SEGRO (LON:SGRO) Issues Earnings Results

Key Points

• Operational performance improved: Like-for-like net rental income rose 5.3% and adjusted EPS increased 6.6%, while new headline rent reached £53 million, including a sharp increase in pre-lets.
• Growth opportunities remain strong: SEGRO expanded its data-center power pipeline to 3 GVA and has a substantial £441 million industrial and logistics development pipeline, with completions expected to accelerate in the second half.
• Valuation pressures affected returns: EPRA NTA per share declined 2.5% following U.K. yield expansion, and the dividend increase was limited to 4.5%; shares fell 0.5% after the results.

SEGRO (LON:SGRO - Get Free Report) posted its earnings results on Thursday. The real estate investment trust reported GBX 19.30 earnings per share for the quarter, Digital Look Earnings reports. SEGRO had a net margin of 77.66% and a return on equity of 3.51%.

Here are the key takeaways from SEGRO's conference call:

• Operational performance strengthened: Like-for-like net rental income rose 5.3% and adjusted EPS increased 6.6%, supported by rent reviews, asset management and development completions.
• Leasing momentum improved: SEGRO signed £53 million of new headline rent, including £24 million of pre-lets versus £3 million in the prior-year period. Management expects occupancy to improve in the second half as vacant U.K. space moves through advanced negotiations.
• Data-center growth opportunity expanded: The power bank reached 3 GVA, including 1.4 GVA of near-to-mid-term opportunities, while SEGRO added 0.5 GVA of reservations and signed a further powered-shell pre-let with VIRTUS.
• Development pipeline remains substantial: Industrial and logistics projects represent £441 million of potential rent, with £90 million in current and near-term projects at an average expected yield of 7.4%; development completions are expected to increase materially in the second half.
• Valuation and dividend constraints weighed on the outlook: EPRA NTA per share fell 2.5% after U.K. yield expansion, while the 4.5% dividend increase was limited by the Prologis best-and-final offer and is not indicative of full-year expectations.

SEGRO Stock Down 0.5%

Shares of SGRO traded down GBX 5.20 on Thursday, reaching GBX 966.60. The company's stock had a trading volume of 9,564,395 shares, compared to its average volume of 32,041,857. The firm has a fifty day moving average of GBX 815.25 and a 200-day moving average of GBX 761.57. SEGRO has a twelve month low of GBX 603 and a twelve month high of GBX 997.40. The stock has a market capitalization of £13.08 billion, a PE ratio of 23.75, a PEG ratio of 2.12 and a beta of 1.14. The company has a current ratio of 0.56, a quick ratio of 0.62 and a debt-to-equity ratio of 41.02.

Analyst Upgrades and Downgrades

Several brokerages have recently commented on SGRO. Berenberg Bank reiterated a "buy" rating and set a GBX 995 target price on shares of SEGRO in a research note on Thursday. Citigroup reiterated a "buy" rating and issued a £104.30 price target on shares of SEGRO in a research report on Friday, June 26th. Finally, Jefferies Financial Group upped their price target on shares of SEGRO from GBX 855 to GBX 917 and gave the stock a "hold" rating in a report on Thursday, July 9th. Five investment analysts have rated the stock with a Buy rating and three have issued a Hold rating to the stock. Based on data from MarketBeat, the stock has an average rating of "Moderate Buy" and a consensus price target of GBX 2,241.

SEGRO Company Profile

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, asset manager and developer of modern warehousing, industrial property and data centres across the UK and seven other European countries.

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