Kimco Realty Corporation
) is set to report its first-quarter 2014 results on May 7, after
the closing bell. This retail real estate investment trust (REIT)
has an expected FFO growth rate of 4.21%. Let's see how things
are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model reveals that Kimco is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at +2.94%. This
is very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Kimco carries a Zacks Rank #3 (Hold). Note that stocks with Zacks
Ranks #1, 2 or 3 have a significantly higher chance of beating
This combination of Kimco's Zacks Rank and 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
What is Driving the Better-than-Expected Earnings?
Strong core operating fundamentals, continued portfolio
restructuring program, solid demand for its properties along with
easy access to capital are expected to lead to a positive
earnings surprise in first-quarter 2014. Moreover, giving us
confidence is the recent analysis by the commercial real estate
CBRE Group, Inc.
), which revealed that the retail availability rate dropped 10
bps to 11.9% in the first-quarter 2014 - reflecting its first dip
below 12% since 2009.
As a matter of fact, in first-quarter 2014, Kimco concluded
transactions over $500 million. Specifically, the company
acquired 5 premium shopping centers for $216.0 million and
offloaded its ownership stake in 11 assets in its U.S. portfolio
for $63.7 million. Also, the company vended a Mexican retail
portfolio for 2.9 billion Mexican pesos ($222 million) in its
Latin America portfolio. Such moves are in line with Kimco's
strategy of focusing on key U.S. markets having demographics and
household income levels higher than the national average.
Other Stocks to Consider
Kimco is not the only firm looking up this earnings season.
Other stocks in the REIT sector having the right combination of
the two key ingredients and are slated to report on May 7,
Regency Centers Corporation
), with an Earnings ESP of +1.54% and a Zacks Rank #3.
Strategic Hotels & Resorts, Inc.
), with an Earnings ESP of +83.3% and a Zacks Rank #2 (Buy).
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.
STRATEGIC HOTEL (BEE): Free Stock Analysis
CBRE GROUP INC (CBG): Free Stock Analysis
KIMCO REALTY CO (KIM): Free Stock Analysis
REGENCY CTRS CP (REG): Free Stock Analysis
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