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Retail REITs' Q3 Earnings to Watch on Oct 26: SPG, O & More

Zacks Equity Research
Updated

The third-quarter 2016 earnings releases for the real estate investment trust (“REIT”) space is gradually gaining momentum. This week will see a deluge of releases from different categories of REITs.

Some retail REITs which are slated to release their results on Oct 26 are Simon Property Group Inc. SPG, Realty Income Corporation O, DDR Corp. DDR and Equity One Inc. EQY.

According to a study by the CBRE Group Inc. CBG, during the third quarter, average availability of retail space was 10.4%, down 20 basis points (bps) sequentially and down 50 bps year over year. In fact, per the study, over two thirds of the total 62 markets that were studied witnessed sequential fall in the availability of retail space in the third quarter. However, demand for retail space in the country continues to grow as new construction remains relatively muted and retailers are combining their online and bricks-and-mortar operations. This indicates a continuation of a gradual, five-year recovery in the U.S. retail-property market.

Now let’s take a look at what’s in store for these retail REITs which are slated to report tomorrow.

For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

Indianapolis, IN-based Simon Property is a leading retail REIT in the U.S., which is engaged in acquiring, owning and leasing a diverse portfolio of shopping malls. The company enjoys a diversified exposure to retail assets across the U.S. In addition, its international presence aids sustainable long-term growth in comparison to its domestically focused peers. The company is constantly restructuring its portfolio and aiming at premium acquisitions and redevelopments. This continued in the third quarter too. Our proven model shows that Simon Property is likely to beat estimates because it has the right combination of two key ingredients. Currently, the company has a Zacks Rank #3 and Earnings ESP of +0.37%. (Read more: Simon Likely to Beat Q3 Earnings: Stock to Gain?)

SIMON PROPERTY Price and EPS Surprise

 

SIMON PROPERTY Price and EPS Surprise | SIMON PROPERTY Quote

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San Diego, CA-based Realty Income is engaged in-house acquisition, leasing, legal, financial underwriting, portfolio management and capital markets expertise. Our model does not conclusively predict that the company will record a positive surprise as it has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

REALTY INCOME Price and EPS Surprise

 

REALTY INCOME Price and EPS Surprise | REALTY INCOME Quote

Beachwood, OH-based DDR acquires, owns, develops, redevelops, leases and manages shopping centers, especially in high-growth areas of the country. Presently, the company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.

DDR CORP Price and EPS Surprise

 

DDR CORP Price and EPS Surprise | DDR CORP Quote

Equity One is a New York-based REIT that principally acquires, renovates, develops and manages community and neighborhood shopping centers anchored by national and regional supermarket chains. Presently, company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.

EQUITY ONE INC Price and EPS Surprise

 

EQUITY ONE INC Price and EPS Surprise | EQUITY ONE INC Quote

Confidential from Zacks

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CBRE GROUP INC (CBG): Free Stock Analysis Report
 
DDR CORP (DDR): Free Stock Analysis Report
 
SIMON PROPERTY (SPG): Free Stock Analysis Report
 
EQUITY ONE INC (EQY): Free Stock Analysis Report
 
REALTY INCOME (O): Free Stock Analysis Report
 
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Zacks Investment Research