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Here's How Kimco Realty (KIM) is Placed Ahead of Q2 Earnings

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Kimco Realty Corporation KIM is slated to report second-quarter 2021 earnings on Jul 29, before the bell. The company’s quarterly results will likely display year-over-year growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Jericho, NY-based retail real estate investment trust (REIT) posted a surprise of 10% in terms of FFO per share. Results reflected better-than-anticipated revenue numbers.

Kimco beat the Zacks Consensus Estimate in three of the preceding four quarters and missed in the other, the average beat being 3.46%. This is depicted in the graph below:

Kimco Realty Corporation Price and EPS Surprise

Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation Price and EPS Surprise

Kimco Realty Corporation price-eps-surprise | Kimco Realty Corporation Quote

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Kimco enjoys ownership of high-quality assets, concentrated in the top major metro markets, which offer several growth levers. Apart from these, having a grocery component has been the saving grace of retail REITs amid the global health crisis, and for Kimco, a significant chunk of its annual base rent comes from grocery-anchored centers.

With a well-located and largely grocery-anchored portfolio that offers essential goods and services, rent-collection figures are likely to have been healthy during the second quarter. Its curbside pick-up program is anticipated to have aided the company’s performance during the quarter under consideration.

Also, with the reopening of additional tenants, this retail REIT is likely to have witnessed better rent collections and a lesser need for rent deferral agreements. Kimco has achieved significant diversification with respect to geography and tenants, which is likely to have supported the company’s cash flows during the period in discussion.

Moreover, per the preliminary trend announcement for the commercial real estate from Moody's Analytics, the vacancy rate fell to 10.5% in the second quarter from the first quarter’s 10.6%, while the effective rent per unit inched up 0.1% sequentially, suggesting a somewhat positive picture.

Therefore, the company’s top-line is expected to show signs of improvement despite secular industry headwinds, including store closures and bankruptcies.

The Zacks Consensus Estimate for Kimco’s quarterly revenues is currently pinned at $272.59 million, calling for 14.1% growth from the prior-year quarter.

Besides, the company has been making moves to bolster its financial flexibility to sailing through the current challenging environment. In the second quarter too, Kimco is expected to have continued to maintain its decent balance-sheet position.

Kimco’s activities during the second quarter were adequate to gain analyst confidence. The Zacks Consensus Estimate for quarterly FFO per share moved a cent north to 31 cents over the past two months. The figure also suggests an increase of 29.2%, year over year.

Here is what our quantitative model predicts:

Our proven model predicts a surprise in terms of FFO per share for Kimco this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of a FFO beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kimco currently carries a Zacks Rank #3 and has an Earnings ESP of +0.89%.

Other Stocks That Warrant a Look

Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report positive surprises this quarter:

Realty Income Corporation O, scheduled to announce quarterly numbers on Aug 2, currently has an Earnings ESP of +1.14% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Simon Property Group, Inc. SPG, slated to release second-quarter numbers on Aug 2, has an Earnings ESP of +1.42% and carries a Zacks Rank of 3 at present.

Federal Realty Investment Trust FRT, set to report quarterly results on Aug 4, currently has an Earnings ESP of +1.83% and carries 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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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report

Kimco Realty Corporation (KIM) : Free Stock Analysis Report

Federal Realty Investment Trust (FRT) : Free Stock Analysis Report

Realty Income Corporation (O) : Free Stock Analysis Report

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