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Taubman Soars to New 52-Week High

Zacks Equity Research

Shares of Taubman Centers Inc. (TCO) crafted a new 52-week high, touching $88.15 in the middle of the trading session on May 14. The closing price of this Michigan-based real estate investment trust (:REIT) was $87.47, representing a decent year-to-date return of 9.5%. The trading volume for the session was over 0.7 million shares.

However, considering the estimate revision trends over the last 30 days, we do not expect any significant price appreciation for this Zacks Ranks #3 (Hold) stock.

Factors to Consider

Impressive first-quarter 2013 results – including an earnings surprise of 7.1% and improvement in rents, occupancies and solid recoveries – as well as a solid portfolio of the best-in-class retail malls that generate robust mall tenant sales were the primary growth drivers for Taubman.

During first-quarter 2013, the company continued its multi-pronged growth strategy with steady development work across outlet centers and traditional shopping centers both on the domestic frontier and international territories. Also, the company has a healthy balance sheet with adequate liquidity.

On the flip side, the possibility of store closures at many Taubman centers due to lease terminations and uncertain economic environment undermine its future growth potential. Also, increase in consumer purchases through catalogs and the Internet could hurt demand for its properties.   

On Apr 25, Taubman reported decent first-quarter 2013 results with FFO (funds from operations) of 90 cents per share, beating the Zacks Consensus Estimate of 84 cents by 7.1% and the year-ago FFO per share of 75 cents by 20.0%. The better-than-expected results were primarily driven by increase in rents and solid recoveries.

Additionally, Taubman has now delivered positive earnings surprises in the last 4 straight quarters, with an average beat of 5.9%.

Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 FFO per share moved up 0.5% to $3.66. On the other hand, the Zacks Consensus Estimate for 2014 FFO has moved down 0.8% to $3.88 per share.

A number of other REITs also touched 52-week highs on the same day. These include DDR Corp. (DDR), Health Care REIT Inc. (HCN) and Liberty Property Trust (LRY).

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 LRY

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