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What's in the Cards for Kimco (KIM) This Earnings Season?
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Kimco Realty Corporation (KIM - Free Report) is slated to report first-quarter 2019 results on May 2, before the market opens.
In the last reported quarter, this New Hyde Park, NY-based retail real estate investment trust (REIT) delivered an in-line performance in terms of funds from operations (FFO) per share. The company registered new leasing spreads of 12.2%.
Over the trailing four quarters, Kimco beat estimates on two occasions and posted in-line results in the other two, recording an average beat of 1.39%. The graph below depicts this surprise history:
Let’s see how things are shaping up for this announcement.
Factors at Play
Kimco is on track with its 2020 Vision that envisages the ownership of high-quality assets, concentrated in major metro markets which offer several growth levers. As part of such efforts, in first-quarter 2019, the company grew its presence in two high-growth markets in Arizona and California with a $31.2-million sale-leaseback transaction with Albertsons Companies for three grocery-anchored parcels in existing Kimco shopping centers. In fact, amid transformation in the retail landscape, Kimco is making concerted efforts to navigate through mall traffic blues, with focus on service and experiential tenants, and omni-channel players.
Moreover, the company is aiming to expand its small shops’ portfolio. These shops basically comprise service-based industries, such as restaurants, salons and spas, personal fitness and medical practices, and enjoy frequent customer traffic and are Internet resistant. Amid limited new supply and favorable demographics, this diversification is likely to help Kimco limit its operating and leasing risks.
Further, with a heathy economy and job-market gains, the company may experience high occupancy and healthy leasing spreads in the to-be-reported quarter. Also, the company is expected to maintain a strong balance sheet backed by its strategic measures to boost the capital structure. It also remains focused on growing its unencumbered asset pool, which is encouraging.
Nonetheless, despite all these efforts, the choppy retail real estate environment might limit its growth momentum to some extent. This is because secular industry headwinds, including retailer downsizing and tenant bankruptcies keep dampening industry fundamentals.
Recent data from Reis shows that the neighborhood and community shopping center vacancy rate remained flat in the first quarter at 10.2%, but inched up from prior year’s 10%. Additionally, the regional mall vacancy rate witnessed an uptick of 0.3% to 9.3% during the quarter. Nonetheless, national average asking rent and effective rent inched up 0.4% on a sequential basis and 1.6% year over year.
Also, in connection to its strategic efforts, Kimco has been making significant disposition of the company’s assets. Particularly, the company announced first-quarter 2019 disposition of seven properties aggregating 691,000 square feet for $101.7 million. The company’s share of these sales amounted to $84.9 million.
Further, with $90.7 million in properties currently under contract, Kimco remains well poised to complete the majority of its planned dispositions in the first half of the year. In fact, management anticipates just a small level of sales activity for the remaining of the year to achieve its full-year forecast of $200-$300 million in total dispositions, net of any acquisition activity.
While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activities cannot be averted in the near term.
Amid these, the Zacks Consensus Estimate for first-quarter revenues of Kimco is currently pinned at $283.9 million — reflecting a 5.3% estimated decline from the prior-year period. The Zacks Consensus Estimate of FFO per share of 36 cents for the quarter also indicates a year-over-year drop of 2.7%.
In addition to the above, Kimco’s activities during the January-March quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share of 36 cents for the quarter under review remained unchanged over the past month.
Here is what our quantitative model predicts:
Kimco does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Kimco is 0.00%.
Zacks Rank: Kimco carries a Zacks Rank #4 (Sell), currently.
This combination of Zacks Rank and Earnings ESP makes us apprehensive about a positive surprise in the quarter.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Welltower, Inc. (WELL - Free Report) , set to report quarterly results on Apr 30, has an Earnings ESP of +0.58% and a carries a Zacks Rank of 3.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , slated to report first-quarter results on May 1, has an Earnings ESP of +0.29% and holds a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
What's in the Cards for Kimco (KIM) This Earnings Season?
Kimco Realty Corporation (KIM - Free Report) is slated to report first-quarter 2019 results on May 2, before the market opens.
In the last reported quarter, this New Hyde Park, NY-based retail real estate investment trust (REIT) delivered an in-line performance in terms of funds from operations (FFO) per share. The company registered new leasing spreads of 12.2%.
Over the trailing four quarters, Kimco beat estimates on two occasions and posted in-line results in the other two, recording an average beat of 1.39%. The graph below depicts this surprise history:
Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation Price and EPS Surprise | Kimco Realty Corporation Quote
Let’s see how things are shaping up for this announcement.
Factors at Play
Kimco is on track with its 2020 Vision that envisages the ownership of high-quality assets, concentrated in major metro markets which offer several growth levers. As part of such efforts, in first-quarter 2019, the company grew its presence in two high-growth markets in Arizona and California with a $31.2-million sale-leaseback transaction with Albertsons Companies for three grocery-anchored parcels in existing Kimco shopping centers. In fact, amid transformation in the retail landscape, Kimco is making concerted efforts to navigate through mall traffic blues, with focus on service and experiential tenants, and omni-channel players.
Moreover, the company is aiming to expand its small shops’ portfolio. These shops basically comprise service-based industries, such as restaurants, salons and spas, personal fitness and medical practices, and enjoy frequent customer traffic and are Internet resistant. Amid limited new supply and favorable demographics, this diversification is likely to help Kimco limit its operating and leasing risks.
Further, with a heathy economy and job-market gains, the company may experience high occupancy and healthy leasing spreads in the to-be-reported quarter. Also, the company is expected to maintain a strong balance sheet backed by its strategic measures to boost the capital structure. It also remains focused on growing its unencumbered asset pool, which is encouraging.
Nonetheless, despite all these efforts, the choppy retail real estate environment might limit its growth momentum to some extent. This is because secular industry headwinds, including retailer downsizing and tenant bankruptcies keep dampening industry fundamentals.
Recent data from Reis shows that the neighborhood and community shopping center vacancy rate remained flat in the first quarter at 10.2%, but inched up from prior year’s 10%. Additionally, the regional mall vacancy rate witnessed an uptick of 0.3% to 9.3% during the quarter. Nonetheless, national average asking rent and effective rent inched up 0.4% on a sequential basis and 1.6% year over year.
Also, in connection to its strategic efforts, Kimco has been making significant disposition of the company’s assets. Particularly, the company announced first-quarter 2019 disposition of seven properties aggregating 691,000 square feet for $101.7 million. The company’s share of these sales amounted to $84.9 million.
Further, with $90.7 million in properties currently under contract, Kimco remains well poised to complete the majority of its planned dispositions in the first half of the year. In fact, management anticipates just a small level of sales activity for the remaining of the year to achieve its full-year forecast of $200-$300 million in total dispositions, net of any acquisition activity.
While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activities cannot be averted in the near term.
Amid these, the Zacks Consensus Estimate for first-quarter revenues of Kimco is currently pinned at $283.9 million — reflecting a 5.3% estimated decline from the prior-year period. The Zacks Consensus Estimate of FFO per share of 36 cents for the quarter also indicates a year-over-year drop of 2.7%.
In addition to the above, Kimco’s activities during the January-March quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share of 36 cents for the quarter under review remained unchanged over the past month.
Here is what our quantitative model predicts:
Kimco does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Kimco is 0.00%.
Zacks Rank: Kimco carries a Zacks Rank #4 (Sell), currently.
This combination of Zacks Rank and Earnings ESP makes us apprehensive about a positive surprise in the quarter.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Public Storage (PSA - Free Report) , scheduled to release earnings on May 1, has an Earnings ESP of +1.15% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Welltower, Inc. (WELL - Free Report) , set to report quarterly results on Apr 30, has an Earnings ESP of +0.58% and a carries a Zacks Rank of 3.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , slated to report first-quarter results on May 1, has an Earnings ESP of +0.29% and holds a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>