Valued at a market cap of $9.2 billion, Federal Realty Investment Trust (FRT) owns, operates, and redevelops high-quality retail-based properties located primarily in major coastal markets from Washington, D.C., to Boston, as well as Northern and Southern California. The Rockville, Maryland-based company’s mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply.
Companies valued at less than $10 billion are typically classified as “mid-cap stocks,” and FRT fits the label perfectly. The REIT owns and operates around 104 properties and has expertise in creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland, and Assembly Row in Somerville, Massachusetts.
FRT is currently trading 5.8% below its 52-week high of $118.34, reached on Sep. 16. Shares of this REIT have declined 2.6% over the past three months, underperforming the broader Dow Jones Industrials Average’s ($DOWI) 1.6% gain during the same time frame.
Moreover, FRT has increased 6.3% over the past 52 weeks, lagging behind DOWI’s 14.2% returns over the same time frame. However, over the past six months, shares of FRT are up 11.1%, surpassing DOWI’s 9.8% gains.
To confirm its recent bearish trend, FRT has been trading below its 50-day moving average since mid-December. Nonetheless, it has remained above its 200-day moving average since late May.
FRT’s shares plunged 3% after delivering mixed Q3 earnings results on Oct. 30. The company’s FFO of $1.71 per share, which grew 3.6% annually, slightly missed the consensus estimates primarily due to higher property-level expenses and lower-than-expected term fees. However, its sales increased 5.9% to $303.6 million and came in slightly above the consensus projections, thanks to healthy leasing activity and notable occupancy gains at its properties.
FRT has underperformed its rival, Regency Centers Corporation (REG), which gained 10.3% over the past 52 weeks and almost 19.3% over the past six months.
Despite Federal Realty’s recent underperformance, analysts remain strongly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 16 analysts covering it, and the mean price target of $124.92 suggests a modest 12.1% premium to its current levels.
