), one of the leading global providers of distribution facilities,
is scheduled to report its 2012 second quarter earnings on July 26.
The current Zacks Consensus Estimate for the second quarter is 42
cents per share, representing a year-over-year growth of about
First Quarter Recap
Prologis had reported first quarter 2012 funds from operations
(FFO) of $184.8 million or 40 cents per share compared with $74.4
million or 29 cents in the year-earlier quarter. Funds from
operations, a widely used metric to gauge the performance of real
estate investment trusts (REITs), are obtained after adding
depreciation and other non-cash expenses to net income.
The reported FFO for first quarter 2012 was in line with the Zacks
Consensus Estimate. Excluding non-recurring items, FFO for the
reported quarter was $262.1 million or 56 cents per share compared
with $62.1 million or 24 cents in the year-ago quarter.
Total revenues during the reported quarter were $500.1 million
compared with $229.9 million in the year-ago quarter. Total
reported revenues were well ahead of the Zacks Consensus Estimate
of $452 million.
Agreement of Analysts
In the last seven days, there has been no earnings estimate
revision for the second quarter and full year 2012 as analysts, in
general, have been circumspect about the future outlook of the
company. In the last 30 days, one of the 13 analysts covering the
stock had revised the earnings estimate down for both the second
quarter and full year 2012.
For 2013, two out of 12 analysts covering the stock had reduced
the earnings estimates in the last 30 days, while none had
increased them. From a macro aspect, this implies that the analysts
are a tad bearish about the performance of the company.
WINTHROP REALTY (FUR): Free Stock Analysis
PROLOGIS INC (PLD): Free Stock Analysis Report
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Magnitude of Estimate Revisions
Earnings estimates have remained static in the last 30 days for
both the second quarter and full year 2012 at 42 cents and $1.67
per share, respectively, meaning that analysts were overtly
cautious about the long-term prospects of the company. For full
year 2013, the earnings estimate has also remained steady at $1.77
during the same time period.
Neutral on Prologis
We currently have a Neutral recommendation on Prologis, which
presently has a Zacks #3 Rank that translates into a short-term
Hold rating. However, we have an Outperform recommendation and a
Zacks #2 Rank (short-term 'Buy' rating) for
Winthrop Realty Trust
), one of the peers of Prologis.
Our long-term Neutral recommendation on Prologis is based on the
belief that it has considerably reduced operating risks through
continued lease-up of its development portfolio. Prologis also has
a geographically diverse portfolio of distribution facilities that
integrate international scope and expertise with a strong local
presence in its markets, which provides a strong upside potential
for the company. Furthermore, the properties are located in large,
supply-constrained infill markets at close proximity to airports,
seaports, and ground transportation facilities, which enable rapid
distribution of customers' products. This has enabled the company
to gain a significant pricing advantage over its competitors.
However, given its international presence, Prologis often faces
unfavorable foreign currency movements and other economic
fluctuations that impair its top-line growth. In addition, the
company faces significant competition from other REITs and private
institutional funds. This puts considerable pressure on the company
to dispose its illiquid assets and reduce operating costs, thereby
undermining its long-term growth potential.