Yahoo Finance What's in the Cards for Macerich (MAC) This Earnings Season?
The Macerich Company MAC is slated to report second-quarter 2019 results on Aug 1, before the market opens. The company’s performance will likely reflect a year-over-year decline in revenues and funds from operations (FFO) per share.
In the last reported quarter, this retail real estate investment trust (REIT) delivered in-line results with respect to FFO per share. The company witnessed an uptick in occupancy and mall tenant annual sales in the quarter. Nonetheless, results suggested a drop in leasing revenues.
Over the preceding four quarters, Macerich met estimates on three occasions and missed in the other, the average negative surprise being 0.25%. This is depicted in the chart below:
Macerich Company Price and EPS Surprise
Macerich Company (The) price-eps-surprise | Macerich Company (The) Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider
The recent data from Reis shows that the vacancy rate of neighborhood and community shopping center contracted 10 basis points sequentially to 10.1% in the second quarter, denoting its first decline since first-quarter 2016. The Regional Mall vacancy rate was flat in the second quarter at 9.3%. Store closures continue to affect Regional Mall vacancy. Nonetheless, both, national average asking rent and effective rent, which nets out landlord concessions, inched up 0.4% sequentially and 1.7% from the year-ago quarter.
The retail real estate market continues to be affected by store closures and is undergoing structural changes. Nonetheless, the latest stability in the vacancy rate and rent levels underlines that the sector has been able to battle such challenges as retail landlords continued their transformation initiatives while there is minimal construction activity in the pipeline.
Macerich too has been undertaking measure to boost its asset quality and customer relationships. It is focusing on improving mall traffic and drive sales by trying to grab attention from new and productive tenants.
These opened up redevelopment scopes at many of the company’s properties, and it is aimed at adding significant value and opting for diversified uses of its high-quality real estate assets.
Nevertheless, the choppy retail real estate environment will keep curbing the company’s growth momentum, affecting rental growth and net operating income expansions. This is because secular industry headwinds, including retailer downsizing and tenant bankruptcies, keep dampening industry fundamentals.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $217.5 million — indicating a y/y fall of 7.3%. In addition, Macerich’s activities during the April-June quarter were inadequate to gain analyst confidence. Consequently, the Zacks Consensus Estimate for FFO per share of 86 cents for the quarter under review remained unchanged over the past month. The figure also indicates a year-over-year decline of 10.4%.
Here is what our quantitative model predicts:
Macerich does not have 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.
Earnings ESP: The Earnings ESP for Macerich is 0.00%.
Zacks Rank: Macerich currently carries a Zacks Rank of 3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the retail 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:
Pennsylvania Real Estate Investment Trust PEI, set to report quarterly results on Jul 30, has an Earnings ESP of +3.70% and carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Federal Realty Investment Trust FRT, scheduled to release earnings on Aug 1, has an Earnings ESP of +0.49% and currently carries a Zacks Rank of 2.
Realty Income Corporation O, slated to report second-quarter results on Aug 5, has an Earnings ESP of +0.78% and holds a Zacks Rank of 3.
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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Realty Income Corporation (O) : Free Stock Analysis Report
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Macerich Company (The) (MAC) : Free Stock Analysis Report
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