Open-air, grocery-anchored shopping centers and mixed-use assets operator Kimco Realty Corporation (KIM - Get Rating) recently reported its fourth-quarter earnings report. Its revenues and NAREIT FFO per share beat the Street estimates by 4.4% and 5.4%, respectively. It also projects 2022 NAREIT FFO per share in the range of $1.46-$1.50. The company’s board of directors raised the quarterly cash dividend on common shares 11.8% by declaring a $0.19 per common share, payable on March 24, 2022.

The stock has lost 0.42% over the past month. In addition, it is currently trading 7.6% below its 52-week high of $25.62, which it hit on January 13, 2022. Furthermore, the effects of the COVID-19 omicron variant and socio-political issues make its near-term prospects uncertain.

Here’s what could influence KIM’s performance in the upcoming months:

High Profitability

In terms of trailing-12-month net income margin, KIM’s 61.85% is 248% higher than the industry average of 17.77%. Likewise, its trailing-12-month ROTA of 4.57% is 129.1% higher than the industry average of 2%. Moreover, the stock’s trailing-12-month ROCE of 10.52% is 120.6% higher than the industry average of 4.77%.

Top Line Growth Doesn’t Translate into Bottom Line Improvement

For the fiscal fourth quarter ended December 31, 2021, KIM’s revenue surged 57.6% year-over-year to $424.65 million. The company’s consolidated EBITDA grew 63.4% year-over-year to $290.46 million. However, its net income came in at $81.95 million, representing a 59.4% year-over-year decrease. Also, its EPS came in at $0.13, down 71.1% year-over-year.

Unfavorable Analyst Estimates

Analysts expect KIM’s EPS to decrease 53.3% in the current quarter, 40% in the next quarter, and 58.1% in the current year. Also, its revenue is expected to decline 2.9% year-over-year to $0.78 in fiscal 2023.

Stretched Valuation

In terms of trailing-12-month P/CF, KIM’s 27.12x is 57.3% higher than the industry average of 17.24x. Likewise, its trailing-12-month P/S of 8.83x is 35% higher than the industry average of 6.54x. Moreover, the stock’s trailing-12-month EV/EBITDA of 27.84x is 25.30% lower than the industry average of 22.22x.

POWR Ratings Don’t Indicate Enough Upside

KIM has an overall rating of C, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. KIM has a C grade for Value, in sync with its higher-than-industry valuation ratios. In addition, KIM has a C grade for Stability, consistent with its beta of 1.48.

KIM also has a C grade for Growth and Sentiment. This is justified as analysts expect its EPS to decline in the near term.

KIM is ranked #26 of 34 stocks in the D-rated REITs – Retail industry. Click here to access all of KIM’s ratings.

Bottom Line

KIM could keep losing in the near term due to concerns over the level and volatility of interest rate hikes. So, the stock looks overvalued at the current price level, and it could be wise to wait for a better entry point in the stock.

How Does Kimco (KIM) Stack Up Against its Peers?

KIM has an overall POWR Rating of C, therefore you might want to consider investing in the following REITs instead – Retail stocks with a B (Buy) rating: SmartCentres Real Estate Investment Trust (CWYUF - Get Rating), Alexander’s, Inc. (ALX - Get Rating), and RioCan Real Estate Investment Trust (RIOCF - Get Rating).

KIM shares were unchanged in after-hours trading Tuesday. Year-to-date, KIM has declined -3.98%, versus a -9.56% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

More Resources for the Stocks in this Article