Prologis, Inc. (PLD.s) is one of the world’s largest manufacturing and real estate investment trusts, investing in California-based logistics facilities. The company has a capitalization of $112.52B. The company is expected to report earnings for the fiscal fourth quarter ending December 2022 on Wednesday, January 18 before the market opens.
Zacks positions Prologis Rank #3 (Hold) in the Bottom 21% position #198/251 of the Real Estate Investment Trust (REIT) – Equity Trust and Others industry. EPS of $1.21 is expected for this report (same as for Nasdaq) with an ESP of 0.55%, marking a year-over-year increase of 8.04%. A profit of $1.41B is expected, which would be an increase of 31.50% y/y.
The estimate has no downward revisions and 1 upward revision in the last 60 days. PLD has a P/E ratio of 21.91 and a PEG ratio of 2.53. The company has reported results above the estimate 19 times out of the last 20 reports, the only negative in July 2022.
Last quarter the company reported EPS of $1.73 and revenue of $1.15B.
For fiscal 2022, PLD’s consensus estimate for FFO per share is $5.13 which would be up 23.6% year-on-year on revenue of $4.76B. Basic FFO per share is expected to be $5.12-$5.14, average occupancy of 97.25%-97.75% and effective operating margin of 8.50%-8.75%.
Factors to consider
The lack of demand amid global economic pressures and tight market conditions is likely to affect certain factors of the company. However, it is possible to see growth in earnings and funds from operations per share.
Prologis is poised to benefit from this favorable trend as the asset category is attractive and there is a development boom in many markets as it has the ability to provide modern logistics facilities at strategic landfills.
PLD may have established favorable fundamentals through its differentiated customer offerings and strong investment activity in the reported quarter as global supply chains transform for faster compliance and resilience. In addition, Prologis has the strong balance sheet to fuel its growth efforts. As a market leader, this industrial real estate investment group has the ability to raise capital at favorable interest rates.
Q4 new deliveries remained high, with 437.6 thousand square meters of industrial products completing construction, increasing competition as demand was exceeded for the 2nd consecutive quarter and also on an annual basis.
On the other hand, the unemployment rate fell to 3.5% in December while the industrial vacancy rate increased 0.2% from the previous quarter to 3.3%. During the period in question, it is likely that its financial strength was maintained through working capital.
Despite the fact that rents increased in 2022, they showed moderation in the last semester. While the average industrial rental rate rose +1.0% to $29.07 per square meter, it increased +18.6% year-over- year. This marked the strongest year in history for annual rental rate growth, according to CWK.
The company’s cost structure and expansion efforts based on acquisitions and developments are expected to provide momentum at the top line. In other news, Britishvolt has reportedly partnered with Prologis to build a new £200M technology center in the West Midlands.
Technical Analysis- Prologis D1 – $120.99
Prologis is in a 61.8% Fib retracement at $123.25 of its last bearish push started in August that was marked from $138.86-$98.00. The price is currently also testing the December high zone at $123.66 without breaking through it yet but holding above the psychological level of $120.00.
In the case of a favorable result, we could see the price surpass this zone in which it is located and go to test the highs of September 12 at $130.61 that coincide with the Fibo 78.6% ($130.12) and the psychological level of $130.00. If it breaks above this level we will possibly see it down to the current high area below $140.00.
In the case of a negative result, it is possible to see the price fall below the psychological level of $120.00 to the current support of $110.00 below the SMA of 20 D1 periods at $115.170 and if this level is broken to head for the low area of $98.00 at the psychological level and $100.00 key support.
The ADX is at 23.80 with the +DI at 30.31 and the -DI at 12.86, marking retracement followed by lack of trend after the fall. However, the latest change in the +DI could mark the start of an uptrend, if it holds above the -DI and the ADX breaks above and holds the 25.00 line driven by a rise in price.
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