It has been about a month since the last earnings report for Taubman Centers (TCO). Shares have added about 1.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Taubman due for a pullback? 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 drivers.
Taubman Centers' Q4 FFO Surpasses Estimates
Taubman Centers reported fourth-quarter 2018 adjusted FFO per share of 91 cents, surpassing the Zacks Consensus Estimate of 89 cents. Results reflect better rents and reduced operating expenses.
However, on a year-over-year basis, quarterly adjusted FFO per share came in below the year-ago tally of $1.03. Moreover, adjusted revenues, including minimum rents, overage rents and expense recoveries, for the quarter came in at $152.07 million, missing the Zacks Consensus Estimate of $155.7 million. Also, the figure came in lower than the prior-year tally of $156.8 million.
Quarter in Detail
Comparable center NOI (excluding lease cancellation income) edged down 1.3% in the quarter under review. Per management, “the timing of net recoveries and the timing of two significant retail holidays in Asia, which shifted from the fourth quarter last year to the third quarter this year” were responsible for lower NOI growth in the quarter.
Average rent per square foot for the company’s comparable centers came in at $57.76, up 3.3% from the year-ago quarter. For the period ended Dec 31, 2018, the trailing 12-month releasing spreads per square foot were 3.9%. Moreover, comparable center mall tenant sales per square foot were up 10.1% year over year in the reported quarter.
As of Dec 31, 2018, leased space in comparable centers was 96.3%, down 0.3% from the comparable period last year. Additionally, ending occupancy in comparable centers was 94.7% at year end, down 1% year over year.
Liquidity
Taubman Centers exited 2018 with cash and cash equivalents of $48.4 million, down from the $42.5 million reported at the end of the December 2017.
Guidance
The company projects 2019 FFO per share of $3.62-$3.74. In addition, the guided range includes the adoption of the new lease accounting standard that will lead to an additional $5 to $7 million of operating expenses.
The full-year FFO per share guidance is backed by assumption of comparable center NOI growth, excluding lease cancellation income, of about 2% for the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, 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.
Taubman Centers, Inc. (TCO): Free Stock Analysis Report
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