On Nov 2, 2013, Zacks Investment Research upgraded Cousins Properties Incorporated (CUZ) – a real estate investment trust (:REIT) – to a Zacks Rank #2 (Buy). This was based on the company’s better-than-expected third-quarter 2013 results.
Why the Upgrade?
On Oct 30, 2013, Cousins Properties reported third-quarter 2013 funds from operations (:FFO) per share of 11 cents, beating the Zacks Consensus Estimate by a penny. This was driven by increase in revenues as well as occupancy and leasing gains. Total revenue for the quarter jumped 32.6% year over year to $52.1 million and also substantially exceeded the Zacks Consensus Estimate of $42 million.
Notably, Cousins Properties’ focus on building its business on a simpler platform, by specifically targeting trophy assets and opportunistic investments, ensures a steady revenue stream. In this context, the Texas-portfolio acquisition in the third-quarter 2013, the largest in the company’s history is noteworthy. Moreover, Cousins Properties maintains a flexible balance sheet with ample liquidity that enables it to capitalize on acquisition opportunities to fuel its growth engine.
As a result of these bullish factors, the tendency for an upward estimate revision has been obvious in recent times. Over the last 7 days, the Zacks Consensus Estimate for 2013 FFO per share rose 6% to 53 cents. Also, for 2014, the Zacks Consensus Estimate for FFO per share rose1.5% to 68 cents.
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Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.