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Kimco Soars to a New 52-Week High

Zacks Equity Research

Shares of Kimco Realty Corporation (KIM) touched a 52-week high of $23.55 towards the end of the trading session on Thursday, Jun 5, 2014, as it gained momentum following decent first-quarter 2014 results. The closing price of $23.54 of this retail real estate investment trust (:REIT) represented a robust year-to-date return of 19.1%. The average trading volume for the session was around 2.54 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving retail market fundamentals and expected year-over-year funds from operations (:FFO) per share growth of 4.01% for 2014.

Growth Drivers

Continuing with its decent performance since the last couple of quarters, Kimco met our expectations yet again in first-quarter 2014. Improving operating portfolio performance and Kimco’s successful efforts to improve its core portfolio through the divestiture of non-strategic assets and acquisition of high-quality properties in the U.S. were the positives. In addition, a significant redevelopment pipeline in high-income, high-growth areas is encouraging.

On May 7, 2014, Kimco reported first-quarter 2014 adjusted funds from operations FFO per share of 34 cents, in line with the Zacks Consensus Estimate and up 6.3% year over year. This was aided by growth in net operating income, occupancy levels and significant leasing activity. Also, total revenue increased 8.7% year over year to $246.9 million and surpassed the Zacks Consensus Estimate of $235 million.

Going forward, solid demand for the company’s properties, its portfolio transformation initiative, along with easy access to capital, promises considerable upside potential. Over the last 7 days, the Zacks Consensus Estimate for 2014 and 2015 FFO per share remained stable at $1.38 and $1.46, respectively.

Other Stocks to Consider

Apart from Kimco, other retail REITs that reached 52-week highs on Jun 5 include Simon Property Group Inc. (SPG), General Growth Properties, Inc (GGP) and The Macerich Company (MAC).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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Read the Full Research Report on KIM
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