The Zacks Analyst Blog Highlights: Kimco Realty, Target, Nordstrom, Wal-Mart Stores and Chicago Bridge & Iron

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Jul 15, 2013, 09:30 ET

CHICAGO, July 15, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Kimco Realty Corp. (NYSE:KIM-Free Report), Target Corp. (NYSE:TGT-Free Report), Nordstrom Inc. (NYSE:JWN-Free Report), Wal-Mart Stores Inc. (NYSE:WMT-Free Report) and Chicago Bridge & Iron (NYSE:CBI-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Kimco Reveals 2Q Transaction Update

Kimco Realty Corp. (NYSE:KIM-Free Report) – a retail real estate investment trust (REIT) – recently unveiled its second-quarter 2013 transaction activities. During the quarter, the company's investments totaled to around $172 million, while the proceeds from divestitures amounted to about $307 million.

Acquisitions

During the quarter, Kimco bought 2 former joint venture (JV) properties namely 'The Marketplace at Factoria' and 'Canyon Square Plaza'. The assets spanning 607,000 square feet were acquired for $146.6 million.

Wash.-based shopping center, The Marketplace at Factoria is situated in the prosperous Seattle community of Bellevue. The property, which is 94% leased, boasts a cluster of retail giants such as Target Corp. (NYSE:TGT-Free Report), Nordstrom Inc. (NYSE:JWN-Free Report) and Wal-Mart Stores Inc. (NYSE:WMT-Free Report). On the other hand, Calif.-based Canyon Square Plaza is in the Los Angeles-Long Beach-Santa Ana MSA (Metropolitan Statistical Area). The property is a grocery-anchored center and occupied by a North American grocery company, Albertsons.

Moreover, during the quarter, Kimco increased its stake in 3 existing institutional JVs – Kimco-UBS ('KUBS'), Kimco Income Fund I ('KIF I') and Kimco Income REIT ('KIR') – for $133.3 million.

Divestitures

During second-quarter 2013, Kimco disposed 11 U.S. shopping centers for $71.6 million, of which the company's share was $36.9 million. Since the initiation of its asset-recycling program in 2010, Kimco has sold 121 properties spanning 11.9 million square feet, for $907.2 million. Of this, Kimco's share was $551.4 million.

In addition, the company sold 9 assets of its Mexican shopping center portfolio to a local real estate operator for 3.35 billion Mexican pesos ($274 million), of which company's share was $93 million.

Non-Retail Portfolio Update

In tune with the monetization of non-retail assets, Kimco reduced its non-retail investment portfolio by $177.9 million (46%) during second-quarter 2013. Notably, the non-retail portfolio is presently at its lowest level, since 2010, and represents below 2% of gross assets.

Moreover, during the second quarter, Kimco and its JV partner – American Industries – decided to sell their interests in several trusts that hold Mexican industrial properties portfolio. The assets proposed for sale to Terrafina – a Mexican REIT – were valued at about $600 million.

Our Viewpoint

We remain impressed with Kimco's strategic move of restructuring the overall portfolio through divestiture of non-strategic assets and acquisition of high-quality properties. Moreover, acquiring interests in existing JVs go well with the company's core operating strategy. This augurs well for future earnings as the properties are positioned mostly in high-income, high-growth areas. Moreover, the high credit tenant retention limits the downside risks and provides a long-term steady source of rental income for the company.

Kimco is scheduled to release second-quarter 2013 results on Jul 30, after the closing bell. The Zacks Consensus Estimate for second-quarter funds from operations (FFO) is currently pegged at 33 cents per share.

Kimco has an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of 0.00% for the second quarter. This, along with its Zacks Rank #3 (Hold), reduces the chances of a positive earnings surprise.

Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.

Chicago Bridge & Iron: Strong Buy

On July 11, Zacks Investment Research upgradedChicago Bridge & Iron (NYSE:CBI-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Strong order activity coupled with rising demand for energy infrastructure, especially in the liquefied natural gas (LNG), gas processing and oil sands markets across the world, are expected to lead to a positive earnings surprise in the upcoming quarter.

The surge in shale gas revolution in North America and the recent approval from the U.S. Department of Energy (DOE) for the export of LNG has created a strong opportunity and thereby a good market for Chicago Bridge & Iron. The company is benefiting from this potential in LNG market and has been receiving a steady inflow of orders from the world's largest refineries and oil & gas facilities. The company's order pipeline primarily comprises front-end engineering and design (FEED) analysis of key projects.

In addition, CBI is already an established niche player in the LNG market, supported by its ability to participate in multiple stages of development and strong base for investments. Given the potential surge in the manufacturing and export of LNG worldwide, CBI expects strong demand specifically for LNG/low temperature storage systems (petrochemicals), an area where Chicago Bridge & Iron plans to aggressively capture market share.

On May 6, 2013, CBI reported first quarter fiscal 2013 results, with earnings per share of 82 cents, down 20.4% from the Zacks Consensus Estimate of $1.03. However, earnings were up 36.7% year over year driven by strong project activities and robust backlog during the reported quarter.

Revenues for the quarter jumped 87.4% year over year to $2.3 billion, driven by the rising demand for energy infrastructure.

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