Rating Change #5
Kimco Realty Corp (KIM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- KIMCO REALTY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, KIMCO REALTY CORP increased its bottom line by earning $0.26 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus $0.26).
- KIM's revenue growth trails the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- 39.60% is the gross profit margin for KIMCO REALTY CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, KIM's net profit margin of 17.40% significantly trails the industry average.
- After a year of stock price fluctuations, the net result is that KIM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
Kimco Realty Corporation is a publicly owned real estate investment trust. The firm engages in acquisitions, development, and management of neighborhood and community shopping centers. The company has a P/E ratio of 84.5, below the average real estate industry P/E ratio of 92.5 and above the S&P 500 P/E ratio of 17.7. Kimco has a market cap of $7.53 billion and is part of the financial sector and real estate industry. Shares are up 16.1% year to date as of the close of trading on Thursday.You can view the full Kimco Ratings Report or get investment ideas from our investment research center.
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