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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 2018 results on Jul 26, before the market opens.
In the last reported quarter, this New Hyde Park, NY-based retail real estate investment trust (REIT) delivered a positive surprise of 2.78% in terms of funds from operations (FFO) per share. The company also reported growth in revenues.
Over the trailing four quarters, Kimco beat estimates in two occasions and posted in-line results in the other two, recording an average beat of 1.37%. The graph below depicts this surprise history:
The Zacks Consensus Estimate for the second-quarter FFO per share is currently pegged at 36 cents.
Let’s see how things are shaping up for this announcement.
Factors at Play
Kimco is on track with its 2020 Vision that envisages the ownership of high-quality assets, concentrated in major metro markets which offer several growth levers. Particularly, the company is aimed at improving its portfolio mix and experiencing decent demand from high-growth category retailers, including off-price and home improvement.
In fact, amid transformation in the retail landscape, Kimco remains well poised to counter the retail blues, with focus on service and experiential tenants, and omni-channel players who generate 56% and 39% of annual base rent, respectively.
Moreover, the company is aimed at expanding its small shops portfolio. These shops, comprising service-based industries, such as restaurants, salons and spas, personal fitness and medical practices, enjoy frequent customer traffic and are Internet resistant. With limited new supply and favorable demographics, this diversification will likely help Kimco bring down its operating and leasing risks. As such, amid upbeat consumer confidence and improving economy, the company is likely to experience high occupancy and healthy leasing spreads, moving ahead.
Further, Kimco is engaged in the execution of strategic measures to boost its capital structure, and enhance the company’s growth profile and tax efficiency as well. The company maintains a strong liquidity profile, with $2.25-billion unsecured line of credit, and aims at growing its unencumbered asset pool which consists of 75% of Kimco’s properties.
Earlier this July, Kimco provided an update of its Q2 transaction activity and reported the sale of 17 shopping centers, aggregating 2.7 million square feet of space, in the quarter. With these dispositions, the company’s second-quarter sales volume has surpassed $330 million and for the first half of the year, the same aggregates $556 million. This retail REIT now remains on track to meet its full-year disposition target of $700-$900 million. The company witnessed solid demand for open-air shopping centers, and the Q2 property sales’ blended cap rate came in line with its expected range of 7.5-8%.
However, in connection to its strategic efforts, Kimco has been making significant disposition of the company’s assets. It disposed 38 shopping centers and four land parcels, aggregating 5 million square feet of space, in the first half of the year, for $556.1 million, of which, Kimco’s share of the sales price was $531.8 million. While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activity cannot be averted in the near term.
In fact, the Zacks Consensus Estimate for second-quarter revenues is currently pegged at $291.5 million, reflecting a 0.5% estimated decline from the prior-year period. Moreover, the Zacks Consensus Estimate of FFO per share of 36 cents for the quarter indicates a year-over-year drop of 5.3%.
In addition, store closures and retailers bankruptcies continue to rule the market, in the retail real estate space. Although retail landlords are making concerted efforts to boost productivity of retail assets by trying to grab attention from new and productive tenants, and disposing the non-productive ones, the national retail vacancy rate marginally increased to 10.2% in the second quarter, underlining store closures of bankrupt toy retailer, Toys “R” Us Inc., per data form Reis, while national average asking rents edged 0.2% higher.
Further, Kimco’s activities during the April-June quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share of 36 cents for the second quarter remained unchanged over the past month.
Here is what our quantitative model predicts:
Kimco has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Kimco is +0.28%.
Zacks Rank: Kimco carries a Zacks Rank #3.
A positive Earnings ESP is a meaningful and leading indicator of a likely beat in terms of FFO per share. This, when combined with a favorable Zacks rank, makes us reasonably confident of a positive surprise.
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 have the right combination of elements to report a positive surprise this quarter:
Vornado Realty Trust (VNO - Free Report) , scheduled to report Q2 numbers on Jul 30, has an Earnings ESP of +1.39% and a Zacks Rank #3.
HCP, Inc. (HCP - Free Report) , set to release second-quarter results on Aug 2, has an Earnings ESP of +0.66% and a Zacks Rank of 3.
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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Image: Bigstock
What's in the Cards for Kimco (KIM) This Earnings Season?
Kimco Realty Corporation (KIM - Free Report) is slated to report second-quarter 2018 results on Jul 26, before the market opens.
In the last reported quarter, this New Hyde Park, NY-based retail real estate investment trust (REIT) delivered a positive surprise of 2.78% in terms of funds from operations (FFO) per share. The company also reported growth in revenues.
Over the trailing four quarters, Kimco beat estimates in two occasions and posted in-line results in the other two, recording an average beat of 1.37%. The graph below depicts this surprise history:
Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation Price and EPS Surprise | Kimco Realty Corporation Quote
The Zacks Consensus Estimate for the second-quarter FFO per share is currently pegged at 36 cents.
Let’s see how things are shaping up for this announcement.
Factors at Play
Kimco is on track with its 2020 Vision that envisages the ownership of high-quality assets, concentrated in major metro markets which offer several growth levers. Particularly, the company is aimed at improving its portfolio mix and experiencing decent demand from high-growth category retailers, including off-price and home improvement.
In fact, amid transformation in the retail landscape, Kimco remains well poised to counter the retail blues, with focus on service and experiential tenants, and omni-channel players who generate 56% and 39% of annual base rent, respectively.
Moreover, the company is aimed at expanding its small shops portfolio. These shops, comprising service-based industries, such as restaurants, salons and spas, personal fitness and medical practices, enjoy frequent customer traffic and are Internet resistant. With limited new supply and favorable demographics, this diversification will likely help Kimco bring down its operating and leasing risks. As such, amid upbeat consumer confidence and improving economy, the company is likely to experience high occupancy and healthy leasing spreads, moving ahead.
Further, Kimco is engaged in the execution of strategic measures to boost its capital structure, and enhance the company’s growth profile and tax efficiency as well. The company maintains a strong liquidity profile, with $2.25-billion unsecured line of credit, and aims at growing its unencumbered asset pool which consists of 75% of Kimco’s properties.
Earlier this July, Kimco provided an update of its Q2 transaction activity and reported the sale of 17 shopping centers, aggregating 2.7 million square feet of space, in the quarter. With these dispositions, the company’s second-quarter sales volume has surpassed $330 million and for the first half of the year, the same aggregates $556 million. This retail REIT now remains on track to meet its full-year disposition target of $700-$900 million. The company witnessed solid demand for open-air shopping centers, and the Q2 property sales’ blended cap rate came in line with its expected range of 7.5-8%.
However, in connection to its strategic efforts, Kimco has been making significant disposition of the company’s assets. It disposed 38 shopping centers and four land parcels, aggregating 5 million square feet of space, in the first half of the year, for $556.1 million, of which, Kimco’s share of the sales price was $531.8 million. While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activity cannot be averted in the near term.
In fact, the Zacks Consensus Estimate for second-quarter revenues is currently pegged at $291.5 million, reflecting a 0.5% estimated decline from the prior-year period. Moreover, the Zacks Consensus Estimate of FFO per share of 36 cents for the quarter indicates a year-over-year drop of 5.3%.
In addition, store closures and retailers bankruptcies continue to rule the market, in the retail real estate space. Although retail landlords are making concerted efforts to boost productivity of retail assets by trying to grab attention from new and productive tenants, and disposing the non-productive ones, the national retail vacancy rate marginally increased to 10.2% in the second quarter, underlining store closures of bankrupt toy retailer, Toys “R” Us Inc., per data form Reis, while national average asking rents edged 0.2% higher.
Further, Kimco’s activities during the April-June quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share of 36 cents for the second quarter remained unchanged over the past month.
Here is what our quantitative model predicts:
Kimco has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Kimco is +0.28%.
Zacks Rank: Kimco carries a Zacks Rank #3.
A positive Earnings ESP is a meaningful and leading indicator of a likely beat in terms of FFO per share. This, when combined with a favorable Zacks rank, makes us reasonably confident of a positive surprise.
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 have the right combination of elements to report a positive surprise this quarter:
Ventas Inc. (VTR - Free Report) , slated to release second-quarter results on Jul 27, has an Earnings ESP of +0.82% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Vornado Realty Trust (VNO - Free Report) , scheduled to report Q2 numbers on Jul 30, has an Earnings ESP of +1.39% and a Zacks Rank #3.
HCP, Inc. (HCP - Free Report) , set to release second-quarter results on Aug 2, has an Earnings ESP of +0.66% and a Zacks Rank of 3.
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.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>