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What's in the Offing for Tanger (SKT) This Earnings Season?
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Tanger Factory Outlet Centers, Inc. (SKT - Free Report) is slated to report third-quarter 2019 results on Oct 30, after the market closes. The company’s performance is likely to reflect a year-over-year decline in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Greensboro, NC-based retail real estate investment trust (REIT) delivered a positive surprise of 5.56% in terms of FFO per share, while top-line growth was lower than anticipated.
Over the trailing four quarters, Tanger Outlet beat estimates on three occasions, the average positive beat being 3.45%. The graph below depicts this surprise history:
Tanger Factory Outlet Centers, Inc. Price and EPS Surprise
Notably, the recent data from Reis shows that the vacancy rate of neighborhood and community shopping center contracted 10 basis points (bps) sequentially to 10.1% in the third quarter. Both, national average asking rent and effective rent, which nets out landlord concessions, inched up 0.3% sequentially. However, the Regional Mall vacancy rate expanded 10 bps sequentially to 9.4%. Nonetheless, rent growth was 0.2% in the quarter.
Admittedly, store closures and bankruptcies have been affecting the retail real estate market, for long, which is, in fact, undergoing structural changes. Tanger Outlet too has been making strategic efforts to boost its mall traffic, and is filling vacancies with new high-quality in-demand tenants. The company focuses on merchandising its centers, and targets popular and productive tenants. Moreover, because of low cost of occupancy and high profitability, the outlet distribution channel has continued to offer a compelling value proposition to retailers. Amid these, the company is expected to have banked on the tendency of a number of retailers seeking out opportunities to enhance their outlet presence into new markets.
The company is also focusing on helping online brands, which are seeking addition of retail store components, to their growth strategy. With targeted marketing initiatives, including a strategic combination of digital engagement and on-site experiences as well as experiential events, the company is anticipated to have enjoyed decent traffic at its centers in the September-end quarter, and healthy variable rental contributions and higher occupancy.
Moreover, with the anticipation of considerable free cash-flow generation and less likelihood of an increase in capital expenditure in the quarter under review for planned leasing, the company is expected to have maintained solid balance-sheet strength and low leverage.
Nonetheless, the disappointing retail real estate environment might have partly curtailed its growth momentum. This is because secular industry headwinds, including retailer downsizing and tenant bankruptcies, keep dampening industry fundamentals. Rental growth is expected to have been tempered, and same-center NOI might have been softer amid store closures and lease modifications.
Amid these, the Zacks Consensus Estimate for third-quarter revenues is pinned at nearly $115 million — indicating a year-over-year fall of around 5%. Furthermore, Tanger Outlet’s activities during the quarter were inadequate to win analysts’ confidence. Consequently, the Zacks Consensus Estimate for third-quarter FFO per share has remained unchanged at 57 cents, over the last 30 days. The figure also indicates a 9.5% decline, year on year.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Tanger Outlet 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.
Although Tanger Outlet carries a Zacks Rank of 2, its Earnings ESP of 0.00% makes surprise prediction difficult.
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:
Digital Realty Trust, Inc. (DLR - Free Report) , slated to report third-quarter results on Oct 29, has an Earnings ESP of +2.61% and currently carries a Zacks Rank of 3.
Apartment Investment and Management Company (AIV - Free Report) , set to release quarterly numbers on Oct 31, has an Earnings ESP of +0.6% and carries a Zacks Rank of 3, currently.
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
What's in the Offing for Tanger (SKT) This Earnings Season?
Tanger Factory Outlet Centers, Inc. (SKT - Free Report) is slated to report third-quarter 2019 results on Oct 30, after the market closes. The company’s performance is likely to reflect a year-over-year decline in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Greensboro, NC-based retail real estate investment trust (REIT) delivered a positive surprise of 5.56% in terms of FFO per share, while top-line growth was lower than anticipated.
Over the trailing four quarters, Tanger Outlet beat estimates on three occasions, the average positive beat being 3.45%. The graph below depicts this surprise history:
Tanger Factory Outlet Centers, Inc. Price and EPS Surprise
Tanger Factory Outlet Centers, Inc. price-eps-surprise | Tanger Factory Outlet Centers, Inc. Quote
Notably, the recent data from Reis shows that the vacancy rate of neighborhood and community shopping center contracted 10 basis points (bps) sequentially to 10.1% in the third quarter. Both, national average asking rent and effective rent, which nets out landlord concessions, inched up 0.3% sequentially. However, the Regional Mall vacancy rate expanded 10 bps sequentially to 9.4%. Nonetheless, rent growth was 0.2% in the quarter.
Admittedly, store closures and bankruptcies have been affecting the retail real estate market, for long, which is, in fact, undergoing structural changes. Tanger Outlet too has been making strategic efforts to boost its mall traffic, and is filling vacancies with new high-quality in-demand tenants. The company focuses on merchandising its centers, and targets popular and productive tenants. Moreover, because of low cost of occupancy and high profitability, the outlet distribution channel has continued to offer a compelling value proposition to retailers. Amid these, the company is expected to have banked on the tendency of a number of retailers seeking out opportunities to enhance their outlet presence into new markets.
The company is also focusing on helping online brands, which are seeking addition of retail store components, to their growth strategy. With targeted marketing initiatives, including a strategic combination of digital engagement and on-site experiences as well as experiential events, the company is anticipated to have enjoyed decent traffic at its centers in the September-end quarter, and healthy variable rental contributions and higher occupancy.
Moreover, with the anticipation of considerable free cash-flow generation and less likelihood of an increase in capital expenditure in the quarter under review for planned leasing, the company is expected to have maintained solid balance-sheet strength and low leverage.
Nonetheless, the disappointing retail real estate environment might have partly curtailed its growth momentum. This is because secular industry headwinds, including retailer downsizing and tenant bankruptcies, keep dampening industry fundamentals. Rental growth is expected to have been tempered, and same-center NOI might have been softer amid store closures and lease modifications.
Amid these, the Zacks Consensus Estimate for third-quarter revenues is pinned at nearly $115 million — indicating a year-over-year fall of around 5%. Furthermore, Tanger Outlet’s activities during the quarter were inadequate to win analysts’ confidence. Consequently, the Zacks Consensus Estimate for third-quarter FFO per share has remained unchanged at 57 cents, over the last 30 days. The figure also indicates a 9.5% decline, year on year.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Tanger Outlet 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.
Although Tanger Outlet carries a Zacks Rank of 2, its Earnings ESP of 0.00% makes surprise prediction difficult.
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:
Stag Industrial, Inc. (STAG - Free Report) , scheduled to release earnings on Oct 30, has an Earnings ESP of +3.30% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Digital Realty Trust, Inc. (DLR - Free Report) , slated to report third-quarter results on Oct 29, has an Earnings ESP of +2.61% and currently carries a Zacks Rank of 3.
Apartment Investment and Management Company (AIV - Free Report) , set to release quarterly numbers on Oct 31, has an Earnings ESP of +0.6% and carries a Zacks Rank of 3, currently.
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.
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>>