Earnings Scorecard: Kimco Realty - Analyst Blog
May 18 2011 - 10:00AM
Zacks
Kimco Realty Corp.
(KIM), a leading real estate investment trust (REIT), reported
fiscal 2011 first quarter recurring funds from operations (FFO) of
30 cents per share, which was in line with the Zacks Consensus
Estimate. Fund from operations, a widely used metric to gauge the
performance of REIT, is obtained after adding depreciation and
amortization and other non-cash expenses to net income.
We cover below the results of the
recent earnings announcement, as well as the subsequent analyst
estimate revisions and the Zacks ratings for the short-term and
long-term outlook for the stock.
Earnings Report
Review
Kimco Realty reported first quarter
2011 rental revenues of $224.0 million compared with $213.4 million
in the year-earlier quarter – an increase of 5.0%. Total revenues
for the reported quarter exceeded the Zacks Consensus Estimate of
$216.0 million.
Overall occupancy in Kimco Realty’s
combined shopping center portfolio was 92.8% at the end of the
quarter, an increase of 20 bps compared with first quarter 2010. In
the U.S. portfolio, occupancy was 92.5% as of March 31, 2011, an
increase of 40 bps compared with the year-ago period. Same-store
net operating income (cash-basis, excluding lease termination fees
and including charges for bad debts) in the U.S. portfolio
increased 1.1% year-over-year.
(Read our full coverage on this
earnings report: Kimco Reports in Line)
Earnings Estimate
Revisions- Overview
Fiscal 2011 earnings estimates have
moved up for Kimco Realty since the earnings release, meaning that
analysts are bullish about the current fiscal performance of the
company. Let’s dig into the earnings estimate details.
Agreement of Estimate
Revisions
In the last 30 days, fiscal 2011
earnings estimates were raised by 5 analysts out of 18 covering the
stock, while 2 had lowered the same. For fiscal 2012, 2 out of 18
analysts covering the stock have revised their estimates upward,
while 2 have lowered it during the same time period. This indicates
that the analysts are optimistic about the short-term fiscal year
earnings, although on a long-term basis, the analysts are
cautious about the performance of the company.
Magnitude of Estimate
Revisions
Earnings estimates for fiscal 2011
have remained steady in the last 30 days at $1.20. For fiscal 2011,
the company has reiterated its earlier recurring FFO guidance in
the range of $1.17 – $1.21 per share.
Management remained encouraged by
the ongoing positive signs in the portfolio in terms of an increase
in space demand and the consequent effect on net operating income
growth and value creation opportunities. For fiscal 2012, earnings
estimates have remained stable during the last 30 days at $1.26,
which signifies that the analysts are circumspect about the
long-term performance of the company.
Moving Forward
The long-term earnings estimate
picture for Kimco Realty is neutral. With a geographically diverse
portfolio concentrated mostly in high-income, high-growth areas,
Kimco Realty is the largest publicly traded owner and operator of
neighborhood and community shopping centers in the U.S. The largest
tenants of the company include well-capitalized discount
retailers that have fared relatively well as U.S. consumers become
more price-conscious.
However, Kimco Realty faces stiff
competition from other players in the market for the acquisition of
properties for its tenants and for other real estate investment
opportunities. Consequently, the company has to continually invest
in value drivers that act as hedge against competition, which
undermines its long-term growth potential.
We maintain our ‘Neutral’ rating on
Kimco Realty, which currently has a Zacks #3 Rank that translates
into a short-term ‘Hold’ rating, indicating that the stock is
expected to perform in line with the overall U.S. equity market for
the next 1–3 months. We also have a ‘Neutral’ recommendation and a
Zacks #3 Rank for CBL & Associates Properties
Inc. (CBL), one of the competitors of Kimco Realty.
About Earnings Estimate
Scorecard
Len Zacks, PhD in mathematics
from MIT, proved over 30 years ago that earnings estimate revisions
are the most powerful force impacting stock prices. He turned this
ground breaking discovery into two of the most celebrating stock
rating systems in use today. The Zacks Rank for stock trading in a
1 to 3 month time horizon and the Zacks Recommendation for
long-term investing (6+ months). These “Earnings Estimate
Scorecard” articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our proven
stock ratings at http://www.zacks.com/education/
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KIMCO REALTY CO (KIM): Free Stock Analysis Report
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