Federal Realty Investment Trust (FRT) reported fourth quarter 2011 FFO (funds from operations) of $62.1 million or 97 cents per share compared with $62.2 million or $1.01 per share in the year-earlier quarter.
Funds from operations, 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. Reported FFO missed the Zacks Consensus Estimate by a penny.
Funds from operations, 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.
We cover below the results of the recent earnings announcement, as well as the subsequent analysts’ estimate revisions and the Zacks ratings for the short and long-term outlook on the stock.
Fourth Quarter Review
Total revenue during the reported quarter increased to $141.5 million from $137.4 million in the year-ago quarter. Total revenue for the full year increased to $553.1 million from $541.7 million a year ago.
Same-store net operating income, excluding redevelopment and expansion properties increased 2.8% on a yearly basis. The overall portfolio was 93.4% leased at the end of fiscal 2011, compared with 93.9% in the prior year. Same-store portfolio was 93.9% leased at the end of the fiscal year compared with 94.4% in the prior year.
Read our full coverage on this earnings report: Federal Realty Misses by a Penny
Earnings Estimate Revisions – Overview
Fiscal earnings estimates have moved in upward directions since the earnings release, suggesting that the analysts are positive about the long-term performance of the company. Let’s dig into the earnings estimate details.
Agreement of Estimate Revisions
In the last 7 days, for fiscal 2012, earnings estimates were increased by one out of the 14 analysts covering the stock while none decreased the same. For fiscal 2013, one out of 14 analysts covering the stock revised the estimates upward, while none moved downward over the same period. This indicates a positive bias for the fiscal year earnings.
Magnitude of Estimate Revisions
Earnings estimates for fiscal 2012 remained constant over the last 7 days at $ 4.21 per share. For fiscal 2013, earnings estimates have increased by a penny to $4.47 during the same time period, which indicates that the analysts are optimistic about the future performance of the company.
Moving Forward
Rockville, Maryland-based Federal Realty Investment Trust specializes in owning, managing, developing, and redeveloping retail, mixed-use and street-retail properties, primarily in densely populated locations.
Federal Realty owns Class A shopping centers in high income, infill areas of the country, with a concentration of assets in Washington DC, Boston, Philadelphia, and California. This provides a significant upside potential for the company, with retailers being more selective about expansion and favoring high-barrier, high-growth areas that fare relatively better.
However, the possibility of store closings at many Federal Realty centers due to lease terminations adds uncertainty to the earnings, and it might have to re-let large big box spaces at significantly lower rents in a very tough leasing environment.This affects the top-line growth of the company and puts considerable pressure on its sustainability.
Federal Realty currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, National Retail Properties. (NNN) also holds a Zacks #2 Rank.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
FED RLTY INV (FRT): Free Stock Analysis Report
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