Phillips Edison & Company (PECO) AI Stock Analysis

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Phillips Edison & Company

(NASDAQ:PECO)

Rating:63Neutral

Price Target:

$37.00

▲( 9.02% Upside)

Phillips Edison & Company's overall stock score reflects strong financial performance and positive earnings call sentiment. However, high valuation and mixed technical signals present challenges. The company's focus on operational efficiency and robust leasing spreads are significant strengths, although concerns about tariff impacts and increasing debt exposure pose risks.

Positive Factors

Acquisitions

PECO acquired 7 shopping centers for $174mn YTD, approximately 44% of its FY guidance range.

Earnings Performance

1Q25 earnings beat boosted by a lease term fee with solid SSNOI.

Growth Potential

PECO is well-positioned to turn the corner into 2025, and view its upcoming Business Update to be a relative catalyst for the stock.

Negative Factors

Billed Occupancy

There was a sequential dip in billed occupancy and lower tenant retention.

Earnings Guidance

'25 earnings guidance was reiterated below the Street expectations.

Occupancy

Leased occupancy declined -60bps Q/Q to 97.1% due to known bankruptcies.

Phillips Edison & Company (PECO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.70B

Dividend Yield3.55%

Average Volume (3M)792.75K

Price to Earnings (P/E)60.7

Beta (1Y)0.45

Revenue Growth9.27%

EPS Growth19.51%

CountryUS

Employees300

SectorReal Estate

Sector Strength63

IndustryREIT - Retail

Share Statistics

EPS (TTM)0.21

Shares Outstanding125,400,000

10 Day Avg. Volume802,775

30 Day Avg. Volume792,751

Financial Highlights & Ratios

PEG Ratio4.53

Price to Book (P/B)1.92

Price to Sales (P/S)0.00

P/FCF Ratio19.81

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$38.50

Price Target Upside13.44% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Phillips Edison & Company Business Overview & Revenue Model

Company DescriptionPhillips Edison & Company, Inc. (PECO), an internally-managed REIT, is one of the nation's largest owners and operators of grocery-anchored shopping centers. PECO's diversified portfolio of well-occupied neighborhood shopping centers features a mix of national and regional retailers selling necessity-based goods and services in fundamentally strong markets throughout the United States. Through its vertically-integrated operating platform, the Company manages a portfolio of 309 properties, including 283 wholly-owned properties comprising approximately 31.7 million square feet across 31 states (as of September 30, 2020). PECO has generated strong operating results over its 29+ year history and has partnered with leading institutional commercial real estate investors, including TPG Real Estate and The Northwestern Mutual Life Insurance Company. The Company remains exclusively focused on creating great grocery-anchored shopping experiences and improving the communities it serves one center at a time.

How the Company Makes MoneyPhillips Edison & Company generates revenue primarily through the leasing of retail space in their grocery-anchored shopping centers. The company's primary revenue streams include rental income from tenants, which often consist of long-term leases with built-in rent escalations, and additional income from common area maintenance fees and other property-related services. PECO aims to maintain high occupancy rates and attract a diverse mix of national, regional, and local tenants to ensure stable and reliable cash flows. The company's earnings are also supported by its strategic acquisitions and dispositions of properties, which help optimize its portfolio. Partnerships with grocery chains and other retail entities enhance the value of their properties, contributing to increased foot traffic and tenant demand.

Phillips Edison & Company Financial Statement Overview

Summary

Phillips Edison & Company exhibits strong revenue growth and operational efficiency with high gross and EBITDA margins. The balance sheet is solid but shows moderate leverage and modest returns on equity. Cash flow management is excellent, with high cash flow to net income ratios, although free cash flow growth has recently declined. The company should focus on enhancing profitability and managing leverage to strengthen its financial position further.

Income Statement

Positive

Phillips Edison & Company shows a consistent upward trend in revenue, with a notable revenue growth rate of 11.28% from 2023 to 2024 and 2.66% in TTM 2025. Gross profit margin remains strong at around 62.14% in TTM 2025. However, net profit margin is low, standing at 6.25% in TTM 2025, indicating relatively high operational costs. The EBIT margin of 26.11% and EBITDA margin of 63.98% in TTM 2025 highlight solid operational efficiency.

Balance Sheet

Positive

The company maintains a stable balance sheet with an equity ratio of 34.61% in TTM 2025, indicating a sound capital structure. The debt-to-equity ratio is 1.04, reflecting moderate leverage. Return on equity is modest at 1.84% in TTM 2025, suggesting room for improvement in generating returns on equity.

Cash Flow

Very Positive

Phillips Edison & Company demonstrates robust cash flow management with a high operating cash flow to net income ratio of 7.84 in TTM 2025, indicating strong cash generation relative to net income. Free cash flow to net income ratio is also favorable at 5.28, showing efficient cash utilization. The free cash flow growth rate, however, is negative at -6.49% from 2024 to TTM 2025, pointing to potential pressures on free cash flow.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
678.99M	661.39M	610.12M	575.37M	532.85M	498.02M
	Gross Profit
421.87M	471.07M	435.00M	412.15M	374.55M	343.51M
	EBIT
177.27M	170.63M	154.20M	118.53M	69.94M	86.69M
	EBITDA
434.50M	425.46M	390.64M	354.75M	315.04M	315.44M
	Net Income Common Stockholders
71.32M	62.69M	56.85M	48.32M	15.12M	4.77M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.40M	12.30M	4.87M	5.48M	92.58M	104.30M
	Total Assets
6.68B	6.55B	4.87B	4.74B	4.67B	4.68B
	Total Debt
2.40B	2.23B	2.08B	1.90B	2.00B	2.39B
	Net Debt
2.39B	2.22B	2.07B	1.89B	1.91B	2.29B
	Total Liabilities
2.54B	2.41B	2.21B	2.14B	2.19B	2.66B
	Stockholders Equity
2.31B	2.32B	2.31B	2.24B	2.15B	1.69B
Cash Flow		Free Cash Flow
224.12M	239.63M	195.71M	186.40M	187.87M	146.61M
	Operating Cash Flow
332.63M	334.71M	290.97M	290.89M	262.90M	210.58M
	Investing Cash Flow
-490.38M	-392.94M	-353.39M	-331.25M	-180.49M	-44.09M
	Financing Cash Flow
155.51M	58.01M	53.95M	-57.83M	-98.82M	-129.66M

Phillips Edison & Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price33.94

Price Trends

50DMA

35.25

Negative

100DMA

35.59

Negative

200DMA

36.22

Negative

Market Momentum

MACD

-0.17

Positive

RSI

38.70

Neutral

STOCH

5.08

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PECO, the sentiment is Negative. The current price of 33.94 is below the 20-day moving average (MA) of 35.23, below the 50-day MA of 35.25, and below the 200-day MA of 36.22, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 38.70 is Neutral, neither overbought nor oversold. The STOCH value of 5.08 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PECO.

Phillips Edison & Company Risk Analysis

Phillips Edison & Company disclosed 55 risk factors in its most recent earnings report. Phillips Edison & Company 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 1 New Risks

We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk. Q4, 2024

Phillips Edison & Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FCPT	73 Outperform	$2.72B	25.34	7.62%	5.17%	6.20%	0.28%
BRX	71 Outperform	$7.54B	23.52	10.99%	4.54%	4.58%	12.65%
SKT	69 Neutral	$3.26B	34.10	15.89%	3.88%	12.38%	-6.36%
KRG	66 Neutral	$4.70B	347.24	0.81%	4.91%	4.37%	-75.82%
PECO	63 Neutral	$4.70B	60.67	3.09%	3.55%	9.27%	19.51%
Sector *	60 Neutral	$2.76B	10.59	0.51%	8507.90%	5.51%	-19.44%
MAC	60 Neutral	$3.92B	―	-4.79%	4.57%	9.58%	-3.85%

* Real Estate Sector Average

Performance Comparison

PECO

Phillips Edison & Company

33.94

3.85

12.79%

MAC

Macerich

14.89

0.59

4.13%

SKT

Tanger

28.81

2.64

10.09%

KRG

Kite Realty Group

21.39

1.37

6.84%

BRX

Brixmor Property

24.64

3.96

19.15%

FCPT

Four Corners Property

27.08

4.37

19.24%

Phillips Edison & Company Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -3.36%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call showcased strong operational performance with high occupancy and robust leasing spreads. Despite macroeconomic uncertainties and potential tariff impacts, PECO maintained a positive outlook with strong acquisition activity and affirmed full-year guidance. The presence of a significant one-time lease termination fee and concerns over increasing variable rate debt exposure were noted but did not overshadow the positive aspects.

Q1-2025 Updates

Positive Updates

Strong Same-Center NOI Growth

The PECO team delivered a strong quarter of growth with same-center NOI increasing by 3.9%.

High Occupancy and Leasing Performance

Portfolio occupancy remained high at 97.1%, with anchor occupancy at 98.4%. In-line renewal rent spreads reached a record high of 21.7%, and comparable new leasing rent spreads were 28.1%.

Robust Acquisition Activity

During the first quarter, PECO purchased $146 million in assets with a strong pipeline and affirmed acquisition guidance of $350 million to $450 million for 2025.

Full-Year Guidance Affirmed

PECO affirmed its 2025 guidance for Nareit FFO per share increase of 5.7% over 2024 at the mid-point and Core FFO per share increase of 5.1% at the mid-point.

Record In-Line Renewal Rent Spreads

The first quarter saw record high in-line renewal rent spreads of 21.7%, reflecting strong leasing and retention environment.

Negative Updates

Concerns Over Tariffs and Economic Uncertainty

There is uncertainty about the macroeconomic environment and potential impacts of tariffs, though no immediate signs of slowing demand.

Lease Termination Impact

First-quarter FFO benefited from a one-time lease termination fee, which was highlighted as non-recurring.

Increased Variable Rate Debt Exposure

PECO's variable rate debt exposure is expected to increase from 14% to about 25-26% later this year due to swap expirations.

Company Guidance

During the first quarter of 2025 earnings call for Phillips Edison & Company, the company provided several key metrics and affirmed its guidance for the year. The company reported a same-center net operating income (NOI) growth of 3.9% and maintained high portfolio occupancy at 97.1%, with anchor occupancy at 98.4%. Lease renewal rent spreads reached a record high of 21.7%, while new leasing rent spreads were 28.1%. Phillips Edison confirmed its guidance for 2025, projecting a Nareit FFO per share increase of 5.7% over 2024 at the mid-point and a Core FFO per share increase of 5.1% at the mid-point. The company aims for a 3% to 3.5% same-center NOI growth for the year. Additionally, they expect to acquire $350 million to $450 million in assets, targeting an unlevered internal rate of return (IRR) of 9%. The company emphasized its focus on grocery-anchored centers, with 71% of its annual base rent (ABR) derived from necessity-based goods and services, providing insulation against potential tariff disruptions.

Phillips Edison & Company Corporate Events

Shareholder MeetingsDividends

Phillips Edison & Company Holds Annual Stockholders Meeting

Positive

May 1, 2025

On May 1, 2025, Phillips Edison & Company held its annual meeting of stockholders, where all ten directors were re-elected, executive compensation was approved, and Deloitte & Touche LLP was ratified as the independent auditor for 2025. Additionally, the company declared monthly dividend distributions of $0.1025 per share for May, June, and July 2025, reflecting its commitment to returning value to shareholders.

Business Operations and StrategyFinancial Disclosures

Phillips Edison Reports Strong Q1 2025 Financial Results

Positive

Apr 24, 2025

On April 24, 2025, Phillips Edison & Company reported its financial results for the first quarter of 2025, showing strong performance with a net income of $26.3 million and significant growth in funds from operations. The company affirmed its full-year earnings guidance, highlighting a 3.9% increase in same-center net operating income and strong leasing activity. The company acquired six shopping centers and extended its revolving credit facility, positioning itself for continued growth and stability in the grocery-anchored retail sector.

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.