1-Star Stocks Poised to Plunge: Kimco Realty?

Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, retail REIT Kimco Realty (NYSE: KIM  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Kimco's business and see what CAPS investors are saying about the stock right now.

Kimco facts

Headquarters (Founded)

New Hyde Park, N.Y. (1960)

Market Cap

$6 billion

Industry

Retail REIT

Trailing-12-Month Revenue

$876 million

Management

CEO David Henry
CFO Glenn Cohen

Return on Equity (Average, Past 3 Years)

4.7%

Cash/Debt

$137 million / $4.5 billion

1-Year Return

67%

Competitors

Simon Property Group (NYSE: SPG  )
Weingarten Realty Investors (NYSE: WRI  )

Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.

On CAPS, 46% of the 351 members who have rated Kimco believe the stock will underperform the S&P 500 going forward. These bears include All-Stars Beorn10 and DarthMaul09, both of whom are ranked in the top 10% of our community.

Earlier this month, Beorn10 explained why Kimco's retail exposure may come back to haunt investors:

I'm betting that retailers will try to limit their costs, possibly modifying their lease agreements or shopping for less expensive locations. Poor employment and a probable drop in unemployment benefits will likely lead to a further decrease in revenue for retailers and a downstream negative effect on commercial property.

While our community remains down on retail REITs, in general, Kimco seems like a particularly bearish situation. Kimco's operating margins and return on equity are lower than those of rivals Simon Property and Weingarten, and its shares currently trade at a forward P/E premium to Simon Property. With consumer spending continuing to face heavy headwinds, CAPS All-Stars like DarthMaul09 think Kimco isn't exactly the safest place to put your money:

The future financial health of retailers appears to be key to the long-term profits of companies like [Kimco]. With the earning season likely to be viewed as good, I would expect a short term rise in the market, but with persistently high unemployment and unemployment benefits being cut, the personal austerity measures will only intensify, hurting retailers and eventually commercial real estate. If this plays out, the stock price will begin to fall towards the end of 2010 or the beginning of 2011.

What do you think about Kimco, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1245935, ~/Articles/ArticleHandler.aspx, 4/19/2014 10:33:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement