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What's in the Cards for Kimco (KIM) This Earnings Season?
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Kimco Realty Corporation (KIM - Free Report) is slated to report second-quarter 2024 results on Aug 1, before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jericho, NY-based retail real estate investment trust (REIT) outpaced the Zacks Consensus Estimate by 2.6% in terms of FFO per share. Kimco’s results reflected growth in revenues on a year-over-year basis.
Over the preceding four quarters, Kimco’s FFO per share surpassed the Zacks Consensus Estimate on two occasions, missed on one occasion and met in the remaining period, the average beat being 1.30%. This is depicted in the graph below:
Per a Cushman & Wakefield (CWK - Free Report) report, although gains in real income and employment continue to support consumer spending, the growth rate has decelerated and become more uneven in recent months. For the first time in years, the retail market is at the point of being supply-constrained, particularly in quality shopping centers.
On a year-over-year basis, the national retail vacancy rate remained unchanged at 5.3% in the second quarter. The vacancy rate was steady for the third consecutive quarter and was among the lowest rates since 2007.
Asking rents continue to increase in response to a tight market. On average, the asking rents for shopping centers improved 3.8% year over year to $24.37 per square foot in the second quarter.
The second quarter witnessed a positive net absorption in the retail market, totaling 1.4 million square feet nationally. This marked a bounce back from its first negative reading over the past three years, recorded in the first quarter of 2024.
Since 2020, new retail construction has been minimal, and it has further retrenched due to high interest rates and other financing challenges.
Factors at Play
Kimco owns properties in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Given a healthy retail real estate environment in the second quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Led by a healthy mix of essential, necessity-based tenants and omni-channel retailers, this retail REIT enjoys a diverse tenant base. This is likely to have aided stable revenue generation during the to-be-reported quarter, driving top-line growth.
As the mixed-use segment continues to gain from the recovery in the apartment and retail sectors, Kimco’s focus on developing mixed-use assets clustered in strong economic metropolitan statistical areas is likely to have given it an edge by driving net asset value.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for KIM’s quarterly revenues stands at $496.9 million, implying 12.2% growth from the prior-year reported number. The consensus mark for revenues from the rental property is currently pegged at $490 million, up from $439 million in the year-ago period.
Our estimate for net revenues from rental properties stands at $475.1 million, suggesting an 8.2% increase year over year and leased occupancy of 96.2%, implying a 20-basis point increase from the prior quarter.
The company’s solid balance sheet position is likely to have supported its growth endeavors.
However, a high interest rate environment is anticipated to have cast a pall on Kimco’s performance to some extent during the quarter. We estimate a year-over-year increase of 8.6% in its second-quarter interest expenses.
Before the second-quarter earnings release, the company’s activities were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has remained unrevised at 40 cents in the past month. However, it suggests a year-over-year increase of 2.6%.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a 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 chances of an FFO beat, which is not the case here.
Kimco currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the retail REIT sector — Simon Property Group (SPG - Free Report) and Tanger, Inc. (SKT - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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What's in the Cards for Kimco (KIM) This Earnings Season?
Kimco Realty Corporation (KIM - Free Report) is slated to report second-quarter 2024 results on Aug 1, before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jericho, NY-based retail real estate investment trust (REIT) outpaced the Zacks Consensus Estimate by 2.6% in terms of FFO per share. Kimco’s results reflected growth in revenues on a year-over-year basis.
Over the preceding four quarters, Kimco’s FFO per share surpassed the Zacks Consensus Estimate on two occasions, missed on one occasion and met in the remaining period, the average beat being 1.30%. This is depicted in the graph below:
Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation price-eps-surprise | Kimco Realty Corporation Quote
U.S. Retail Real Estate Market in Q2
Per a Cushman & Wakefield (CWK - Free Report) report, although gains in real income and employment continue to support consumer spending, the growth rate has decelerated and become more uneven in recent months. For the first time in years, the retail market is at the point of being supply-constrained, particularly in quality shopping centers.
On a year-over-year basis, the national retail vacancy rate remained unchanged at 5.3% in the second quarter. The vacancy rate was steady for the third consecutive quarter and was among the lowest rates since 2007.
Asking rents continue to increase in response to a tight market. On average, the asking rents for shopping centers improved 3.8% year over year to $24.37 per square foot in the second quarter.
The second quarter witnessed a positive net absorption in the retail market, totaling 1.4 million square feet nationally. This marked a bounce back from its first negative reading over the past three years, recorded in the first quarter of 2024.
Since 2020, new retail construction has been minimal, and it has further retrenched due to high interest rates and other financing challenges.
Factors at Play
Kimco owns properties in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Given a healthy retail real estate environment in the second quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Led by a healthy mix of essential, necessity-based tenants and omni-channel retailers, this retail REIT enjoys a diverse tenant base. This is likely to have aided stable revenue generation during the to-be-reported quarter, driving top-line growth.
As the mixed-use segment continues to gain from the recovery in the apartment and retail sectors, Kimco’s focus on developing mixed-use assets clustered in strong economic metropolitan statistical areas is likely to have given it an edge by driving net asset value.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for KIM’s quarterly revenues stands at $496.9 million, implying 12.2% growth from the prior-year reported number. The consensus mark for revenues from the rental property is currently pegged at $490 million, up from $439 million in the year-ago period.
Our estimate for net revenues from rental properties stands at $475.1 million, suggesting an 8.2% increase year over year and leased occupancy of 96.2%, implying a 20-basis point increase from the prior quarter.
The company’s solid balance sheet position is likely to have supported its growth endeavors.
However, a high interest rate environment is anticipated to have cast a pall on Kimco’s performance to some extent during the quarter. We estimate a year-over-year increase of 8.6% in its second-quarter interest expenses.
Before the second-quarter earnings release, the company’s activities were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has remained unrevised at 40 cents in the past month. However, it suggests a year-over-year increase of 2.6%.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a 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 chances of an FFO beat, which is not the case here.
Kimco currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the retail REIT sector — Simon Property Group (SPG - Free Report) and Tanger, Inc. (SKT - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Simon Property, scheduled to report quarterly numbers on Aug 5, has an Earnings ESP of +0.44% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tanger is slated to report quarterly numbers on Aug 1. SKT has an Earnings ESP of +0.94% and carries a Zacks Rank of 2 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.