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What's in the Cards for Federal Realty's (FRT) Q3 Earnings?
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Federal Realty Investment Trust (FRT - Free Report) is set to report third-quarter 2020 earnings on Nov 5, after the bell. The company’s quarterly results might display year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this retail real estate investment trust (REIT) reported a negative surprise of 36.36% in terms of FFO per share. Quarterly results highlighted the adverse impact of the coronavirus pandemic and particularly, collectability-related adjustment impacts.
Over the last four quarters, it met estimates on one occasion and missed in the other three, the average negative beat being 9.89%. The graph below depicts the surprise history of the company:
Federal Realty Investment Trust Price and EPS Surprise
Let’s see how things have shaped up for this announcement.
Key Factors
The retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and now the pandemic is only adding to its woes. Despite retail sales rebounding to the pre-COVID levels during the July-September period, with an improvement in consumer sentiment, per a report from CBRE Group (CBRE - Free Report) , the total retail availability rate expanded 20 basis points (bps) to 6.6% during the quarter, signaling the weakening retail real estate fundamentals.
Particularly, the pandemic’s impact has been most for experience-based retail, including full-service restaurants, fitness centers and movie theaters. Negative net absorption aggregated nearly 15 million square feet. This was mainly in the neighborhood, community & strip center segment, and represented the largest decline since the first quarter of 2009. Moreover, construction completions of less than 6 million square feet marked the lowest quarterly total ever recorded.
Federal Realty too was not spared. In addition, with the tenant roster having exposure to lifestyle and entertainment-oriented restaurants, and retailers that are not essential for consumers during the pandemic, rent collection is a key concern.
Nevertheless, the reopening of the retail sector in several parts of the United States has come as a relief. This is because, with more reopening of stores, tenants stand in a better position to generate revenues and meet their rent payments. Thus, the pressure on retail landlords is likely to have reduced to some extent and their rent-collection figures are expected to improve.
In its Oct 7 operational update, Federal Realty noted that all 104 of its shopping centers remained open and operational throughout the COVID-19 pandemic. Additionally, as of Oct 1, 2020, 94% of its retail tenants are open and operating on at least a modified basis.
The company noted that for the third quarter, it collected roughly 83% of its billed recurring rents. Nonetheless, as of Oct 1, deferral agreements were entered for $30 million of billed recurring rents related to second and third quarters of the ongoing year, and have a weighted average payback period of approximately 10 months. Federal Realty recognized revenues from around 60% of tenants, with deferral agreements on an accrual basis. Moreover, nearly $5 million of the deferred billed recurring rents is related to the July-September quarter.
The Zacks Consensus Estimate for quarterly revenues is pegged at $206.3 million, calling for a 11.8% decline from the year-ago period. Also, Federal Realty’s activities during the quarter were inadequate to win analyst confidence. The consensus estimate for the third-quarter FFO per share has been revised 5.2% downward to $1.10 in a month’s time, suggesting a year-over-year decline of 30.8%.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Federal Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Federal Realty currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.36%.
Stocks to Consider
Here are a few stocks in the broader real estate sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Ventas, Inc. (VTR - Free Report) , scheduled to announce earnings results on Nov 6, has an Earnings ESP of +2.03% and carries a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
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What's in the Cards for Federal Realty's (FRT) Q3 Earnings?
Federal Realty Investment Trust (FRT - Free Report) is set to report third-quarter 2020 earnings on Nov 5, after the bell. The company’s quarterly results might display year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this retail real estate investment trust (REIT) reported a negative surprise of 36.36% in terms of FFO per share. Quarterly results highlighted the adverse impact of the coronavirus pandemic and particularly, collectability-related adjustment impacts.
Over the last four quarters, it met estimates on one occasion and missed in the other three, the average negative beat being 9.89%. The graph below depicts the surprise history of the company:
Federal Realty Investment Trust Price and EPS Surprise
Federal Realty Investment Trust price-eps-surprise | Federal Realty Investment Trust Quote
Let’s see how things have shaped up for this announcement.
Key Factors
The retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and now the pandemic is only adding to its woes. Despite retail sales rebounding to the pre-COVID levels during the July-September period, with an improvement in consumer sentiment, per a report from CBRE Group (CBRE - Free Report) , the total retail availability rate expanded 20 basis points (bps) to 6.6% during the quarter, signaling the weakening retail real estate fundamentals.
Particularly, the pandemic’s impact has been most for experience-based retail, including full-service restaurants, fitness centers and movie theaters. Negative net absorption aggregated nearly 15 million square feet. This was mainly in the neighborhood, community & strip center segment, and represented the largest decline since the first quarter of 2009. Moreover, construction completions of less than 6 million square feet marked the lowest quarterly total ever recorded.
Federal Realty too was not spared. In addition, with the tenant roster having exposure to lifestyle and entertainment-oriented restaurants, and retailers that are not essential for consumers during the pandemic, rent collection is a key concern.
Nevertheless, the reopening of the retail sector in several parts of the United States has come as a relief. This is because, with more reopening of stores, tenants stand in a better position to generate revenues and meet their rent payments. Thus, the pressure on retail landlords is likely to have reduced to some extent and their rent-collection figures are expected to improve.
In its Oct 7 operational update, Federal Realty noted that all 104 of its shopping centers remained open and operational throughout the COVID-19 pandemic. Additionally, as of Oct 1, 2020, 94% of its retail tenants are open and operating on at least a modified basis.
The company noted that for the third quarter, it collected roughly 83% of its billed recurring rents. Nonetheless, as of Oct 1, deferral agreements were entered for $30 million of billed recurring rents related to second and third quarters of the ongoing year, and have a weighted average payback period of approximately 10 months. Federal Realty recognized revenues from around 60% of tenants, with deferral agreements on an accrual basis. Moreover, nearly $5 million of the deferred billed recurring rents is related to the July-September quarter.
The Zacks Consensus Estimate for quarterly revenues is pegged at $206.3 million, calling for a 11.8% decline from the year-ago period. Also, Federal Realty’s activities during the quarter were inadequate to win analyst confidence. The consensus estimate for the third-quarter FFO per share has been revised 5.2% downward to $1.10 in a month’s time, suggesting a year-over-year decline of 30.8%.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Federal Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Federal Realty currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.36%.
Stocks to Consider
Here are a few stocks in the broader real estate sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Lexington Realty Trust (LXP - Free Report) , set to report quarterly numbers on Nov 5, currently has an Earnings ESP of +1.33% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ventas, Inc. (VTR - Free Report) , scheduled to announce earnings results on Nov 6, has an Earnings ESP of +2.03% and carries a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Click Here, See It Free >>