also came in 6.5% higher than $1.54 recorded in the prior-year quarter.

Results highlight improvement in Same-Park net operating income (NOI) backed by growth in rental rates and occupancy, as well as improved NOI from non-Same-Park and multi-family assets. However, NOI reduction due to asset sold earlier partly offset the positives.

Rental income came in at around $103.8 million, marking 3.3% growth from the year-ago tally. The reported figure also exceeded the Zacks Consensus Estimate of $100 million.

Quarter in Detail

Same-Park rental income was up 2.2% year over year to $98.2 million, while Same-Park NOI climbed 3.8% year over year to $69.4 million, driven by improving rental rates and occupancy level.

Same-Park annualized rental income per occupied-square-foot inched up 1.2% to $15.36, while weighted average square-foot occupancy was 95.0%, up 90 basis points year over year.

Liquidity

PS Business Parks exited third-quarter 2018 with cash and cash equivalents of $8.7 million, down from $114.9 million reported at the end of the previous year.

Portfolio Update

As of Sep 30, 2018, the company had two multi-tenant office buildings, aggregating 107,000 square feet in Orange County, CA, as held for sale. The company expects to close this sale during fourth-quarter 2018.

Dividend Update

On Oct 23, the company announced a quarterly dividend of $1.05 per share. The dividend is payable on Dec 27, to shareholders of record as of Dec 12, 2018.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, PS Business Parks has a poor Growth Score of F, however its Momentum Score is doing a lot 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PS Business Parks has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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