On March 24, 2014, we issued an updated research report on
Duke Realty Corp.
), a commercial real estate investment trust (REIT).
On Jan 29, Duke Realty finally posted a positive earnings
surprise of 7.4% for fourth-quarter 2013, after posting in-line
results for the past few quarters. In particular, the company's
core funds from operations (FFO) of 29 cents per share surpassed
both the Zacks Consensus Estimate and the prior-year quarter FFO
per share by 2 cents. Better-than-expected revenues and higher
net operating income attributed to the year-over-year increase at
We believe that Duke Realty's portfolio repositioning efforts
to strengthen its bulk industrial assets base and lower its
suburban office assets bode well for long-term growth. In
relation to this, the company's achievement of its goal of 60%
for industrial assets investment in 2013 is commendable.
Moreover, Duke Realty's latest deal with the freight forwarding
), for a build-to-suit project in East Point, GA will further
boost the company's industrial assets portfolio.
Apart from this, the strong fundamentals of the healthcare
sector position Duke Realty well for growth, going forward. The
recent rating affirmation of Duke Realty is also encouraging and
plays a notable role in preserving investor confidence in the
stock and its creditworthiness in the market.
However, although Duke Realty's large development pipeline is
encouraging for its future growth, it increases operational
risks. Also, while the company is shedding its suburban
office portfolio, the company still has exposure to such assets
that may dent its top-line growth. And with a gradual reduction
in the Fed's support, interest rates are expected to increase,
which may in turn hurt the rate-sensitive business of the company
in the long run.
Over the last 30 days, the Zacks Consensus Estimate has moved
up by a penny to $1.14 per share for 2014. On the other hand, it
remained stable at $1.20 for 2015. The stock currently has a
Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Investors interested in REIT industry may consider stocks like
Cousins Properties Inc.
). Both stocks have a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.
COUSIN PROP INC (CUZ): Free Stock Analysis
DUKE REALTY CP (DRE): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
PUBLIC STORAGE (PSA): Free Stock Analysis
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