Shares of Simon Property Group Inc. (SPG) touched a new 52-week high of $195.68 on Jan 8. However, the stock closed the session at $ 194.52, reflecting a solid return of 38.2% in a year’s time. The trading volume for the session was 799,434 shares.
Despite the strong price appreciation, this Zacks Rank #2 (Buy) stock still has plenty of upside left, given the positive estimate revisions it witnessed over the past 60 days. Further, the expected long-term earnings per share growth rate for this retail real estate investment trust (“REIT”) now stands at 6.7%.
Growth Drivers
Simon Property focuses on acquiring and redeveloping premium outlets in some of the vibrant U.S. markets to enhance its portfolio. Further, the diversified portfolio of the company, in terms of geography and product, shields it from market volatility and helps in posting decent performance. The Indianapolis, IN-based REIT is all set to invest $2.5 billion in its Premium Outlets portfolio for a global development pipeline of 6.4 million square feet in 2015.
On Oct 22, Simon Property reported third-quarter 2014 funds from operations (“FFO”) of $2.25 per share, compared with the prior-year quarter figure of $1.97 per share. On a reported basis, FFO was $1.90 per share, down from $2.21 in the year-ago quarter.
The Zacks Consensus Estimate for the quarter was $2.02 per share. The year-over-year rise in comparable FFO per share was driven by notable increase in base minimum rent and occupancy level.
Echoing similar sentiments, the Zacks Consensus Estimate for both 2014 and 2015 moved north. Specifically, over the last 60 days, the estimate for 2014 edged up 0.2% to $8.91 per share, while that for 2015 advanced 0.4% to $9.77 per share.
Other Stocks to Consider
Other top-ranked stocks in this space include The Macerich Co. (MAC), CBL & Associates Properties Inc. (CBL) and Kimco Realty Corp. (KIM). All these stocks hold the same rank as Simon Property.
Note: 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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