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Macerich (MAC) Down 14.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Macerich (MAC). Shares have lost about 14.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Macerich due for a breakout? 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.

Macerich Q3 FFO Beats, 2021 Guidance Raised

Macerich reported FFO per share of 45 cents, excluding financing expenses in relation to Chandler Freehold and loss on extinguishment of debt, which exceeded the Zacks Consensus Estimate of 43 cents. However, the figure declined 13.5%, year over year.

Results reflected solid top-line growth. The retail REIT has also raised the 2021 FFO per share guidance.

The company generated revenues of $212.1 million in the third quarter. The top line surpassed the Zacks Consensus Estimate of $210.6 million as well as increased 14.1% year on year.

According to the company’s press release, even amid the COVID-19 case rate increases from the Delta variant, customer traffic reverted to the pre-COVID levels, while tenant sales continued trending substantially upward in aggregate in mid-summer.

In third-quarter 2021, portfolio comparable tenant sales from spaces less than 10,000 square feet were 14% higher than the pre-COVID third quarter of 2019.

Behind the Headlines

At Sep 30, 2021, portfolio occupancy was 90.3%, reflecting a 90-basis-point expansion from 89.4% as of Jun 30, 2021.

During the September-end quarter, Macerich signed 219 leases for 1.1 million square feet of space (excluding COVID workout deals). This marks a 15% increase compared to the pre-COVID third quarter of 2019.

As of Sep 30, 2021, the average rent per square foot was $62.58, up 0.5% from $62.29 as of Sep 30, 2020.

The same-center net operating income or NOI (excluding lease termination income) increased 20.6% from the prior-year number.

As of Sep 30, 2021, it had cash and cash equivalents of $117.6 million. As of Nov 3, the company had $100 million outstanding on its revolving line of credit. Its total liquidity as of the same date amounted to roughly $610 million.

The company made progress towards de-leveraging, with $1.5 billion of debt repaid so far in the year.

Guidance

Assuming no further government-mandated shutdowns of its properties, the company raised the 2021 guidance. The REIT now expects current-year FFO per share of $1.92-$2.00 compared with the $1.82-$1.97 guided earlier.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Macerich has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Macerich has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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