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Macerich (MAC) Down 3.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Macerich (MAC - Free Report) . Shares have lost about 3.9% 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 catalysts.

Macerich Q3 FFO Misses Estimates, Revenues Beat

Macerich delivered third-quarter 2018 FFO per share (excluding costs related to shareholder activism) of 99 cents, a penny below the Zacks Consensus Estimate. However, the figure came in higher than the prior-year tally of 96 cents.

Results reflect occupancy uptick, higher tenant sales, as well as improving same-center earnings. During the quarter, the company also announced a 50/50 joint venture with Simon Property Group for creating the Los Angeles Premium Outlets.

The company posted adjusted revenues of $217.6 million for the quarter, surpassing the Zacks Consensus Estimate of $217.2 million. However, the figure came in 1.4% lower than the prior-year figure.

Quarter in Detail

As of Sep 30, 2018, mall portfolio occupancy expanded 80 basis points (bps) year over year to 95.1%. Mall tenant annual sales increased 7.3% year over year to $707 per square feet. Re-leasing spreads for the year ended Sep 30, 2018, increased 10.8%. Average rent per square foot ascended 3.9% to $59.09 from $56.88 as of Sep 30, 2017.

Also, same-center net operating income for the reported quarter climbed 3.7% from the comparable period last year.

As of Sep 30, 2018, Macerich’s cash and cash equivalents summed $93.5 million, up from $91 million reported as of Dec 31, 2017.

Guidance

Macerich narrowed its guidance for 2018. The retail REIT expects FFO per share, excluding costs related to shareholder activism, of $3.82-$3.87, compared with the earlier outlook of $3.82-$3.92.     

The company lowered its same-center NOI growth rate projection of 1.2-1.7%, assuming a fourth-quarter range of 3-3.5%.

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, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Macerich has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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