In the past 30 days, four analysts have raised their EPS estimates for this Real Estate Investment Trust. The shares have a current annual dividend yield of 2.72%, paid quarterly.
Kimco Realty Corporation (KIM)
From Argus Weekly Staff Report
We are raising our rating on Kimco Realty Corp. to BUY from HOLD based on our projections for better-than-peer average growth. We have a favorable view of Kimco’s transformation into a pure-play U.S. retail REIT through international asset sales and domestic acquisitions, including the purchase of Weingarten Realty Investors in August 2021. We expect the merger to provide new growth opportunities along with synergies that will boost FFO.
Kimco has built a portfolio of mostly open-air shopping centers that are anchored by large grocery chains; these grocery stores are largely e-commerce-resistant, in our view, and support foot traffic to smaller surrounding stores. Compared to 11 other grocery-anchored retail REITs, we view KIM to be best of breed. Kimco’s average base rent of roughly $19 per square foot is slightly below the peer average of $20, reflecting the lower median income of neighborhoods near Kimco’s shopping centers. We believe that this lower median income reduces e-commerce risk from grocery delivery apps, which tend to have lower usage rates in areas with lower median incomes.
We are raising our 2021 FFO estimate to $1.37 per share from $1.24, reflecting management’s guidance and the strong year-to-date results. For 2022, we are raising our FFO estimate to $1.51 from $1.42 based on our expectations for contributions from the Weingarten merger. Our long-term annualized FFO per share growth rate estimate is 4%, raised from 3%.
KIM shares are trading at 16.3-times our 2022 FFO estimate, below the peer average of 18.1. We believe that the stock deserves to trade at a higher multiple. Our target price of $27 implies a projected 2022 FFO multiple of 17.9, still below the peer average.
Jim Kelleher, CFA, Argus Weekly Staff Report, argusresearch.com, 212-425-7500, January 6, 2022