Simon Property's (SPG) Q4 Earnings: What's in the Cards?

Retail real estate investment trust ("REIT") Simon Property Group Inc.SPG is expected to report fourth quarter and 2016 results on Tuesday, Jan 31, before the market opens. Last quarter, the company delivered a 0.75% positive surprise.

In the trailing four quarters, Simon Property posted an average positive surprise of 4.14%, beating estimates on all occasions. The Zacks Consensus Estimate for fourth-quarter funds from operations ("FFO") is currently pegged at $2.51.

Let's see how things have shaped up for this announcement.

Simon Property Group, Inc. Price and EPS Surprise

Simon Property Group, Inc. Price and EPS Surprise | Simon Property Group, Inc. Quote

Factors to Consider

Indianapolis, IN-based Simon Property enjoys a diversified exposure to retail assets across the U.S. In addition to this, its international presence aids sustainable long-term growth in comparison with its domestically focused peers. Per a recent CBRE Group, Inc. CBGstudy , during the fourth quarter, sentiments of the consumers rebounded, after a small drop in third quarter. Also, during the quarter, demand for retail space remained steady.

However, rising consumer purchases through the Internet has emerged as a pressing concern for retail REITs. While the company is striving to counter such pressure through various initiatives, the implementation of such measures requires a decent upfront cost and therefore, would limit any robust growth in its profit margins.

Earnings Whispers

Our proven model does not conclusively show that Simon Property will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, that is not the case here as you will see below.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks ESP : The Most Accurate estimate and the Zacks Consensus Estimate currently stand at $2.50 and $2.51, respectively, which translates into an Earnings ESP of -0.40%.

Zacks Rank : Simon Property currently has a Zacks Rank #3. Though this increases the predictive power of ESP, the company's negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Camden Property Trust CPT , slated to release earnings results on Feb 7, has an Earnings ESP of +0.88% and a Zacks Rank #3.

Ashford Hospitality Prime, Inc. AHP , slated to release earnings results on Feb 22, has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. 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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CBRE Group, Inc. (CBG): Free Stock Analysis Report

Simon Property Group, Inc. (SPG): Free Stock Analysis Report

Camden Property Trust (CPT): Free Stock Analysis Report

Ashford Hospitality Prime, Inc. (AHP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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