Federal Realty Investment Trust (FRT) Down 4.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Federal Realty Investment Trust (FRT). Shares have lost about 4.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Federal Realty Investment Trust 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 drivers.

Federal Realty Q4 FFO Misses, Revenues Beat Estimates

Federal Realty’s fourth-quarter 2019 FFO per share of $1.58 missed the Zacks Consensus Estimate of $1.60. However, the reported figure improved from the prior-year tally of $1.57.

Total revenues inched up 1.6% year over year to $239.1 million in the reported quarter. The top-line figure also surpassed the Zacks Consensus Estimate of $238.7 million.

Results reflect rise in property operating income and cash-basis rollover growth on comparable spaces.

For 2019, the company reported FFO per share of $6.17, down from the prior-year tally of $6.23. However, full-year revenues of $935.8 million increased 2.2% year on year.

Quarter in Details

During the reported quarter, Federal Realty signed 112 leases for 494,768 square feet of retail space. On a comparable space basis, the company leased 461,952 square feet at an average rent of $37.78 per square foot. This denotes cash-basis rollover growth of 7%.

As of Dec 31, 2019, the company’s overall portfolio was 94.2%, shrinking 40 basis points (bps) year over year. As of that date, comparable property portfolio was 94.9% leased, down 20 bps from the prior-year period. However, property operating income (POI) for comparable properties grew 2.4% for the fourth quarter.

Federal Realty exited fourth-quarter 2019 with cash and cash equivalents of approximately $127.4 million, up from the $64.1 million posted at the end of 2018.

During the December-end quarter, Federal Realty sold under threat of condemnation of an 11.7-acre portion of San Antonio Center, located in Mountain View, CA, for $155 million. Moreover, the company acquired a 147,000-square-foot grocery-anchored neighborhood shopping center — Georgetowne Shopping Center — with surface parking on 9 acres in Brooklyn, NY, for $83.7 million cash.

Outlook

For 2020, Federal Realty expects FFO per share of $6.40-$6.58.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Federal Realty Investment Trust has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 indicates a downward shift. Notably, Federal Realty Investment Trust has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.