Macerich (MAC) Up 4.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Macerich (MAC). Shares have added about 4.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Macerich due for a pullback? 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.
Macerich Beats on Q2 FFO, Increases 2021 Guidance
Macerich delivered FFO per share of 59 cents, excluding financing expenses in relation to Chandler Freehold, which exceeded the Zacks Consensus Estimate of 44 cents. The figure also increased 51.3%, year over year.
Results reflected better-than-expected top-line growth. The retail REIT has also raised the mid-point of the 2021 FFO per share guidance. It continues to see significant momentum in the leasing environment.
The company generated revenues of $215.5 million in the quarter. The top line surpassed the Zacks Consensus Estimate of $194.3 million as well as increased 20.7% year on year.
The relaxation of government-mandated restrictions and high levels of vaccinations across the United States have resulted in significant improvement in sales and traffic across the company’s portfolio. In second-quarter 2021, comparable tenant sales from spaces less than 10,000 square feet across the portfolio jumped 13.4% relative to the pre-pandemic sales during second-quarter 2019.
Behind the Headlines
At Jun 30, 2021, portfolio occupancy was 89.4%, reflecting a 90-basis-point expansion from 88.5% as Mar 31, 2021.
In the June-end quarter, Macerich signed 223 leases for roughly 692,000 square feet of space. This marks a substantial 15% more deals and 6% more square feet than what was leased during the pre-pandemic second-quarter 2019.
Re-leasing spreads for the 12-month period ended Jun 30, 2021 were nearly flat at -0.01%. This, however, marked a sequential improvement compared to the re-leasing spreads for the 12-month period ended Mar 31, 2021, which were down 2.1%.
As of Jun 30, 2021, average rent per square foot was $62.47, relatively flat with $62.48 as of Jun 30,2020.
Same-center net operating income or NOI (excluding lease termination income) increased 10.4% from the prior-year number.
As of Jun 30, 2021, it had cash and cash equivalents of $194 million. As of Aug 4, the company had $200 million outstanding on its revolving line of credit. Its total liquidity as of the same date amounted to roughly $500 million.
The company made progress towards lowering leverage, with $1.3 billion of debt repaid between Mar 31, and Aug 4, 2021.
Guidance
Assuming no further government-mandated shutdowns of its properties, the company raised the lower end of its guided ranges, narrowing the ranges and raising the mid-point of the 2021 FFO per share guidance. The REIT now expects 2021 FFO per share of $1.82-$1.97 compared with the $1.77-$1.97 guided earlier.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Macerich has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 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, Macerich has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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