Remember when we told you to keep your eyes on shopping center focused real estate groups (The Changing Malls of America)? We won’t say we told you so, but Kimco Realty (KIM) currently tops the list of EEON’s fastest growing securities. Kimco Realty Corporation is a Real Estate Investment Trust (“REIT”) based in Jericho, New York that has specialized in investing in and operating open-air shopping centers for over 60 years. As of March 2020, Kimco Realty held stakes in over 400 shopping centers across 27 states (and Puerto Rico), comprising over 70 million square feet of commercial space. In 2019, Kimco generated $1.1 billion in revenues from its rental properties, earned net income of $413 million, and generated approximately $705 million in EBITDA. Although shares of the firm have lagged in recent months, the firm’s technical indicators make it an interesting asset for investors who are considering jumping in the shopping center investment space.
Fundamentally, the company’s reported revenue growth is propelling the shares to the top of our fastest growing companies list:
Drilling down into Kimco’s Growth ratings shows that the company recorded year over year revenue growth of 235.58% for the most recent quarter, looking at Scalability and Profitability highlights the company’s profit margin of 35.8%, a TTM return on assets of 8.8%, and a TTM return on equity of 18.43%. These metrics allude to the relative strength of Kimco’s current operating position. Kimco also looks interesting from a value perspective. As the COVID-19 pandemic has kept American’s at home, operators of shopping center spaces have been negatively affected by their tenants’ inability to pay monthly rents. This has resulted in a decrease in share prices, and a corresponding increase in value metrics. At current valuations, Kimco Realty has a 1.13 price to book ratio, a 6.64% dividend yield (though currently suspended), and an 18.8% earnings yield.
This combination of Growth, Scalability, and Value potential makes Kimco Realty an asset for investors from both the Value and Growth camps to keep on their radars. As mentioned, the shares have seen a notable decline over the 6 months to early September, 2020, the Company’s management team has noted a continued improvement in the number of individuals shippers utilizing its shopping centers as more and more businesses open their doors to the public again. This has led to Kimco collecting 85% of rents on time during August 2020, up from 76% in June. These are encouraging signs for shareholders who hope to see America’s retail industry bounce back as society finds a new normal during the pandemic era. At current valuations, Kimco shareholders are well positioned to benefit from further resumption of normal retail activities, should they occur. However, although Kimco’s management has put emphasis on maintaining a strong balance sheet, the business is at risk of existing tenants being forced to close permanently should shoppers not return to the mall en-masse.
Source: Kimco Form 10K