A month has gone by since the last earnings report for SITE Centers (SITC). Shares have added about 0.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SITE Centers due for a pullback? 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 drivers.
SITE Centers Q1 FFO Beats, Revenues Miss Estimates
SITE Centers posted first-quarter 2019 OFFO per share of 32 cents, surpassing the Zacks Consensus Estimate of 29 cents.
Results reflected growth in same-store NOI. The company, on a pro-rata basis, generated new and renewal leasing spreads of 23.2% and 7.9%, respectively, in the first quarter.
However, the operating FFO per share figure compares unfavorably with the prior-year tally of 53 cents. This year-over-year decline reflects the dilutive impact of the company’s spin-off of RVI, partially offset by lower interest expense.
The company generated revenues of $113.7 million in the quarter, missing the Zacks Consensus Estimate of $117.9 million. Further, the top-line figure came in lower than the $207 million recorded in the comparable period last year. This downside primarily resulted from lower rental income owing to a decrease in minimum rents and percentage rents.
Quarter in Detail
Same-store NOI growth for the total portfolio on a pro-rata basis was 1.3% in the first quarter. SITE Centers reported a leased rate of 93% as of Mar 31, 2019, compared with 93.6% in the prior-year period, on a pro-rata basis. Notably, the bankruptcies of Toys “R” Us and Mattress Firm primarily resulted in the year-over-year decline.
Annualized base rent per occupied square-foot for the total portfolio was $17.92 on a pro-rata basis as of Mar 31, 2019, up from $17.16 recorded a year ago.
SITE Centers sold five shopping centers for $185.6 million during the reported quarter. Further, the company entered into an agreement with Column Financial, Inc, an affiliate of Credit Suisse, regarding a portfolio of 83 properties anchored by Shopko. The company’s management of the assets is anticipated to generate a one-time $1-million fee, of which $0.5 million was recorded in the March-end quarter.
Also, the company received a $1.8 million fee related to the refinancing of RVI’s loan facility, which was excluded from OFFO.
Finally, SITE Centers exited the January-March quarter with $9.61 million in cash compared with $11.08 million as of Dec 31, 2018.
The company revised the operating FFO per share outlook to $1.14- $1.19 from the initially provided estimate of $1.13-$1.14. The Zacks Consensus Estimate for the same is pegged at $1.16. Furthermore, the guidance for same-store net operating income has been revised to 1.25-2% compared to the prior projection of 1-2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, SITE Centers has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SITE Centers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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SITE CENTERS CORP. (SITC) : Free Stock Analysis Report
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