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Here's How Kimco (KIM) is Placed Ahead of Q4 Earnings
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Kimco Realty Corporation (KIM - Free Report) is slated to report fourth-quarter and full-year 2020 results on Feb 11, before the market opens. 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 Jericho, NY-based retail real estate investment trust (REIT) posted a negative surprise of 3.85% in terms of FFO per share. Results reflected a decline in same-property net operating income (NOI), mainly affected by a charge for potentially uncollectible accounts receivable. The company also witnessed a contraction in occupancy due to tenant bankruptcies.
Kimco beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other, the average surprise being 1.52%. This is depicted in the graph below:
Let’s see how things have shaped up prior to this announcement.
Factors at Play
The retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and the pandemic has only further aggravated its woes. However, per a report from CBRE Group (CBRE - Free Report) , solid holiday spending helped total retail sales in the fourth quarter, which remained above the first-quarter 2020 pre-pandemic level. In fact, the immunization process roll-out and the additional fiscal stimulus have boosted consumer sentiment.
Retail sales grew 3.9% year on year in the December-end quarter to $1.64 trillion. Though non-store retailers have been witnessing decent sales activity, this holiday season saw higher-than-expected physical store shopping, which is encouraging for the retail real estate market.
The total retail availability rate remained sequentially unchanged at 6.6% in the fourth quarter but expanded 40 basis points year on year thanks to the pandemic. Particularly, the power center segment reported the largest increase year on year. Moreover, rates have varied widely in terms of geography, with the suburban areas and tier II cities outperforming higher density urban areas.
Net absorption of 7.1 million square feet in the fourth quarter marked the first quarterly gain since the outbreak of the global health crisis in the January-March quarter of 2020. Except power centers, every property type recorded positive net absorption. Amid significant e-commerce penetration and store closures, power centers have been affected as well. However, total retail completions plummeted nearly 60% year on year during the fourth quarter due to the COVID-associated restrictions.
Considering Kimco, we note that this retail REIT enjoys ownership of high-quality assets, concentrated in the top major metro markets, which offer several growth levers. Apart from these, having a grocery component has been the saving grace of retail REITs amid these uncertain times, and for Kimco, a significant chunk of its annual base rent comes from grocery-anchored centers. Its curbside pick-up program is likely to have aided the company’s performance during the fourth quarter.
Nonetheless, Kimco, too, is not immune to store closures and retailer bankruptcies. The choppy retail real estate environment is likely to have curbed its growth momentum in the to-be-reported quarter, as secular industry headwinds continue dampening industry fundamentals. Further, rent relief and deferral requests from its tenants might have hurt revenue growth.
Nevertheless, with the reopening of additional tenants, the company is likely to have witnessed better rent collections and a lesser need for rent deferral agreements.
The Zacks Consensus Estimate for Kimco’s quarterly revenues is currently pinned at $271.2 million, calling for an 8.4% decline from the prior-year quarter.
In addition to the above, Kimco’s activities during the fourth quarter were inadequate to gain analyst confidence. The Zacks Consensus Estimate of 30 cents for quarterly FFO per share remained unrevised over the past month. The figure also calls for a decline of 18.9%, year over year.
For the full year, the Zacks Consensus Estimate for FFO per share has remained unchanged at $1.16 over the past month. The figure also indicates a 21.1% decline year on year. Revenues are projected to decline 6.3% year on year to $1.09 billion.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Kimco 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.
Kimco currently carries a Zacks Rank #3 and has an Earnings ESP of -3.33%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:
Rexford Industrial Realty, Inc. (REXR - Free Report) , scheduled to report fourth-quarter numbers on Feb 10, has an Earnings ESP of +3.66% 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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Image: Bigstock
Here's How Kimco (KIM) is Placed Ahead of Q4 Earnings
Kimco Realty Corporation (KIM - Free Report) is slated to report fourth-quarter and full-year 2020 results on Feb 11, before the market opens. 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 Jericho, NY-based retail real estate investment trust (REIT) posted a negative surprise of 3.85% in terms of FFO per share. Results reflected a decline in same-property net operating income (NOI), mainly affected by a charge for potentially uncollectible accounts receivable. The company also witnessed a contraction in occupancy due to tenant bankruptcies.
Kimco beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other, the average surprise being 1.52%. This is depicted in the graph below:
Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation price-eps-surprise | Kimco Realty Corporation Quote
Let’s see how things have shaped up prior to this announcement.
Factors at Play
The retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and the pandemic has only further aggravated its woes. However, per a report from CBRE Group (CBRE - Free Report) , solid holiday spending helped total retail sales in the fourth quarter, which remained above the first-quarter 2020 pre-pandemic level. In fact, the immunization process roll-out and the additional fiscal stimulus have boosted consumer sentiment.
Retail sales grew 3.9% year on year in the December-end quarter to $1.64 trillion. Though non-store retailers have been witnessing decent sales activity, this holiday season saw higher-than-expected physical store shopping, which is encouraging for the retail real estate market.
The total retail availability rate remained sequentially unchanged at 6.6% in the fourth quarter but expanded 40 basis points year on year thanks to the pandemic. Particularly, the power center segment reported the largest increase year on year. Moreover, rates have varied widely in terms of geography, with the suburban areas and tier II cities outperforming higher density urban areas.
Net absorption of 7.1 million square feet in the fourth quarter marked the first quarterly gain since the outbreak of the global health crisis in the January-March quarter of 2020. Except power centers, every property type recorded positive net absorption. Amid significant e-commerce penetration and store closures, power centers have been affected as well. However, total retail completions plummeted nearly 60% year on year during the fourth quarter due to the COVID-associated restrictions.
Considering Kimco, we note that this retail REIT enjoys ownership of high-quality assets, concentrated in the top major metro markets, which offer several growth levers. Apart from these, having a grocery component has been the saving grace of retail REITs amid these uncertain times, and for Kimco, a significant chunk of its annual base rent comes from grocery-anchored centers. Its curbside pick-up program is likely to have aided the company’s performance during the fourth quarter.
Nonetheless, Kimco, too, is not immune to store closures and retailer bankruptcies. The choppy retail real estate environment is likely to have curbed its growth momentum in the to-be-reported quarter, as secular industry headwinds continue dampening industry fundamentals. Further, rent relief and deferral requests from its tenants might have hurt revenue growth.
Nevertheless, with the reopening of additional tenants, the company is likely to have witnessed better rent collections and a lesser need for rent deferral agreements.
The Zacks Consensus Estimate for Kimco’s quarterly revenues is currently pinned at $271.2 million, calling for an 8.4% decline from the prior-year quarter.
In addition to the above, Kimco’s activities during the fourth quarter were inadequate to gain analyst confidence. The Zacks Consensus Estimate of 30 cents for quarterly FFO per share remained unrevised over the past month. The figure also calls for a decline of 18.9%, year over year.
For the full year, the Zacks Consensus Estimate for FFO per share has remained unchanged at $1.16 over the past month. The figure also indicates a 21.1% decline year on year. Revenues are projected to decline 6.3% year on year to $1.09 billion.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Kimco 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.
Kimco currently carries a Zacks Rank #3 and has an Earnings ESP of -3.33%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release quarterly earnings on Feb 17, currently has an Earnings ESP of +0.76% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rexford Industrial Realty, Inc. (REXR - Free Report) , scheduled to report fourth-quarter numbers on Feb 10, has an Earnings ESP of +3.66% 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.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>