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Retail REITs to Watch for in Q2 Earnings: NNN, RPT, REG, RPAI

As we tread into another busy week of the current reporting cycle, a lot of activity can be noticed in the real estate investment trust (REIT) space. In fact, there is a deluge of Q2 earnings releases this week, with National Retail Properties, Inc. NNN, Ramco-Gershenson Properties Trust RPT, Regency Centers Corporation REG and Retail Properties of America, Inc. RPAI of the retail REIT category, reporting their numbers on Aug 2.

Industry top shots like Simon Property Group, Inc. SPG and Kimco Realty Corporation KIM already announced their results last week. Simon Property reported a positive surprise of 0.38% benefitting from growth in operating income as well as new developments and expansion. Kimco’s results were in line with the Zacks Consensus Estimate and its occupancy reached an eight-year high.

Armed with strong consumer spending, job gains and rising income levels, the U.S. economy registered a solid rebound and retails sales picked up in the second quarter. Further, with omni-channel retailing expansion, demand for space climbed in the brick-and-mortar centers.  

Per the study of CBRE Group Inc. CBG, the national retail availability rate has fallen to its lowest level since 2008 amid reviving retail sales. In second-quarter 2016, retail availability averaged 10.9%, reflecting a 10 basis points (bps) contraction sequentially and 30 bps from a year ago. Encouragingly, two-thirds of the U.S. markets experienced tighter retail availability.

However, not every retail REIT is equally poised to beat earnings this season. Hence,  we relied on the Zacks methodology for predicting a beat this quarter, combining a favorable Zacks Rank –  Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

Our proprietary methodology – Earnings ESP – shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

Let’s take a look at what’s in store for these retail REITs which are slated to report on Aug 2.

National Retail Properties invests in single tenant net-leased retail properties throughout the United States. The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). Though a favorable Zacks Rank increases the predictive power of ESP, the stock’s zero ESP makes surprise prediction difficult.

NATL RETAIL PPT Price and EPS Surprise

NATL RETAIL PPT Price and EPS Surprise | NATL RETAIL PPT Quote

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Ramco-Gershenson Properties Trust is engaged in the business of owning and managing large, multi-anchor shopping centers, primarily in a number of the largest-metropolitan markets in the central United States. The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). It is not poised for a beat this quarter as it lacks the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold). We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

RAMCO-GERSHENSN Price and EPS Surprise

RAMCO-GERSHENSN Price and EPS Surprise | RAMCO-GERSHENSN Quote

Regency Centers Corporation is engaged in ownership, operations and development of high-quality, grocery-anchored neighborhood and community shopping centers. The company has an Earnings ESP of -1.24% and a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, a negative ESP lowers the chances of a beat this quarter.

REGENCY CTRS CP Price and EPS Surprise

REGENCY CTRS CP Price and EPS Surprise | REGENCY CTRS CP Quote

Retail Properties of America is engaged in the ownership and operations of high quality, strategically-located shopping centers in the United States. The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). Therefore, despite a favorable Zacks Rank, the stock’s zero ESP makes surprise prediction difficult.

RETAIL PROPERTS Price and EPS Surprise

RETAIL PROPERTS Price and EPS Surprise | RETAIL PROPERTS Quote

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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
 
CBRE GROUP INC (CBG): Free Stock Analysis Report
 
SIMON PROPERTY (SPG): Free Stock Analysis Report
 
KIMCO REALTY CO (KIM): Free Stock Analysis Report
 
REGENCY CTRS CP (REG): Free Stock Analysis Report
 
NATL RETAIL PPT (NNN): Free Stock Analysis Report
 
RAMCO-GERSHENSN (RPT): Free Stock Analysis Report
 
RETAIL PROPERTS (RPAI): Free Stock Analysis Report
 
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Zacks Investment Research