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Why Is Federal Realty (FRT) Down 8.1% Since the Last Earnings Report?

A month has gone by since the last earnings report for Federal Realty Investment TrustFRT . Shares have lost about 8.1% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.

Federal Realty's Q4 FFO Beats, Revenues Rise Y/Y

Federal Realty posted fourth-quarter 2016 FFO per share of $1.45, beating the Zacks Consensus Estimate of $1.44 and increasing from the prior-year quarter figure of $1.37.

Total revenue for the quarter grew 6% year over year to $204.1 million. However, the top line marginally missed the Zacks Consensus Estimate of $204.8 million.

For full-year 2016, this retail REIT reported FFO per share of $5.65, well ahead of the year-ago tally of $5.05. Revenues came in at $801.6 million for the year, up 7.7% from a year ago.

Quarter in Details

During the fourth quarter, Federal Realty inked 89 lease deals for 347,604 square feet of retail space. As of Dec 31, 2016, the company's overall portfolio was 94.4% leased, up 10 basis points (bps) year over year.

On a comparable-space basis (spaces for which a former tenant was there), Federal Realty leased 274,622 square feet, at an average cash-basis contractual rent escalation of 15%. Rent increases (on a GAAP basis) for comparable retail space averaged at 27% for fourth-quarter 2016.

Same-center property operating income (including redevelopments) improved 3% year over year. As of Dec 31, 2016, Federal Realty's same-center portfolio was 95.7% leased, down 20 bps year over year. The quarterly results were affected by a high number of anchor vacancies.

Federal Realty exited the fourth quarter with cash and cash equivalents of approximately $23.4 million, up from $21 million at the end of 2015.

Outlook 2017

Federal Realty affirmed its 2017 guidance for FFO per share of $5.83-$5.93.

Dividend Update

Concurrent with the earnings release, Federal Realty declared a quarterly cash dividend of 98 cents per share. The dividend will be paid on Apr 17, 2017 to shareholders on record as of Mar 14.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimate. There have been two downward revisions for the current quarter compared to one upward.

Federal Realty Investment Trust Price and Consensus

Federal Realty Investment Trust Price and Consensus | Federal Realty Investment Trust Quote

VGM Scores

At this time, Federal Realty's stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with a 'B'. However, the stock was allocated a grade of 'F' on the value side, putting it in the bottom quintile for this investment strategy.

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

The stock is suitable solely for momentum based on our styles scores.

Outlook

While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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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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