Here's Why You Should Hold On To Kimco (KIM) Stock For Now

Kimco Realty Corp. (NYSE:KIM) has been making strategic efforts to strengthen its small shops portfolio. It is relying on omni-channel retailing, in a bid to counter pressure from the rising online sales.

Kimco, like other retail real estate investment trusts (REIT), is suffering due to shrinking mall traffic, with online purchases taking precedence. As a result, retailers, unable to counter the mounting competition, are filing for bankruptcies and opting for store closures. This has aggravated the problems of the brick-and-mortar industry that is already reeling from increase in e-commerce sales.

In addition, shares of this Zacks Rank #3 (Hold) company have underperformed the industry, year to date. During this time frame, the company has lost 23.7%, whereas the industry recorded loss of 7.4%.



Amid these challenging times, the company’s focus on Internet-resistant alternatives will likely help it limit operating and leasing risks. The company is aimed at enhancing its small-shops portfolio, which comprises service-based industries like restaurants, saloons and spas, personal fitness and medical practices. Also, these industries enjoy frequent customer traffic.

Kimco has well-capitalized retailers in its tenant roster which contribute significantly to its rental revenues. Moreover, these retailers have a strong omni-channel presence that positions the company well to ride on the growth trajectory.

Additionally, the company’s 2020 Vision is aligned with the aim to reposition and optimize its portfolio. Adhering to these strategic measures, Kimco is increasing ownership of premium assets in major metro markets in the United States and shedding interest in its joint-venture initiatives. The company has already exited the South America market and disposed all its Canada-based operating assets as well. These diligent efforts are anticipated to boost the company’s growth profile over the long run.

The company’s Zacks Consensus Estimate for the current-year funds from operations (FFO) per share has been revised 1.3% upward to $1.53 in two months’ time.

Stocks to Consider

Better-ranked stocks in the REIT space include Getty Realty Corporation (NYSE:GTY) , Seritage Growth Properties (NYSE:SRG) and Prologis Inc. (NYSE:PLD) .

While Getty Realty and Seritage sport a Zacks Rank #1 (Strong Buy), Prologis carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Getty Realty’s 2017 FFO per share estimates moved up 3.1% to $2 in a month’s time.

Seritage’s 2017 FFO per share estimates inched up 0.5% to $2.01 in the past 60 days.

Prologis 2017 FFO per share estimates climbed 0.7% to $2.81 over the same time period.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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