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National Retail Properties (NNN)
NYSE:NNN
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National Retail Properties
(NYSE:NNN)
79Outperform
Positive Factors
Acquisitions
Transaction activity in 4Q acquisitions of $216.8m beat guide midpoint and the management noted the conservatism in its acquisition guide with an elevated deal flow compared to last year.
Financial Performance
The company's quarterly AFFO results are in-line with expectations, and the full-year guidance is above consensus.
Growth Strategy
NNN continues to get rid of nonperforming assets, which has caused recent quarters to experience a higher number of dispositions.
Negative Factors
Earnings Visibility
Resolution of known tenant credit issues and an anticipated drop in lease term revenues cloud earnings visibility and growth is likely modest.
Market Competition
NNN expects most of the competition to take place around larger portfolio deals, which is seen as more of a drag for competitors O and WPC.
Operational Costs
The company anticipates higher property expenses for vacant properties, including taxes and insurance.
National Retail Properties (NNN) vs. S&P 500 (SPY)
Market Cap
$7.85B
Dividend Yield5.56%
Average Volume (3M)1.60M
Price to Earnings (P/E)19.4
Beta (1Y)0.44
Revenue Growth5.40%
EPS Growth-1.33%
CountryUS
Employees83
SectorReal Estate
Sector Strength80
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.51
Shares Outstanding187,951,110
10 Day Avg. Volume1,414,145
30 Day Avg. Volume1,598,943
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.59
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit14.91
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.80Price Target Upside8.06% Upside
Rating ConsensusHold
Number of Analyst Covering10
National Retail Properties Business Overview & Revenue Model
Company DescriptionNational Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of September 30, 2020, the company owned 3,114 properties in 48 states with a gross leasable area of approximately 32.4 million square feet and with a weighted average remaining lease term of 10.7 years.
How the Company Makes MoneyNational Retail Properties generates revenue primarily through the ownership and leasing of retail properties under long-term, net lease agreements. In these agreements, tenants are responsible for paying the majority of the operating expenses, such as property taxes, insurance, and maintenance, in addition to their rent. This model provides NNN with a stable and predictable income stream, minimizing direct operational costs. The company's revenue is further bolstered by strategically acquiring properties with high-performing tenants, which can enhance occupancy rates and rental income. Additionally, NNN may engage in property sales or acquisitions that can generate capital gains or strategic portfolio realignment, further contributing to its earnings.
National Retail Properties Financial Statement Overview
Summary
National Retail Properties exhibits strong financial health with consistent revenue growth, improved profitability margins, and effective debt management. Robust cash flow generation supports the company's operations, though continued investments and liability management are crucial for maintaining financial stability.Income Statement
National Retail Properties has demonstrated a consistent revenue growth trend with Total Revenue increasing from $670.5 million in 2019 to $869.3 million in 2024. The company maintains strong profitability with a robust Gross Profit Margin (%). Net Profit Margin and EBIT Margin have shown improvements over the years, indicating operational efficiency.85
Very Positive
Balance Sheet
The company has a solid equity base with Stockholders' Equity increasing steadily. A notable reduction in Total Debt from $4.36 billion to $0 in 2024 indicates improved financial leverage. However, the Equity Ratio could be stronger, and the potential risks of high liability relative to assets need monitoring.78
Positive
Cash Flow
Operating Cash Flow has shown a steady increase, supporting strong Free Cash Flow levels. The Free Cash Flow to Net Income Ratio is strong, indicating good cash generation relative to earnings. However, the Investing Cash Flow indicates significant outflows, which require careful management to ensure continued liquidity.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 869.27M | 828.11M | 773.05M | 726.41M | 660.68M | Gross Profit |
| 836.95M | 799.73M | 746.77M | 698.02M | 632.32M | EBIT |
| 577.87M | 555.10M | 482.54M | 449.10M | 374.49M | EBITDA |
| 827.55M | 793.73M | 706.37M | 654.32M | 571.11M | Net Income Common Stockholders |
| 396.83M | 392.34M | 186.71M | 152.24M | 99.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 8.73M | 1.19M | 2.50M | 171.32M | 267.24M | Total Assets |
| 8.87B | 8.66B | 8.15B | 7.75B | 7.64B | Total Debt |
| 4.37B | 4.36B | 3.92B | 3.75B | 3.22B | Net Debt |
| 4.37B | 4.36B | 3.91B | 3.58B | 2.95B | Total Liabilities |
| 4.51B | 4.50B | 4.02B | 3.85B | 3.32B | Stockholders Equity |
| 4.36B | 4.16B | 4.12B | 3.90B | 4.32B |
| Cash Flow | Free Cash Flow | |||
| 635.50M | 612.41M | 578.36M | 568.42M | 450.19M | Operating Cash Flow |
| 635.50M | 612.41M | 578.36M | 568.42M | 450.19M | Investing Cash Flow |
| -424.34M | -680.66M | -777.63M | -432.18M | -142.82M | Financing Cash Flow |
| -207.26M | 66.63M | 34.73M | -232.16M | -41.25M |
National Retail Properties Technical Analysis
Positive
41.46
Price Trends
41.05
Positive
40.16
Positive
42.21
Negative
Market Momentum
0.34
Negative
55.01
Neutral
66.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NNN, the sentiment is Positive. The current price of 41.46 is above the 20-day moving average (MA) of 40.78, above the 50-day MA of 41.05, and below the 200-day MA of 42.21, indicating a neutral trend. The MACD of 0.34 indicates Negative momentum. The RSI at 55.01 is Neutral, neither overbought nor oversold. The STOCH value of 66.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NNN.
National Retail Properties Risk Analysis
National Retail Properties disclosed 36 risk factors in its most recent earnings report. National Retail 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
National Retail Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $7.85B | 19.42 | 9.35% | 5.56% | 5.40% | -1.33% | |
78 Outperform | $8.18B | 27.66 | 9.58% | 4.63% | 6.21% | 22.32% | |
77 Outperform | $8.43B | 43.09 | 3.54% | 3.96% | 13.75% | 5.67% | |
72 Outperform | $7.70B | 24.15 | 10.99% | 4.45% | 4.58% | 12.65% | |
68 Neutral | $4.90B | 63.30 | 3.09% | 3.40% | 9.27% | 19.51% | |
65 Neutral | $4.87B | 359.58 | 0.81% | 4.74% | 4.37% | -75.82% | |
60 Neutral | $2.81B | 11.39 | 0.21% | 8508.43% | 6.31% | -14.32% |
* Real Estate Sector Average
Performance Comparison
NNN
National Retail Properties
41.46
1.47
3.68%
ADC
Agree Realty
74.98
17.96
31.50%
KRG
Kite Realty Group
22.45
2.17
10.70%
FRT
Federal Realty
95.23
-3.14
-3.19%
BRX
Brixmor Property
25.11
3.75
17.56%
PECO
Phillips Edison & Company
35.23
3.13
9.75%
National Retail Properties Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 0.85%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call indicated a strong performance in terms of occupancy, acquisitions, and financial metrics, supported by a robust balance sheet. However, challenges with tenant defaults and vacancy resolution, along with expected cap rate compression, present areas of concern.Q1-2025 Updates
Positive Updates
Strong Occupancy and Portfolio Performance
The portfolio of 3,641 properties maintained a high occupancy rate of 97.7%, with minimal credit losses. The stability was highlighted by resilience during the GFC and the pandemic.
Successful Acquisitions and Strategic Dispositions
NNN acquired 82 new properties for $232 million at a cap rate of 7.4% and sold 10 properties for $16 million in line with their full-year guidance.
Robust Financial Position
NNN has a strong balance sheet with $1.1 billion availability on its credit line and a conservative debt maturity profile, supporting acquisition guidance of $500 million to $600 million.
Positive Financial Metrics
Reported core FFO of $0.86 per share and AFFO of $0.87 per share, each up 3.6% over the prior year period, with annualized base rent up over 5% year-over-year.
Lease Termination Fees and Strong Lease Renewals
Collected $8.2 million in lease termination fees and completed 25 renewals and 8 new leases with a blended rent recapture rate of 98%.
Negative Updates
Tenant Defaults Impact
The resolution of two tenant defaults from Q4 2024 is expected to impact core FFO per share by $0.15 to $0.25 for the year.
Challenges with Furniture and Restaurant Assets
Ongoing efforts to resolve vacancies in furniture and restaurant assets, with 15 of 35 furniture stores and 31 restaurant assets still pending resolution.
Cap Rate Compression
Expected cap rate pressure in 2025 with significant compression in larger portfolio deals, causing foregone opportunities.
Watch List Concerns
No new tenants were added to the watch list, but concerns remain with 'At Home' stores, which account for about 1% of ABR.
Company Guidance
During the NNN REIT Inc. First Quarter 2025 Earnings Call, CEO Steve Horn discussed the company's progress in resolving vacancies in their furniture and restaurant assets, with 15 of 35 furniture stores resolved and significant interest in the rest. For restaurant assets, 38 have been leased or sold. The expected impact of tenant defaults is anticipated to be only $0.15 to $0.25 on the stabilized core FFO per share for the year, representing less than 1%. The portfolio includes 3,641 properties with a 97.7% occupancy rate, slightly below the long-term average due to recent evictions. In the first quarter, NNN acquired 82 properties for approximately $232 million, with an initial cap rate of 7.4% and an average lease term of over 18 years. The company executed strategic dispositions generating $16 million in proceeds. The balance sheet remains strong with $1.1 billion availability on a $1.2 billion line of credit. NNN maintains its 2025 acquisition guidance of $500 million to $600 million and reported a core FFO of $0.86 and AFFO of $0.87 per share for the quarter, each up 3.6% year-over-year. The annualized base rent increased by over 5% year-over-year. NNN's first-quarter NOI margin was 95.9%, with G&A expenses at 5.6% of total revenues. The company declared a $0.58 quarterly dividend, representing a 5.4% annualized yield at a 66% AFFO payout ratio.National Retail Properties Corporate Events
Executive/Board Changes
National Retail Properties Announces CFO Transition Plan
Neutral
Jan 10, 2025
NNN REIT, Inc. announced the retirement of Kevin B. Habicht, their Executive Vice President, Chief Financial Officer, and Board member, effective March 31, 2025. Habicht will assist the company with transitional matters post-retirement. Vincent H. Chao has been appointed as Habicht’s successor, bringing extensive public company and investment banking experience. The company outlined a comprehensive severance plan for its executives, highlighting the terms of equity award vesting and severance payments in various termination scenarios.
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.