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Why Is Prologis (PLD) Up 1.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prologis 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.
Prologis Q2 FFO Beats Estimates, Rental Revenues Up Y/Y
Prologis reported second-quarter 2024 core FFO per share of $1.34, outpacing the Zacks Consensus Estimate by a penny. This compares unfavorably with the year-ago quarter’s figure of $1.83.
The quarterly results reflected a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor. In addition, this industrial REIT increased its 2024 core FFO per share guidance range.
Per Hamid R. Moghadam, the co-founder, chairman and CEO of the company, "While customer demand remains subdued, it is improving, and we expect that trend to continue as the construction pipeline shrinks. Meanwhile, our premier global portfolio will continue to benefit from its embedded NOI potential, and opportunities in data centers and energy give us tremendous confidence in future growth."
Prologis generated rental revenues of $1.85 billion, which missed the Zacks Consensus Estimate of $1.86 billion. However, the figure increased from the $1.65 billion reported in the year-ago period. Total revenues were $2.01 billion, down from the year-ago quarter’s $2.45 billion.
Quarter in Detail
In the quarter under review, 46.6 million square feet of leases commenced in the company’s owned and managed portfolio, with 39.6 million square feet in the operating portfolio and 7.0 million square feet in the development portfolio. The retention level was 73.2% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 96.1% in the second quarter, down from 96.8% in the prior quarter and 97.5% in the year-ago period.
Prologis’ share of net effective rent change was 73.9% in the April-June quarter. In the reported quarter, the cash rent change was 51.4%. Cash same-store net operating income (NOI) grew 7.2% compared to the 5.7% growth in the prior quarter.
The company’s share of building acquisitions amounted to $279 million, with a weighted average stabilized cap rate (excluding other real estate) of 5.0% in the second quarter. Development stabilization aggregated $2.04 billion, with 31.9% being built to suit, while development starts totaled $300 million. Prologis’ total dispositions and contributions were $940 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 5.8%.
However, during the reported quarter, interest expenses jumped 39% on a year-over-year basis to $208.3 million.
Liquidity
Prologis exited the second quarter of 2024 with cash and cash equivalents of $598.3 million, up from $500.6 million at the end of the first quarter of 2024. Total liquidity amounted to $6.45 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 23.7% as of Jun 30, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.3 years. The company has no significant debt maturities until 2026.
Prologis and its co-investment ventures issued an aggregate of $1.2 billion of debt in the reported quarter at a weighted average interest rate of 4.4% and a weighted average term of 10.9 years.
Guidance
Prologis increased its 2024 core FFO per share guidance to the range of $5.39-$5.47 from the $5.37-$5.47 range guided earlier, suggesting a 0.2% increase at the midpoint.
The company has maintained its previous guidance of average occupancy in the band of 95.75%-96.75%. Also, cash same-store NOI (Prologis share) remained unchanged within the range of 6.25% to 7.25%.
The company has kept its outlook for capital deployment (Prologis share) on development starts unchanged from $2.5-$3.0 billion. Spending on acquisitions is projected to be $1.0-$1.5 billion, up from its prior guided range of $500 million-$1.0 billion. Dispositions is estimated at $1.0-$1.4 billion, up from its previous range of $800 million-$1.2 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Prologis has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Prologis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Prologis (PLD) Up 1.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Prologis (PLD - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prologis 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.
Prologis Q2 FFO Beats Estimates, Rental Revenues Up Y/Y
Prologis reported second-quarter 2024 core FFO per share of $1.34, outpacing the Zacks Consensus Estimate by a penny. This compares unfavorably with the year-ago quarter’s figure of $1.83.
The quarterly results reflected a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor. In addition, this industrial REIT increased its 2024 core FFO per share guidance range.
Per Hamid R. Moghadam, the co-founder, chairman and CEO of the company, "While customer demand remains subdued, it is improving, and we expect that trend to continue as the construction pipeline shrinks. Meanwhile, our premier global portfolio will continue to benefit from its embedded NOI potential, and opportunities in data centers and energy give us tremendous confidence in future growth."
Prologis generated rental revenues of $1.85 billion, which missed the Zacks Consensus Estimate of $1.86 billion. However, the figure increased from the $1.65 billion reported in the year-ago period. Total revenues were $2.01 billion, down from the year-ago quarter’s $2.45 billion.
Quarter in Detail
In the quarter under review, 46.6 million square feet of leases commenced in the company’s owned and managed portfolio, with 39.6 million square feet in the operating portfolio and 7.0 million square feet in the development portfolio. The retention level was 73.2% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 96.1% in the second quarter, down from 96.8% in the prior quarter and 97.5% in the year-ago period.
Prologis’ share of net effective rent change was 73.9% in the April-June quarter. In the reported quarter, the cash rent change was 51.4%. Cash same-store net operating income (NOI) grew 7.2% compared to the 5.7% growth in the prior quarter.
The company’s share of building acquisitions amounted to $279 million, with a weighted average stabilized cap rate (excluding other real estate) of 5.0% in the second quarter. Development stabilization aggregated $2.04 billion, with 31.9% being built to suit, while development starts totaled $300 million. Prologis’ total dispositions and contributions were $940 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 5.8%.
However, during the reported quarter, interest expenses jumped 39% on a year-over-year basis to $208.3 million.
Liquidity
Prologis exited the second quarter of 2024 with cash and cash equivalents of $598.3 million, up from $500.6 million at the end of the first quarter of 2024. Total liquidity amounted to $6.45 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 23.7% as of Jun 30, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.3 years. The company has no significant debt maturities until 2026.
Prologis and its co-investment ventures issued an aggregate of $1.2 billion of debt in the reported quarter at a weighted average interest rate of 4.4% and a weighted average term of 10.9 years.
Guidance
Prologis increased its 2024 core FFO per share guidance to the range of $5.39-$5.47 from the $5.37-$5.47 range guided earlier, suggesting a 0.2% increase at the midpoint.
The company has maintained its previous guidance of average occupancy in the band of 95.75%-96.75%. Also, cash same-store NOI (Prologis share) remained unchanged within the range of 6.25% to 7.25%.
The company has kept its outlook for capital deployment (Prologis share) on development starts unchanged from $2.5-$3.0 billion. Spending on acquisitions is projected to be $1.0-$1.5 billion, up from its prior guided range of $500 million-$1.0 billion. Dispositions is estimated at $1.0-$1.4 billion, up from its previous range of $800 million-$1.2 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Prologis has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Prologis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.