Why Is SL Green (SLG) Up 3.2% Since Its Last Earnings Report?
A month has gone by since the last earnings report for SL Green Realty Corporation SLG. Shares have added about 3.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is SLG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SL Green Q2 FFO Surpasses Estimates, Revenues Fall Y/Y
SL Green Realty reported second-quarter 2018 FFO of $1.69 per share, beating the Zacks Consensus Estimate by a cent. The figure also came in higher than the year-ago FFO per share of $1.76.
Results reflect a year-over-year rise in same-store cash NOI. However, investment income witnessed a steep decline.
Rental revenues of $211.4 million in the reported quarter missed the Zacks Consensus Estimate of $215.4 million. Also, the figure declined 24% year over year.
Quarter in Detail
For the reported quarter, same-store cash NOI, including the share of same-store cash NOI from unconsolidated joint ventures, rose 8% year over year. Notably, consolidated property same-store cash NOI increased 4%.
In the Manhattan portfolio, SL Green signed 58 office leases for 565, 914 square feet of space during the second quarter. As of Jun 30, 2018, Manhattan’s same-store occupancy, inclusive of leases signed but not yet commenced, was 95.9%, up 40 basis points (bps) from the end of the last reported quarter. Importantly, in the April-June quarter, the mark-to-market on signed Manhattan office leases was 5.2% higher over the previous fully-escalated rents on the same spaces.
On the other hand, in the Suburban portfolio, SL Green signed 13 office lease deals for 45,224 square feet of space. Same-store occupancy for the Suburban portfolio, inclusive of leases signed but not yet commenced, was 87.2% as of Jun 30, 2018, shrinking 40 bps from the end of the previous quarter. Moreover, in the quarter under review, mark-to-market on signed suburban office leases came in 4.9% lower than the previously fully-escalated rents on the same spaces.
SL Green exited the second quarter with cash and cash equivalents of nearly $287.2 million, up from $127.9 million recorded at the end of 2017.
Year to date, SL Green has repurchased 15.6 million shares of common stock under its 2-billion share-repurchase plan. The shares were bought back at an average price of $99.58 per share.
Additionally, the company originated new debt and preferred equity investments, aggregating $541 million in the quarter, all of which were retained.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
SL Green Realty Corporation Price and Consensus
At this time, SLG has a poor Growth Score of F, however its Momentum is doing a lot 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 F. If you aren’t focused on one strategy, this score is the one you should be interested in.
The company’s stock is suitable soley for momentum based on our styles scores.
SLG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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