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Why Is Simon Property (SPG) Up 7% Since Last Earnings Report?

A month has gone by since the last earnings report for Simon Property (SPG). Shares have added about 7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Simon Property due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Simon Property Q3 FFO Beats, View Up, Dividend Hiked

Simon Property’s third-quarter 2022 comparable FFO per share of $2.97 exceeded the Zacks Consensus Estimate of $2.93. The figure compared favorably with the year-ago quarter’s $2.92.

Results reflect healthy operating performance and growth in occupancy levels. Based on the quarterly results, this retail REIT behemoth raised the 2022 FFO per share outlook and announced a hike in the quarterly dividend.

Simon Property generated revenues of $1.315 billion in the quarter. While the figure missed the Zacks Consensus Estimate by 0.2%, it increased 1.5% year over year.

Inside the Headlines

SPG reported revenues from lease income of $1.22 billion, increasing marginally from the prior-year period’s $1.21 billion. The Zacks Consensus Estimate for the same was pegged at $1.21 billion.

As of Sep 30, 2022, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 94.5%, up from 92.8% witnessed as of Sep 30, 2021. The Zacks Consensus Estimate stood at 94% for the quarter.

The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $54.80 as of Sep 30, 2022, rising from $53.91 as of Sep 30, 2021. The figure also surpassed The Zacks Consensus Estimate of $54.00.

SPG’s total operating expenses in the third quarter were $663.6 million, declining 3% from the prior-year quarter’s $684.2 million.

The domestic property net operating income (NOI) increased 2.3% year over year while portfolio NOI climbed 3.2%.

Balance Sheet Position

Simon Property exited the third quarter of 2022 with $8.6 billion of liquidity. This comprised $1.2 billion of cash in hand, including its share of joint-venture cash, and $7.4 billion of available capacity under the company’s revolving credit facilities.

Share Repurchase

During the quarter, SPG repurchased 405,926 shares of its common stock under its $2.0 billion share repurchase plan.

2022 Guidance Up

Simon Property raised the 2022 comparable FFO per share guidance.

It projects the same in the range of $11.83-$11.88, up from $11.70-$11.77 guided earlier.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Simon Property has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Simon Property has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Simon Property is part of the Zacks REIT and Equity Trust - Retail industry. Over the past month, SITE CENTERS CORP. (SITC), a stock from the same industry, has gained 11.9%. The company reported its results for the quarter ended September 2022 more than a month ago.

SITE CENTERS CORP. reported revenues of $136.19 million in the last reported quarter, representing a year-over-year change of +12.5%. EPS of $0.30 for the same period compares with $0.29 a year ago.

SITE CENTERS CORP. is expected to post earnings of $0.28 per share for the current quarter, representing a year-over-year change of -6.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

SITE CENTERS CORP. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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