Yahoo Finance Can Kimco Realty (KIM) Beat Earnings Estimates in Q2? - Analyst Blog
Kimco Realty Corporation KIM is slated to report second-quarter 2015 results on Jul 28, after the market closes. Last quarter, this retail real estate investment trust (“REIT”) delivered a 2.86% positive surprise.
In the four trailing quarters, the company beat estimates in two with a positive average earnings surprise of 1.43%. The Zacks Consensus Estimate for second-quarter funds from operations (“FFO”) per share is currently pegged at 42 cents.
Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Kimco is likely to beat earnings because it has the right combination of two key ingredients. For a likely earnings beat, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold), which is the case here.
Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of 43 cents and the Zacks Consensus Estimate of 42 cents, is +2.38%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: The combination of Kimco’s Zacks Rank #3 and +2.38% ESP makes us confident of an earnings beat.
Conversely, we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What's Driving the Better-than-Expected Earnings?
We believe that with premium properties in high-income, high-growth areas, investments in high-quality neighborhood and community shopping centers, and presence of well-capitalized retailers in its tenant roster, Kimco is poised to report top-line growth in the second quarter.
Regardless of global issues, the domestic economy has steadily been gaining ground. Consumer confidence is growing and amid low prices of gas and growth in employment, retail sales are expected to rise, which in turn, would propel retail space demand.
Moreover, the company is aiming to increase its small shops portfolio. These shops comprise service-based industries such as restaurants, saloons and spas, personal fitness and medical practices. They enjoy frequent customer traffic and are Internet-resistant. Also, Kimco’s transaction activities for second-quarter 2015 totaled over $500 million. These transaction activities were in sync with the company’s strategy to simplify its business by lowering its number of joint ventures (“JV”).
We expect all these factors to have helped the company in achieving growth in occupancy and increase in same property net operating income in the to-be-reported quarter.
Other Stocks That Warrant a Look
Here are some other stocks in the retail REIT industry that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Acadia Realty Trust AKR carries a Zacks Rank #3 and has an Earnings ESP of +29.73%. It is scheduled to report results on Jul 28.
Federal Realty Investment Trust FRT has an earnings ESP of +3.15% and a Zacks Rank #3. The company is slated to release earnings on Aug 5.
Weingarten Realty Investors WRI, with an Earnings ESP of +1.89% and a Zacks Rank #2, is scheduled to report results on Jul 28.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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KIMCO REALTY CO (KIM): Free Stock Analysis Report
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