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EGP

EastGroup Properties NYSE:EGP Stock Report

Last Price

US$144.34

Market Cap

US$6.3b

7D

-4.7%

1Y

-14.6%

Updated

02 Oct, 2022

Data

Company Financials +
EGP fundamental analysis
Snowflake Score
Valuation5/6
Future Growth2/6
Past Performance4/6
Financial Health2/6
Dividends5/6

EGP Stock Overview

EastGroup Properties, Inc. (NYSE: EGP), an S&P MidCap 400 company, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina.

EastGroup Properties, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for EastGroup Properties
Historical stock prices
Current Share PriceUS$144.34
52 Week HighUS$229.84
52 Week LowUS$139.08
Beta0.88
1 Month Change-11.83%
3 Month Change-8.08%
1 Year Change-14.60%
3 Year Change14.45%
5 Year Change61.26%
Change since IPO949.75%

Recent News & Updates

Aug 26

Eastgroup Properties raises quarterly dividend by 13.6%

Eastgroup Properties (NYSE:EGP) declared $1.25/share quarterly dividend, 13.6% increase from prior dividend of $1.10. Forward yield 2.95% Payable Oct. 14; for shareholders of record Sept. 30; ex-div Sept. 29. See EGP Dividend Scorecard, Yield Chart, & Dividend Growth.

Aug 18

Amazon Sneezed, EastGroup Properties Caught A Cold

EastGroup Properties joined its industrial REIT peer set in reporting impressive 2Q earnings. EGP’s tenant base is deep. AMZN, the largest tenant, represents only 2.8% of revenues. Despite market reactions/perceptions, EGP operations have no correlation with AMZN. On April 26th, EastGroup Properties, Inc. (EGP) reported stellar 1Q22 operating results. The metrics were truly astounding: Funds from Operations of $1.68 Per Share for First Quarter 2022 Compared to $1.45 Per Share for First Quarter 2021, an Increase of 15.9% Same Property Net Operating Income for the Same Property Pool Excluding Income from Lease Terminations Increased 8.5% on a Cash Basis and 7.4% on a Straight-Line Basis for First Quarter 2022 Compared to the Same Period in 2021 Rental Rates on New and Renewal Leases Increased an Average of 33.5% on a Straight-Line Basis Somehow, though, EGP’s celebration of success was cut short less than 48 hours later when Amazon (AMZN) reported an unexpected loss of $7.56/share and implied they had leased/bought/built too much industrial/logistics/distribution space. The Amazon fallout didn’t just affect EGP but hit the whole industrial REIT sector. Like EastGroup, Prologis (PLD), Terreno Realty (TRNO), First Industrial (FR), Rexford Industrial (REXR) and other industrial REITs reported record earnings and double digit rent roll-ups, but AMZN’s report/comments quickly knocked 25% off their share prices. S&P Capital IQ An Inappropriate Market Response As it turns out, Amazon is EastGroup’s largest tenant, but even at 2.20% of EGP’s total rental revenues, an unlikely AMZN lease default would go unnoticed in EGP’s 98%+ leased, high demand portfolio. More to the point, Amazon’s revenues are growing, they are on the hook for all of their leases, and more than 90% of their leases with EGP expire after 2033! S&P Capital IQ Even though Amazon’s prospects have no negative impact on EGP’s revenues, EastGroup management has been forced to address the AMZN fallout on many fronts. In negotiating a seller tax-advantaged OP Unit acquisition in the Bay Area, they successfully navigated their share price decline with a wary, but understanding, counterparty. Similarly, to capitalize their robust development pipeline, they pivoted from using their previously advantageous common share ATM and chose, instead, a series of fixed-rate debt offerings as opposed to issuing shares at dilutive prices. EGP’s July 27 2Q22 earnings release was again impressive: *Funds from Operations of $1.72 Per Share for Second Quarter 2022 Compared to $1.47 Per Share for Second Quarter 2021, an Increase of 17.0%. *Same Property Net Operating Income for the Same Property Pool Excluding Income from Lease Terminations Increased 9.5% on a Cash Basis and 7.7% on a Straight-Line Basis for Second Quarter 2022 Compared to the Same Period in 2021. *Rental Rates on New and Renewal Leases Increased an Average of 37.2% on a Straight-Line Basis. In the report, EGP also revised their 2022 earnings guidance higher, and the impact of the Amazon fallout was conspicuous in their modeling.

Jul 30

EastGroup Properties: Rocket On The Launching Pad

Earlier this year, I identified EastGroup Properties as one of 12 REITs likely to outperform in 2022. That prediction hasn't panned out so far. I also predicted Industrial REITs would outperform the REIT average this year. That prediction isn't doing well either, but the year is only half over. EastGroup Properties just reported an earnings beat, and raised guidance. This article examines growth, balance sheet, dividend, and valuation metrics for this healthy industrial REIT. Earlier this year, I identified EastGroup Properties, Inc. (EGP) as one of 12 REITs (real estate investment trusts) likely to outperform in 2022. That prediction hasn't panned out so far. As of July 26 closing, EGP has returned (-26.29)%, while the average REIT as represented by the Vanguard Real Estate ETF (VNQ) has returned (-17.34)%. Data by YCharts I also predicted Industrial REITs would outperform the REIT average this year. That prediction isn't doing well, either. According to leading REIT sector analyst Hoya Capital Income Builder, Industrial REITs have returned (-21.85)% this year, compared to the Equity REIT average of (-17.82)%. Hoya Capital Income Builder However, the year is only half over, so there is still time for things to change. Meanwhile, EastGroup Properties is in great shape, and just reported an earnings beat, and raised guidance. Meet the company EastGroup Properties Founded in 1969, and headquartered in Jackson, Mississippi, EastGroup Properties owns and operates multi-tenant, shallow bay warehouse facilities totaling just over 50 msf (million square feet), in 25 primary and secondary markets spread across 11 states. At $7.1 billion, the company sits squarely in the market cap sweet spot, the ideal size for total return. The company has built 47% of their current portfolio themselves, rather than acquiring. Company website Harvard MBA Marshall Loeb has been the President and CEO since 2016, following 25 prior years of experience in real estate. Of course, real estate is all about location. EastGroup focuses on: Multi-tenant distribution properties In urban areas In major Sunbelt markets Infill sites in supply-constrained submarkets In choice last-mile e-commerce locations Around transportation facilities in high-growth areas. Over 80% of the company's square footage and 85% of ABR (annual base rent) are concentrated in four Sunbelt states: State % of EGP Square footage % of EGP ABR Texas 36% 34% Florida 25% 24% California 15% 21% Arizona 7% 7% Other 17% 14% EastGroup also gravitates toward smaller facilities of 60,000 to 125,000 square feet, for which the new supply pipeline is smaller. Company investor presentation EGP seeks customers that need to stay in their current location for business reasons, and typically need 15K to 70K square feet. Their historic lease retention rate is right at 70%, and rose to 76% in Q2 2022, according to the newest 10-Q. Fully 82% of their customers lease less than 100,000 square feet. Because of this focus, the tenant roster is highly diverse, with the top 10 tenants accounting for only 9.4% of ABR, according to the company's July investor presentation. Their strategy on new development is a little different than most. They prefer to build value-add facilities in markets where they already have acquired space, often creating a park-like setting. Company investor presentation Quarterly results hot off the presses The company just reported Q2 2022 earnings. Here are the highlights: Revenues of $118.5 million, up 19% YoY (year-over-year). Net income of $46.2 million, up 67% YoY. Net income attributable to shareholders of $1.09, up 58% YoY. EBITDA of $96.2 million, up 38% YoY. FFO per share $1.72, up 17% YoY. Same-property NOI of $73.8 million, up 9.5% YoY. Same-property occupancy of 98.2%. Portfolio 99.1% leased and 98.5% occupied as of June 30. New lease spreads of 35.8% and renewal leasing spreads of 37.8%, for an eye-popping blended rate of 37.2%, bringing 2022 blended spreads to 35.2%. Net cash from operations of $176.2 million, up 25% YoY. Also during Q2, EGP acquired Tulloch Corporation, and its 14 properties in San Francisco and Sacramento, totaling approximately 1.7 msf, along with 10.5 acres of land. The company also: completed 3 development and value-add projects totaling 842,000 square feet, already 99% leased, with a projected stabilized yield of 6.2%, acquired another 116.8 acres of land for $35 million, acquired 229,000 square feet of value-add properties for $47 Million, and started construction on three new development projects (522,000 square feet) with projected total costs of $70 million. The development and value-add pipeline now includes 28 projects in 15 cities, totaling 4.6 msf as of June 30, for a projected total investment of $558 million. EastGroup also sold a 42,000 square foot property in Houston for $13 million, realizing a gain of $11 million. Overall, the company is expanding rapidly. The company also raised funds from operations ("FFO") per share guidance from $6.75 at the midpoint to $6.90. Growth metrics Here are the 4-year growth figures for FFO, TCFO (total cash from operations), and market cap. Metric 2017 2018 2019 2020 2021* CAGR FFO (millions) $145.1 $165.9 $186.9 $211.6 $239.6 -- FFO Growth % -- 14.3 12.7 13.2 13.2 13.4% FFO per share $4.26 $4.67 $4.98 $5.38 $6.09 -- FFO per share Growth % -- 9.6 6.6 8.0 13.2 9.4% TCFO (millions) $155.0 $164.7 $195.9 $196.3 $321.6 -- TCFO Growth % -- 6.3 18.9 1.0 63.8 20.0% Market Cap (billions) $3.04 $3.34 $5.16 $5.46 $8.84 -- Market Cap Growth % -- 9.9 54.5 5.8 61.9 58.1% Source: TD Ameritrade, CompaniesMarketCap.com, and author calculations EGP's growth rate in FFO and TCFO has been nothing short of spectacular, and as quarterly results show, that growth continues. Together with the company's liquidity ratio of 2.06, this company qualifies as a bona fide FROG (fast rate of growth). Thanks to this year's sell-off, market cap has fallen to $7.1 billion, but it remains in the market cap sweet spot. Market cap growth CAGR for the past 4.5 years has moderated to a still-sizzling 23.0%. Meanwhile, here is how the stock price has done over the past 3 twelve-month periods, compared to the REIT average as represented by the Vanguard Real Estate ETF. Metric 2019 2020 2021 2022 3-yr CAGR EGP share price July 27 $120.90 $124.07 $176.11 $164.12 -- EGP share price Gain % -- 2.6 41.9 (-6.8) 10.72% VNQ share price July 27 $88.29 $78.94 $106.50 $95.34 -- VNQ share price Gain % -- (-10.6) 34.9 (-10.5) 1.51% Source: MarketWatch.com and author calculations EGP has outperformed the VNQ in each of the past 3 years, rewarding investors with an average gain of 10.72% per annum, compared to the VNQ's mere 1.51%. Despite the selloff thus far this year, EGP's returns for investors have historically been in the double digits for many years. Company investor presentation The selloff thus far this year has created an attractive entry point for initiating or enhancing a position. Balance sheet metrics EGP has a very sturdy balance sheet, with an exceptionally low debt ratio and Debt/EBITDA. Company Liquidity Ratio Debt Ratio Debt/EBITDA Bond Rating EGP 2.06 14% 5.0 Baa2 Source: Hoya Capital Income Builder, TD Ameritrade, and author calculations EGP reported $5.56 million in cash and cash equivalents on hand as of June 30, over against $1.62 billion in debt, only $58,000 of which comes due this year. Debt maturities are pretty evenly spaced from 2023 - 2026, varying from $115 million in 2023 to $145 million in 2025. Even assuming no growth in earnings, servicing this level of debt is well within the company's capabilities. EastGroup Properties Debt Maturity Schedule (Company 10-Q for Q2 2022) Dividend metrics EGP has raised its dividend every year for the past 10 years, with no dividend cuts in 29 years. And we're not talking about small increases, like many of the so-called dividend aristocrats. The 3-year dividend growth rate is a stellar 13.6% and the 5-year is 10.1%. The Dividend Safety rating is an attractive C+, striking a nearly ideal balance between paying cash to the investor and retaining money to grow the business. Company Div. Yield 3-yr Div. Growth Div. Score Payout Div. Safety EGP 2.68% 13.6% 3.46 64% C+

Shareholder Returns

EGPUS REITsUS Market
7D-4.7%-4.1%-2.5%
1Y-14.6%-20.4%-23.2%

Return vs Industry: EGP exceeded the US REITs industry which returned -20.4% over the past year.

Return vs Market: EGP exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is EGP's price volatile compared to industry and market?
EGP volatility
EGP Average Weekly Movement3.4%
REITs Industry Average Movement4.2%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: EGP is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: EGP's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196982Marshall Loebhttps://www.eastgroup.net

EastGroup Properties, Inc. (NYSE: EGP), an S&P MidCap 400 company, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 15,000 to 70,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets.

EastGroup Properties, Inc. Fundamentals Summary

How do EastGroup Properties's earnings and revenue compare to its market cap?
EGP fundamental statistics
Market CapUS$6.27b
Earnings (TTM)US$212.38m
Revenue (TTM)US$443.50m

29.5x

P/E Ratio

14.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
EGP income statement (TTM)
RevenueUS$443.50m
Cost of RevenueUS$122.81m
Gross ProfitUS$320.69m
Other ExpensesUS$108.31m
EarningsUS$212.38m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 25, 2022

Earnings per share (EPS)4.89
Gross Margin72.31%
Net Profit Margin47.89%
Debt/Equity Ratio81.9%

How did EGP perform over the long term?

See historical performance and comparison

Dividends

3.5%

Current Dividend Yield

59%

Payout Ratio