Yahoo Finance Is a Beat in Store for Federal Realty (FRT) in Q1 Earnings?
Federal Realty Investment Trust FRT, a leading real estate investment trust (REIT) focused on retail properties, is set to report its first-quarter earnings for 2023 on May 4 after market close. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.
In the last reported quarter, this retail REIT reported a surprise of 0.64% in terms of FFO per share. Results reflected healthy leasing activity and better-than-anticipated revenues.
Over the last four quarters, Federal Realty surpassed estimates on all occasions, the average beat being 4.52%. The graph below depicts the surprise history of the company:
Federal Realty Investment Trust Price and EPS Surprise
Federal Realty Investment Trust price-eps-surprise | Federal Realty Investment Trust Quote
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2023 performance.
U.S. Retail Real Estate Market in Q1
Per a report from CBRE Group CBRE, the U.S. retail real estate market remained resilient in the first quarter of 2023, with the retail availability rate falling 50 basis points (bps) year over year to a new low of 4.8%.
The overall retail rent growth of 2% year over year remained above the 10-year average. Retail space absorption was at 8.6 million square feet for the first quarter of 2023, marking the 10th consecutive quarter of positive retail absorption per the CBRE Group report.
Factors to Note
Federal Realty is anticipated to have benefited from the recovery in the retail real estate market. The company has a portfolio of premium retail assets, mainly situated in major coastal markets from Washington, D.C. to Boston, San Francisco and Los Angeles. FRT’s properties are strategically located in the first-ring suburbs of major metropolitan markets of the United States, aiding its first-quarter cash flows.
Due to strong demographics and the infill nature of its properties, the company has been able to maintain a high occupancy level over the years. FRT’s well-diversified tenant base of retailers is expected to have led to steady rental revenue generation in the first quarter. Moreover, Federal Realty’s solid balance-sheet position is likely to have supported its acquisition and development activities in the first quarter.
FRT's strategic focus on mixed-use properties enables the company to benefit from multiple revenue streams. By combining residential, retail and office spaces, these properties attract a variety of tenants, creating a vibrant, bustling atmosphere that draws in consumers. This diversification is likely to have played a crucial role in FRT's first-quarter 2023 performance as it insulates the company from the fluctuations and uncertainties of a single sector.
Projections for Q1 2023
The Zacks Consensus Estimate for quarterly revenues is pegged at $276.81 million, calling for a 7.8% increase from the year-ago period. The consensus mark for rental revenues is pegged at $275.30 million, suggesting a rise from the year-ago period’s $256.51 million.
Rental income from minimum rents — commercial — is presently pegged at $178.85 million, up from $169.63 in the year-ago period. Rental income from cost reimbursements is projected at $52.19 million, up from $50.31 million in the prior-year period.
Federal Realty’s activities during the soon-to-be-reported quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the first-quarter FFO per share has been revised a cent downward to $1.57 in the past month. However, it suggests 4.67% growth year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Federal Realty 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 the case here.
Federal Realty currently has a Zacks Rank of 3 and an Earnings ESP of +0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our model shows that Americold Realty Trust, Inc. COLD and Agree Realty Corporation ADC also have the right combination of elements to report a surprise this quarter.
Americold Realty Trust, scheduled to report quarterly numbers on May 4, has an Earnings ESP of +17.72% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agree Realty Corporation, scheduled to report quarterly numbers on May 4, has an Earnings ESP of +0.59% and carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Conclusion
Federal Realty's first-quarter 2023 earnings preview suggests a promising performance, driven by a recovery in the retail sector and the company's strategic focus on mixed-use properties. The projected improvements in rent collections and occupancy rates, coupled with FRT's strong dividend history, make the company an attractive investment option for those seeking exposure to the retail real estate market. Keep an eye on the official earnings release to confirm these expectations and gain insights into Federal Realty's growth trajectory.
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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Federal Realty Investment Trust (FRT) : Free Stock Analysis Report
Agree Realty Corporation (ADC) : Free Stock Analysis Report
Americold Realty Trust Inc. (COLD) : Free Stock Analysis Report
CBRE Group, Inc. (CBRE) : Free Stock Analysis Report
