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Why Is SL Green (SLG) Down 6.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for SL Green (SLG - Free Report) . Shares have lost about 6.2% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

SL Green Q2 FFO, Revenues Beat on Solid Leasing Activity

SL Green reported second-quarter 2019 FFO per share of $1.82, surpassing the Zacks Consensus Estimate of $1.73. The tally includes promote income from the sale of 521 Fifth Avenue of $3.4 million or 4 cents per share. Results also compare favorably with the year-ago quarter’s $1.69.

Results reflect strong leasing activity in the company’s Manhattan and Suburban portfolio. Further, total revenues for the quarter improved year over year.

Net rental revenues of $216.5 million in the second quarter outpaced the Zacks Consensus Estimate of $213.5 million. The revenue figure also compares favorably with the prior-year tally of $211.4 million.

Quarter in Detail

For the second quarter, same-store cash NOI, including SL Green’s share of same-store cash NOI from unconsolidated joint ventures, declined 2.7% year over year. However, excluding free rent and lease termination income given to Viacom for space at 1515 Broadway, the figure inched up 1.1%.

In the Manhattan portfolio, SL Green signed 40 office leases for 507,743 square feet of space during the quarter. Importantly, for the six-month period ended June 2019, the mark-to-market on signed Manhattan office leases was 30.5% higher than the previous fully-escalated rents on the same spaces. As of Jun 30, 2019, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.2%, shrinking 80 basis points year over year.

In the Suburban portfolio, SL Green signed 10 office lease deals for 77,712 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced, was 90% as of Jun 30, 2019, compared to 92.2% as of Jun 30, 2018.

Liquidity

SL Green exited the June-end quarter with cash and cash equivalents of nearly $149 million, up from $129.5 million recorded at the end of 2018.

Investment Activity

In first-half 2019, the company repurchased 1.3 million shares of common stock under its $2.5-billion share-repurchase program. The shares were bought back at an average price of $86.42 per share.

Additionally, the company, along with its joint-venture partner closed the sale of 521 Fifth Avenue for $381 million. The transaction generated cash proceed of $106 million for the company.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward 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 lot better with a B. However, 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 D. 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, 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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