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Phillips Edison & Company (PECO)
NASDAQ:PECO
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Phillips Edison & Company
(NASDAQ:PECO)
70Outperform
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. S&P 500 (SPY)
Market Cap
$4.89B
Dividend Yield3.41%
Average Volume (3M)967.25K
Price to Earnings (P/E)63.1
Beta (1Y)0.41
Revenue Growth9.27%
EPS Growth19.51%
CountryUS
Employees300
SectorReal Estate
Sector Strength70
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.21
Shares Outstanding125,400,000
10 Day Avg. Volume781,251
30 Day Avg. Volume967,246
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
$38.43Price Target Upside7.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
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 primarily generates revenue through leasing space in its portfolio of grocery-anchored shopping centers. The company earns rental income from its tenants, which include grocery stores, discount retailers, and various service providers. Additionally, PECO benefits from long-term leases with built-in rent escalations, providing a stable and predictable revenue stream. The company may also engage in property acquisitions and dispositions to optimize its portfolio and increase returns. Furthermore, PECO's focus on essential retail tenants helps ensure consistent demand, contributing to its financial stability and growth.
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
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.78
Positive
Balance Sheet
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.65
Positive
Cash Flow
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.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| 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
Positive
35.89
Price Trends
35.35
Positive
35.83
Positive
36.29
Negative
Market Momentum
0.09
Negative
53.88
Neutral
47.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PECO, the sentiment is Positive. The current price of 35.89 is above the 20-day moving average (MA) of 35.46, above the 50-day MA of 35.35, and below the 200-day MA of 36.29, indicating a neutral trend. The MACD of 0.09 indicates Negative momentum. The RSI at 53.88 is Neutral, neither overbought nor oversold. The STOCH value of 47.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks
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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $2.69B | 25.02 | 7.62% | 5.24% | 6.20% | 0.28% | |
73 Outperform | $7.85B | 24.48 | 10.99% | 4.37% | 4.58% | 12.65% | |
70 Outperform | $4.89B | 63.12 | 3.09% | 3.41% | 9.27% | 19.51% | |
69 Neutral | $3.44B | 35.95 | 15.89% | 3.65% | 12.38% | -6.36% | |
65 Neutral | $4.96B | 366.56 | 0.81% | 4.65% | 4.37% | -75.82% | |
60 Neutral | $2.77B | 10.47 | 0.42% | 8531.49% | 6.23% | -16.09% | |
53 Neutral | $4.12B | ― | -4.79% | 4.28% | 4.88% | -66.88% |
* Real Estate Sector Average
Performance Comparison
PECO
Phillips Edison & Company
36.28
4.76
15.10%
MAC
Macerich
16.03
0.94
6.23%
SKT
Tanger
31.21
4.43
16.54%
KRG
Kite Realty Group
23.17
2.91
14.36%
BRX
Brixmor Property
26.58
5.02
23.28%
FCPT
Four Corners Property
27.35
3.55
14.92%
Phillips Edison & Company Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 2.19%|
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.
Spark’s Take on PECO Stock
According to Spark, TipRanks’ AI Analyst, PECO is a Outperform.
Phillips Edison & Company is well-positioned with strong operational and financial fundamentals, reflected in its solid financial performance and positive earnings call guidance. Technical indicators suggest moderate stability, while valuation metrics indicate high earnings multiples, posing a risk of overvaluation. Overall, the company’s strengths in leasing performance and strategic acquisitions drive a favorable outlook, but careful attention to cost management and external challenges is warranted.
To see Spark’s full report on PECO stock, click here.
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.
Spark’s Take on PECO Stock
According to Spark, TipRanks’ AI Analyst, PECO is a Outperform.
Phillips Edison & Company is well-positioned with strong operational and financial fundamentals, reflected in its solid financial performance and positive earnings call guidance. Technical indicators suggest moderate stability, while valuation metrics indicate high earnings multiples, posing a risk of overvaluation. Overall, the company’s strengths in leasing performance and strategic acquisitions drive a favorable outlook, but careful attention to cost management and external challenges is warranted.
To see Spark’s full report on PECO stock, click here.
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.