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Taubman (TCO) Up 4.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Taubman Centers (TCO). Shares have added about 4.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Taubman due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Taubman Centers Q2 FFO Meets Estimates, Revenues Up

Taubman Centers reported second-quarter 2018 adjusted FFO per share of 87 cents, in line with the Zacks Consensus Estimate. The figure came in 5.4% lower than the year-ago tally of 92 cents.

Adjusted revenues, including minimum rents, overage rents and expense recoveries, for the quarter came in at $139.7 million, missing the Zacks Consensus Estimate of $141 million. The figure improved nearly 1.7% from the prior-year quarter.

The quarter experienced higher rents and greater lease cancellation income. Further, cost-saving initiatives executed in the previous year enabled the company to enjoy lower general and administrative expenses.

Quarter in Detail

Comparable center net operating income (NOI) inched up 1.7% for the quarter. Average rent per square foot in comparable centers came in at $57.90, up 3.6% from the prior-year quarter. For the period ended Jun 30, 2018, the trailing 12-month releasing spreads per square foot were 2.3%.

Moreover, comparable center mall tenant sales per square foot rose 6% in the reported quarter. Further, the company's year-to-date comparable center mall tenant sales per square foot marked a 9.1% increase.

As of Jun 30, 2018, leased space in comparable centers was 94.9%, down 0.7% from the comparable period last year. Additionally, ending occupancy in comparable centers was 92.2% at the end of the quarter under review, down 1.1% year over year.

Liquidity

Taubman Centers exited the April-June quarter with cash and cash equivalents of $35.4 million, down from the $53.9 million reported at the end of the prior quarter.

Guidance

The company projects 2018 adjusted FFO per share of $3.74-$3.84, revised from the previous outlook of $3.72-$3.86.

The full-year FFO per share guidance is backed by assumption of comparable center NOI growth of about 3-4% for the year, up from the earlier forecast of 2-3%.

Consolidated and unconsolidated interest expenses are estimated to be $189-$192 million. Also, the guidance does not include any future costs that might be incurred related to shareowner activism or fair value change in its investment.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Taubman has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our style scores.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Taubman has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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Taubman Centers, Inc. (TCO): 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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