) - the industrial real estate investment trust (REIT) - is slated
to report its second-quarter 2014 results on Jul 22, before the
opening bell. Last quarter, it posted a 2.38% positive
Also, the company has reported an average positive earnings
surprise of 4.22% over the past four quarters. Let's see how things
are shaping up for this announcement.
Factors to Consider
Prologis has been capitalizing on growth opportunities across
the globe, with notable investments in China, Europe, Japan and
Mexico in the second quarter of 2014. Amid a larger customer base,
rise in e-Commerce application and supply chain consolidation,
there is an increasing demand for high-quality logistics facilities
in these markets. But there is a still-gradual pickup in new
construction starts that is resulting in significant rise in rents
in many of its markets. And with the capacity to offer modern
distribution facilities in strategic infill locations around the
globe, Prologis is well leveraging on this demand supply
However, given its international presence, Prologis often faces
unfavorable foreign currency movements and other economic
fluctuations that impair its top-line growth. Notably, in 2013, the
company generated approximately 30.1% of its revenue from
operations outside the U.S. Therefore, state of affairs and
developments associated with international operations have a
notable impact on its performance.
In April, Prologis came up with better-than-expected results for
the first quarter of 2014. The company reported core FFO per share
of 43 cents, which was a penny above the Zacks Consensus Estimate
and 3 cents ahead of the year-ago quarter figure. While total
revenue declined from the year-ago quarter, it managed to beat the
Zacks Consensus Estimate. The company has also narrowed its 2014
Our proven model does not conclusively show that Prologis will
beat earnings this quarter. This is because a stock needs to have
both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
case here as you will see below.
Zero Zacks ESP:
Both the Most Accurate estimate and the Zacks Consensus Estimate
stand at 46 cents per share. Hence, the difference is 0.00%.
Zacks Rank #3:
Prologis' Zacks Rank #3 (Hold) when combined with a 0.00% Earnings
ESP (Expected Surprise Prediction) makes surprise prediction
Notably, we caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Other Stocks to Consider
You could consider other stocks in the REIT sector that have
both a positive Earnings ESP and a favorable Zacks Rank:
SL Green Realty Corp.
) has an Earnings ESP of +0.70% with Zacks Rank #2 (Buy). The
company will report its second-quarter 2014 results on July 23.
Avalonbay Communities Inc.
) has an Earnings ESP of +0.60% with Zacks Rank #2. The company
will report its second-quarter 2014 results on July 23.
American Capital Agency Corp.
) has an Earnings ESP of +6.06% with Zacks Rank #2. The company
will report its second-quarter 2014 results on July 28.
FFO, a widely used metric to gauge the performance of REITs, is
obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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