A month has gone by since the last earnings report for Macerich (MAC - Free Report) . Shares have lost about 1.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
Macerich's Q4 FFO Meets, Revenues Miss Estimates
Macerich delivered fourth-quarter 2018 FFO per share of $1.09, in line with the Zacks Consensus Estimate. The figure compared favorably with the prior-year tally of $1.03.
However, the company posted adjusted revenues of $215.7 million for the quarter, missing the Zacks Consensus Estimate of $234.2 million. Also, the figure came in 6.2% lower than the prior-year tally.
Results reflect a decline in minimum rents and tenant recoveries. However, the company witnessed an uptick in occupancy and mall tenant annual sales. Moreover, Macerich provided its guidance for 2019. The REIT expects FFO per share of $3.50-3.58, and $3.65-$3.73 (excluding impact of ASC 842).
Notably, the 2019 outlook has been negatively impacted by expectations related to interest rates, anchor closures, anticipated tenant bankruptcies and other factors, the company said. The guidance assumes 0.5-1% (excluding lease termination income) growth in same center net operating income.
Macerich's joint venture (JV) in One Westside, previously known as Westside Pavilion, in Los Angeles, CA, entered into a lease with Google, Inc. for the whole of its 584,000-square-foot Class A creative office campus. Also, its JV in Country Club Plaza in Kansas City entered into a lease with Nordstrom.
Quarter in Detail
As of Dec 31, 2018, mall portfolio occupancy expanded 40 basis points (bps) year over year to 95.4%. Mall tenant annual sales increased 10% year over year to $726 per square feet. Re-leasing spreads for the year ended Dec 31, 2018, increased 11.1%. Average rent per square foot ascended 3.7% to $59.09 from $56.97 as of Dec 31, 2017.
Also, same center net operating income (excluding lease termination revenue) rose 4.2% from the prior-year quarter. As of Dec 31, 2018, Macerich’s cash and cash equivalents summed $102.7 million, up from $91 million reported as of Dec 31, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Macerich has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.