It has been about a month since the last earnings report for Macerich (MAC). Shares have lost about 6.3% 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 the most recent earnings report in order to get a better handle on the important drivers.
Macerich Q2 FFO & Revenues Miss, '23 View Revised
Macerich reported FFO per share, excluding financing expenses in relation to Chandler Freehold, of 40 cents, missing the Zacks Consensus Estimate by two cents. The figure declined 13% from the year-ago quarter’s tally.
The results reflected year-over-year increase in revenues aided by healthy leasing activity. However, higher interest expense during the quarter acted as a dampener.
Quarterly revenues of $212.4 million were higher than the year-ago quarter’s $204.1 million. However, the figure missed the Zacks Consensus Estimate of $218.7 million.
Behind the Headlines
The portfolio tenant sales per square foot for spaces less than 10,000 square feet in the trailing 12 months ended Jun 30, 2023, came in at $853 compared with $860 for the same period ended Jun 30, 2022.
During the reported quarter, Macerich signed 191 leases encompassing 1.4 million square feet. On a comparable center basis, this reflected a 21% increase in the amount of square footage signed year over year.
As of Jun 30, 2023, portfolio occupancy was 92.6%, up from 91.8% as of Jun 30, 2022. Our expectation for the same was pegged at 92.4%.
For the 12 months ended Jun 30, 2023, re-leasing spreads were 11.3% more than the expiring base rent.
Same-center NOI, including lease termination income, increased marginally year over year to $193.6 million. Our expectation was pegged at $193.7 million.
However, interest expenses during the quarter increased to $54.7 million from $53.2 million recorded in the prior-year quarter.
As of Aug 8, 2023, Macerich had around $565 million of liquidity. This included $405 million of available capacity on its $525 million revolving line of credit.
The company revised its 2023 FFO per share (excluding financing expenses in relation to Chandler Freehold) guidance to $1.77-$1.83 from $1.75-$1.85 guided earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
Currently, Macerich has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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