) - the industrial real estate investment trust (REIT) - is
slated to report its first-quarter 2014 results on Apr 22, before
the opening bell. Last quarter, it posted a 2.38% positive
CBRE GROUP INC (CBG): Free Stock Analysis
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PROLOGIS INC (PLD): Free Stock Analysis
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Also, the company has posted an average positive earnings
surprise of 5.14% over the past four quarters. Let's see how
things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model conclusively shows that Prologis will beat
earnings because it has the right combination of two key
Positive Zacks ESP:
, which represents the difference between the Most Accurate
estimate (43 cents) and the Zacks Consensus Estimate (42 cents),
stands at +2.38%. This is very meaningful and a leading indicator
of a likely positive earnings surprise for shares.
Prologis carries a Zacks Rank #3 (Hold). Note that stocks with
Zacks Ranks #1, 2 or 3 have a significantly higher chance of
This combination of Prologis' Zacks Rank #3 and +2.38% Earnings
ESP makes us confident about a positive earnings beat.
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 momentum
What is Driving the Better-Than-Expected
Improving operating fundamentals in the industrial real estate
markets are expected to drive growth at Prologis. In the U.S.,
the industrial market has continued to recuperate and according
to a recent report by
CBRE Group Inc.
), the national industrial availability in first-quarter 2014
fell by 20 basis points from 2013 end to 11.1%. Though the rate
of decline in availability has slowed to some extent due to
increase in constructions, a large number of markets are yet to
recover completely, reflecting the scope for growth in rents in
the upcoming periods..
With its capacity to offer modern distribution facilities in
strategic infill locations around the globe, Prologis stands to
benefit from the demand supply imbalance. In fact, efficiencies
from enhanced scale, development initiatives and recovering rents
set the ground for growth of this REIT. Moreover, operating
conditions are improving in Latin America as well as in Asia and
the availability of Class-A distribution space remains
constrained while Europe seems to emerge out of the recessionary
Prologis' core FFO per share of 43 cents in the fourth quarter
was a penny ahead of both the Zacks Consensus Estimate and the
year-ago quarter figure. Though total revenue declined from the
year-ago quarter, it managed to beat the Zacks Consensus
Estimate. Furthermore, in February, the company ushered in good
news for its shareholders by announcing an 18% increase in its
quarterly dividend rate to 33 cents per share.
Other Stocks to Consider
Prologis is not the only firm looking up this earnings season.
Other stocks in the REIT sector that have both a positive
Earnings ESP and a favorable Zacks Rank are:
Simon Property Group Inc.
), with an Earnings ESP of +0.45% and a Zacks Rank #2 (Buy). The
company will report its first-quarter 2014 results before the
market opens on Apr 22.
Kimco Realty Corporation
), with an Earnings ESP of +2.94% and a Zacks Rank #3 (Hold). The
company will report its first-quarter 2014 results on May 7,
after the closing bell.
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.