Why Is Macerich (MAC) Down 22% Since Last Earnings Report?

A month has gone by since the last earnings report for Macerich (MAC). Shares have lost about 22% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Macerich due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Macerich's Q4 FFO Meets Estimates, Leasing Revenues Beat

Macerich reported fourth-quarter 2019 adjusted FFO per share of 98 cents, in line with the Zacks Consensus Estimate. However, the figure compared unfavorably with the prior-year quarter’s $1.09. Adjusted FFO per share for the quarter excludes financing expense in relation to Chandler Freehold.

The company generated leasing revenues of $222.6 million in the quarter. The figure surpassed the Zacks Consensus Estimate of $218.4 million, but slipped 0.8% year over year.

Results reflect decent tenant sales growth and an increase in average rent though occupancy declined.

For the full year, adjusted FFO per share came in at $3.54, declining from the prior-year tally of $3.73. Moreover, leasing revenues were down 2.8% year over year to $858.9 billion.

Behind the Headlines

As of Dec 31, 2019, the mall portfolio occupancy shrank 140 basis points year over year to 94%. Mall tenant annual sales for the 12-month period ended Dec 31, 2019 increased 10.3% to $801 per square feet. Leasing volumes for 2019 was up nearly 20% from 2018 volumes. Average rent per square foot rose 3.3% to $61.06 from $59.09 as of Dec 31, 2018. Also, same-center net operating income (excluding lease termination income) of, was almost unchanged year-over-year.

Notably, in 2019, Macerich completed more than $2 billion of financings. This was done at an average interest rate of 4% and an average maturity of 9.3 years, netting $560 million of excess loan proceeds at the company's share.

Outlook

Macerich provided its guidance for 2020 FFO per share. The REIT expects FFO per share of $3.40-3.50 for the ongoing year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Macerich has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Macerich has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.