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Is Macerich (MAC) Set to Beat Q1 Earnings Estimates?

Retail real estate investment trust (“REIT”) The Macerich Company MAC is expected to report first-quarter 2016 results on May 3, 2016, after the market closes. Last quarter, the company had delivered a 2.75% positive surprise.

For the trailing four quarters, Macerich posted an average positive surprise of 4.03%, beating estimates on all occasions. The Zacks Consensus Estimate for the first quarter funds from operations (“FFO”) is currently pegged at 85 cents.

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

Why a Likely Positive Surprise?

Our proven model shows that Macerich is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to beat estimates, and Macerich has the right mix.

Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of 87 cents and the Zacks Consensus Estimate of 85 cents, is +2.35%. This is a meaningful and leading indicator of a likely positive surprise.

Zacks Rank: Macerich carries a Zacks Rank #2.

The combination of Macerich’s Zacks Rank #2 and positive ESP makes us reasonably confident of a positive surprise this season.

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

What's Driving the Better-than-Expected Earnings?

Macerich’s portfolio of premium malls in the dynamic U.S. markets enabled the company to maintain a stable source of rent over the past quarters.

Moreover, a better employment scenario is expected to drive demand for retail goods. This presents an opportune moment for Macerich for providing real estate support to the retail sector. In fact, amid lower supply of new properties, a steadily rising demand is emerging as the sector’s primary growth driver. All these are expected to be reflected in the company’s first-quarter 2016 results.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to post a positive surprise this quarter:

Host Hotels & Resorts, Inc. HST has an Earnings ESP of +2.63% and a Zacks Rank #3. The company will report results on Apr 29.

Taubman Centers, Inc. TCO has an Earnings ESP of +3.53% and a Zacks Rank #3. The company will release results on May 2.

Vornado Realty Trust VNO has an Earnings ESP of +0.81% and a Zacks Rank #3. The company will report first-quarter 2016 results on May 2.

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. All earnings per share numbers presented in this write up represent FFO per share.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
MACERICH CO (MAC): Free Stock Analysis Report
 
TAUBMAN CENTERS (TCO): Free Stock Analysis Report
 
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
 
VORNADO RLTY TR (VNO): Free Stock Analysis Report
 
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