It has been about a month since the last earnings report for Macerich (MAC). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Macerich 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.
Macerich's Q2 FFO Beats Estimates, Leasing Revenues Dip
Macerich delivered second-quarter 2019 FFO per share, excluding loss on extinguishment of debt and costs related to shareholder activism, of 88 cents, beating the Zacks Consensus Estimate of 86 cents. However, the figure compares unfavorably with the prior-year quarter’s 96 cents.
The company witnessed strong tenant sales growth as well as increase in average rent and releasing spreads, while occupancy declined. Though leasing revenues missed expectations, growth in same-center NOI aided its performance.
In fact, the company generated leasing revenues of $211 million in the quarter, missing the Zacks Consensus Estimate of $217.5 million. The figure also slipped 2.8% year over year.
Behind the Headline Numbers
As of Jun 30, 2019, mall portfolio occupancy shrunk 20 basis points (bps) year over year to 94.1%. Mall tenant annual sales for the 12-month period ended June 30, 2019, increased 12.1% year over year to $776 per square feet. Re-leasing spreads for the 12-month period ended Jun 30, 2019, increased 9.4%. Average rent per square foot ascended 4% to $61.17 from $58.84 as of Jun 30, 2018. Also, same-center net operating income (excluding lease termination revenue) inched up 0.9% from the prior-year quarter.
Moreover, the company accomplished $476 million of loan financing at an average interest rate of 4.19%, netting $112 million of excess loan proceeds.
Macerich reiterated its guidance for 2019. The REIT expects FFO per share of $3.50-3.58 for the ongoing year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Macerich has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
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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