Taubman (TCO) Down 3.9% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Taubman Centers (TCO). Shares have lost about 3.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Taubman 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 catalysts.

Taubman Centers Q4 FFO & Revenues Beat Estimates

Taubman Centers reported fourth-quarter 2019 adjusted FFO per share of 97 cents, beating the Zacks Consensus Estimate of 94 cents. The figure also compares favorably with the year-ago quarter’s reported tally of 91 cents.

Moreover, adjusted revenues, including rental revenues and overage rents for consolidated businesses, came in at around $159.7 million, surpassing the Zacks Consensus Estimate of $159.6 million.

For the full year, Taubman Centers reported adjusted FFO per share of $3.71, indicating a 3.1% year-over-year decline on revenues of $600.9 million.

Quarter in Detail

Comparable center NOI (excluding lease cancellation income) edged down 0.1% year over year. For the period ended Dec 31, 2019, the trailing 12-month releasing spread per square foot was down 1.1%. Results were impacted by a certain number of deals having an average lease term of less than two years. Excluding these leases, the releasing spread was 3.2%.

Comparable center tenant sales per square foot were up 3.1% in the fourth quarter, while average rent per square foot of $55.98 inched up 0.8%.

As of Dec 31, 2019, leased space in comparable centers was 95.7%, down 0.7% from Dec 31, 2018. Additionally, ending occupancy in comparable centers of 94.3% at the year-end marked a 0.6% decline from the prior-year end. Notably, occupancy and leased space performance was impacted by the Stamford Town Center, which is being marketed for sale, along with the Forever 21 store at The Mall at Short Hills (Short Hills, NJ) that closed in late December.

Portfolio Activity

Taubman Centers accomplished the sale of 50% of Taubman Asia’s interest in CityOn.Zhengzhou (Zhengzhou, China) in December to real estate funds managed by the Blackstone (NYSE:BX) Group, Inc. for $89 million. The company, however, retained a 24.5% ownership stake in the center. Net proceeds of $47.5 million were received by the company, which were utilized for debt repayment.

Further, in line with Taubman’s strategy to sell 50% of its three Asia-based shopping centers to Blackstone, the former expects to complete the sale of Taubman Asia’s 50% interest in CityOn.Xi’an (Xi’an, China) to Blackstone in first-quarter 2020.

Liquidity

Taubman Centers exited fourth-quarter 2019 with cash and cash equivalents of nearly $102.8 million, up from the $48.4 million reported at the end of December 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Taubman has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

Taubman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.