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Why Is SL Green (SLG) Down 0.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for SL Green (SLG - Free Report) . Shares have lost about 0.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is SL Green 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.

SL Green's Q1 FFO & Revenues Miss Estimates, NOI Up

SL Green reported first-quarter 2019 FFO of $1.68 per share, missing the Zacks Consensus Estimate of $1.72. This tally was net of a non-cash charge of $2 million, related to a tenant bankruptcy at 625 Madison Avenue.

Nonetheless, results compared favorably with the year-ago figure of $1.66.
The quarterly performance reflects growth in same-store cash NOI. However, same-store occupancy for the company’s suburban portfolio witnessed a decline.

Net rental revenues of $212.6 million in the reported quarter missed the Zacks Consensus Estimate of $215 million. The revenue figure also compares unfavorably with the year-ago tally of $215.4 million.

Quarter in Detail

For the first quarter, same-store cash NOI, including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, climbed 5.1% year over year. This excluded free rent and lease termination income given to Viacom for space at 1515 Broadway.

In the Manhattan portfolio, SL Green signed 32 office leases for 407,902 square feet of space during the quarter. Importantly, in the Jan-Mar quarter, the mark-to-market on signed Manhattan office leases was 4.5% higher than the previous fully-escalated rents on the same spaces. As of Mar 31, 2019, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.8%, 30 basis points (bps) higher than the end of the first-quarter 2018.

In the Suburban portfolio, SL Green signed eight office lease deals for 32,970 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced,was 91.1% as of Mar 31, 2019, lower than92.4% as ofMar 31, 2018.

Liquidity

SL Green exited the Mar-end quarter with cash and cash equivalents of nearly $144.3 million, up from $129.5 million recorded at the end of 2018.

Investment Activity

In first-quarter 2019, the company repurchased 0.4 million shares of common stock under its $2.5-billion share repurchase program. The shares were bought back at average price of $86.07 per share.

Additionally, the company, along with its joint-venture partner, entered into agreements, to sell 521 Fifth Avenue for $381 million. The transaction is expected to close in second-quarter 2019 and cash proceed for the company will likely be nearly $100 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, SL Green has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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

SL Green has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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