Eastgroup Properties (EGP) AI Stock Analysis

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Eastgroup Properties

(NYSE:EGP)

65Neutral

Eastgroup Properties shows strong financial performance and a positive outlook from the earnings call, supporting the company's growth trajectory. However, the technical analysis indicates a bearish trend, and the valuation suggests the stock is priced at a premium. These factors combined result in a moderately favorable stock score.

Positive Factors

Leasing Activity

EastGroup completed 2.8 million square feet of new and renewal leasing, marking its highest ever quarterly achievement.

Rental Rate Increases

New and renewal leases showed rental rate increases averaging 53.1% on a straight-line basis.

Negative Factors

Lease Rejections

Conn's Inc. rejected their lease, impacting tenant occupancy.

Occupancy Rates

EastGroup's portfolio was 95.7% occupied, showing a decline compared to previous quarters.

Eastgroup Properties (EGP) vs. S&P 500 (SPY)

Market Cap

$8.13B

Dividend Yield3.77%

Average Volume (3M)527.81K

Price to Earnings (P/E)33.6

Beta (1Y)0.85

Revenue Growth12.35%

EPS Growth5.59%

CountryUS

Employees101

SectorReal Estate

Sector Strength86

IndustryREIT - Industrial

Share Statistics

EPS (TTM)4.66

Shares Outstanding52,024,017

10 Day Avg. Volume565,008

30 Day Avg. Volume527,808

Financial Highlights & Ratios

PEG Ratio6.00

Price to Book (P/B)N/A

Price to Sales (P/S)14.07

Price to Cash Flow (P/CF)41.80

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$194.50

Price Target Upside24.44% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Eastgroup Properties Business Overview & Revenue Model

Company DescriptionEastGroup Properties, Inc. (EGP) is a real estate investment trust (REIT) focused on the development, acquisition, and operation of industrial properties in major Sunbelt markets throughout the United States. The company's core business is centered on owning, managing, and leasing multi-tenant business distribution spaces, which are strategically located near major transportation hubs and in proximity to large population centers.

How the Company Makes MoneyEastGroup Properties generates revenue primarily through rental income from its portfolio of industrial properties. The company leases space to a diversified tenant base across various industries, including e-commerce, logistics, and manufacturing. Key revenue streams include long-term lease agreements and renewals, which provide a stable and predictable cash flow. Additionally, EastGroup Properties invests in developing new properties and acquiring existing ones to expand its portfolio and increase rental income potential. The company's earnings are further supported by its strategic focus on high-demand regions, enabling it to capitalize on favorable market conditions and maintain high occupancy rates.

Eastgroup Properties Financial Statement Overview

Summary

EastGroup Properties presents a strong financial profile with consistent revenue growth and robust cash flow generation, supporting its operations and expansion in the REIT sector. While the company's leverage is high, typical for its industry, it maintains a solid equity base. The notable decline in net income in 2024 presents a potential risk that warrants monitoring. Overall, the company is well-positioned to capitalize on its operational strengths and navigate industry challenges.

Income Statement

Positive

Eastgroup Properties demonstrated a solid revenue growth trajectory over the past years, with revenue increasing from $331 million in 2019 to $570 million in 2023. The gross profit margin is strong, indicating efficient cost management. However, the net profit margin saw fluctuations, notably declining in 2024 due to significantly lower net income, which could be attributed to exceptional items or increased costs. Overall, the company maintains a healthy EBIT and EBITDA margin, supporting operational efficiency.

Balance Sheet

Positive

The company has maintained a stable balance sheet with a relatively high debt-to-equity ratio, reflecting significant leverage which is common in the REIT industry. However, the equity ratio suggests a solid equity base. The return on equity has been robust, although the sharp decline in net income in 2024 could impact investor returns if sustained. Overall, the balance sheet reveals a healthy but leveraged financial position.

Cash Flow

Positive

Eastgroup Properties shows strong free cash flow generation, with consistent growth over the years. The operating cash flow to net income ratio is favorable, suggesting effective cash conversion from operations. Despite high capital expenditures, the company has maintained solid free cash flow levels, providing flexibility for debt servicing and investment opportunities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
640.23M	570.59M	487.02M	409.48M	363.02M
	Gross Profit
2.20M	416.56M	353.11M	294.40M	259.65M
	EBIT
638.03M	228.14M	183.77M	151.72M	129.17M
	EBITDA
453.25M	399.22M	337.41M	278.82M	245.53M
	Net Income Common Stockholders
4.66K	200.49M	186.18M	123.78M	73.49M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
17.53M	40.26M	56.00K	4.39M	21.00K
	Total Assets
5.08B	4.52B	4.04B	3.22B	2.72B
	Total Debt
1.55B	1.70B	1.88B	1.48B	1.32B
	Net Debt
1.53B	1.66B	1.88B	1.47B	1.32B
	Total Liabilities
1.78B	1.91B	2.08B	1.64B	1.45B
	Stockholders Equity
3.29B	2.61B	1.95B	1.57B	1.27B
Cash Flow		Free Cash Flow
338.20M	338.20M	275.65M	223.19M	163.15M
	Operating Cash Flow
338.20M	338.20M	316.50M	256.49M	196.28M
	Investing Cash Flow
-570.06M	-570.06M	-521.15M	-529.26M	-288.26M
	Financing Cash Flow
272.06M	272.06M	200.31M	277.14M	91.77M

Eastgroup Properties Technical Analysis

Technical Analysis Sentiment

Negative

Last Price156.30

Price Trends

50DMA

174.97

Negative

100DMA

169.75

Negative

200DMA

173.55

Negative

Market Momentum

MACD

-0.40

Positive

RSI

48.90

Neutral

STOCH

43.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EGP, the sentiment is Negative. The current price of 156.3 is below the 20-day moving average (MA) of 172.21, below the 50-day MA of 174.97, and below the 200-day MA of 173.55, indicating a bearish trend. The MACD of -0.40 indicates Positive momentum. The RSI at 48.90 is Neutral, neither overbought nor oversold. The STOCH value of 43.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EGP.

Eastgroup Properties Risk Analysis

Eastgroup Properties disclosed 31 risk factors in its most recent earnings report. Eastgroup Properties reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Eastgroup Properties Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REXR	76 Outperform	$7.62B	27.78	3.38%	5.03%	17.48%	7.45%
STAG	75 Outperform	$6.04B	30.60	5.53%	4.93%	8.41%	-2.96%
LXP	72 Outperform	$2.23B	58.03	2.04%	7.02%	5.27%	58.15%
FR	71 Outperform	$6.16B	20.87	10.99%	3.43%	9.06%	4.57%
TRNO	66 Neutral	$5.50B	27.86	5.59%	3.75%	18.24%	6.95%
EGP	65 Neutral	$8.13B	33.57	7.72%	3.77%	12.35%	5.59%
Sector *	61 Neutral	$4.31B	16.14	-3.60%	11.88%	6.17%	-20.99%

* Real Estate Sector Average

Performance Comparison

EGP

Eastgroup Properties

156.30

-10.88

-6.51%

STAG

Stag Industrial

32.15

-3.55

-9.94%

TRNO

Terreno Realty

55.83

-3.89

-6.51%

First Industrial Realty

46.33

-3.95

-7.86%

LXP

LXP Industrial Trust

7.69

-0.83

-9.74%

REXR

Rexford Industrial Realty

33.96

-12.07

-26.22%

Eastgroup Properties Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -9.13% | Next Earnings Date: Apr 23, 2025

Earnings Call Sentiment Positive

The earnings call reflected a generally positive outlook with strong financial performance, leasing activity, and strategic acquisitions. However, challenges such as occupancy decline, tenant defaults, and issues in the California market were noted. The company remains optimistic about 2025 with strategic plans to address these issues.

Highlights

Funds from Operations Growth

Funds from operations rose 5.9% for the quarter and 7.9% for the year, excluding involuntary conversions.

Strong Leasing Activity

Year leasing was 97.1% with occupancy at 96.1%, and quarterly re-leasing spreads were 47% GAAP and 29% cash.

Record Amount of Square Footage Leased

The company achieved a record amount of square footage leased within the operating portfolio in the past quarter.

Diversified Rent Roll

The top 10 tenants comprise only 7.2% of rents, down 70 basis points from year-end 2023.

Acquisition Growth

Acquired 4 fully leased buildings in Dallas and Phoenix, increasing market presence.

Strong Financial Metrics

Debt to total market capitalization was 15%, debt-to-EBITDA ratio was 3.4x, and interest and fixed charge coverage ratio was 11.5x.

Lowlights

Occupancy Decline

Average quarterly occupancy was 95.8%, down over 200 basis points from the fourth quarter of 2023.

Challenges with Large Tenant Defaults

Tenant defaults were contained to a handful of larger customers, impacting bad debt.

California Market Challenges

Los Angeles market faced credit challenges and slower leasing activity.

Increased Leasing Costs

Leasing costs increased due to inflationary pressures and higher leasing commission percentages.

Company Guidance

During the EastGroup Properties Fourth Quarter 2024 Earnings Call, significant metrics were highlighted to reflect the company's performance and strategic outlook. The company's funds from operations (FFO) rose by 5.9% for the quarter and 7.9% for the year, excluding involuntary conversions, marking a continued trend of growth. Occupancy was strong, with year leasing at 97.1% and average quarterly occupancy at 95.8%, despite being down 200 basis points from the previous year. Re-leasing spreads were substantial, with quarterly GAAP at 47% and cash at 29%. Year-end results showed re-leasing spreads of 50% GAAP and 30% cash, while cash same-store net operating income (NOI) increased by 3.4% for the quarter and 5.6% for the year. The company also reported improvements in its rent roll diversity, with top 10 tenants comprising 7.2% of rents, down 70 basis points from the previous year. Looking ahead, EastGroup forecasts 2025 development starts of $300 million, with $150 million earmarked for strategic acquisitions, aiming to maintain an average occupancy of 96% and a cash same-property NOI midpoint of 5.9%.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.