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Why Is Mack-Cali (CLI) Up 5.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Mack-Cali Realty (CLI - Free Report) . Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mack-Cali 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.

Mack-Cali Q3 FFO Lags Estimates, Revenues Decline

Mack-Cali’s core FFO per share of 43 cents came in lower than the year-ago figure of 57 cents.  Moreover, it lagged the Zacks Consensus Estimate of 44 cents per share.

Further, the company’s third-quarter 2018 revenues of $132.1 million declined 17.4% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $127.2 million.

Q3 Highlights

As of Sep 30, 2018, Mack-Cali’s consolidated core office properties were 84.2% leased, which increased 100 basis points (bps) from the prior-quarter end. Same-store cash revenues for the office portfolio descended 4.8% while same-store cash NOI fell 6.5%.

During the reported quarter, Mack-Cali executed 52 lease deals, spanning around 833,840 square feet of space, at the company’s consolidated in-service commercial portfolio. This comprised 23% for new leases, and 77% for lease renewals and other tenant-retention deals.

Further, for the core portfolio, rental rate roll up for third-quarter 2018 deals was 9.9% on a cash basis. For new transactions, rental rate roll up was 6.5% on a cash basis, while for renewals and other tenant retention deals, it was 10.6% on a cash basis.

The company’s residential same-store portfolio remained 74.4% leased at the quarter’s end. Moreover, same-store NOI increased 1.2% in the quarter under review.

Guidance

Mack-Cali revised its projected core FFO per share to $1.81-$1.85. The estimate provided earlier was $1.80-$1.86.

The company projects office occupancy (year-end % leased) of 84-86% and dispositions of $300-$375 million for full-year 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, Mack-Cali has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Mack-Cali has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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