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National Retail Properties (NNN)
NYSE:NNN
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National Retail Properties
(NYSE:NNN)
79Outperform
Positive Factors
Financial Performance
The company's quarterly AFFO results are in-line with expectations, and the full-year guidance is above consensus.
Liquidity Position
The company is in a good liquidity position, with approximately $200 million of cash and $1.2 billion available on their revolving credit facility.
Property Investments
During the quarter, the company invested $216.8 million in property investments at an initial cash yield of 7.6%.
Negative Factors
Acquisition Challenges
Slow acquisition volume and slightly compressed cap rates could challenge NNN REIT’s ability to maintain favorable acquisition spreads.
Earnings Growth
Resolution of known tenant credit issues and an anticipated drop in lease term revenues cloud earnings visibility and growth is likely modest.
Tenant Issues
The company continues to face significant challenges with several problematic tenants.
National Retail Properties (NNN) vs. S&P 500 (SPY)
Market Cap
$7.63B
Dividend Yield5.68%
Average Volume (3M)1.45M
Price to Earnings (P/E)18.8
Beta (1Y)0.56
Revenue Growth4.97%
EPS Growth-0.26%
CountryUS
Employees83
SectorReal Estate
Sector Strength74
IndustryREIT - Retail
Share Statistics
EPS (TTM)2.15
Shares Outstanding188,033,600
10 Day Avg. Volume1,524,773
30 Day Avg. Volume1,454,609
Financial Highlights & Ratios
PEG Ratio13.17
Price to Book (P/B)N/A
Price to Sales (P/S)8.94
Price to Cash Flow (P/CF)16.50
P/FCF Ratio11.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.70Price Target Upside16.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
National Retail Properties Business Overview & Revenue Model
Company DescriptionNational Retail Properties (NNN) is a publicly-traded real estate investment trust (REIT) that specializes in acquiring, owning, and managing high-quality retail properties subject to long-term, net leases with established tenants. The company's portfolio is diversified across various retail industries, providing a stable and growing income stream. NNN's strategic focus is on properties that offer strong market positioning and are operated by creditworthy tenants, ensuring long-term occupancy and income stability.
How the Company Makes MoneyNational Retail Properties generates revenue primarily through the ownership and leasing of retail properties under long-term, net lease agreements. In these agreements, tenants are responsible for paying the majority of the operating expenses, such as property taxes, insurance, and maintenance, in addition to their rent. This model provides NNN with a stable and predictable income stream, minimizing direct operational costs. The company's revenue is further bolstered by strategically acquiring properties with high-performing tenants, which can enhance occupancy rates and rental income. Additionally, NNN may engage in property sales or acquisitions that can generate capital gains or strategic portfolio realignment, further contributing to its earnings.
National Retail Properties Financial Statement Overview
Summary
National Retail Properties exhibits strong financial health with consistent revenue growth, improved profitability margins, and effective debt management. The company shows robust cash flow generation, but ongoing investments and liability management are crucial for maintaining financial stability.Income Statement
National Retail Properties has demonstrated a consistent revenue growth trend with Total Revenue increasing from $670.5 million in 2019 to $869.3 million in 2024. The company maintains strong profitability with a robust Gross Profit Margin (%). Net Profit Margin and EBIT Margin have shown improvements over the years, indicating operational efficiency.85
Very Positive
Balance Sheet
The company has a solid equity base with Stockholders' Equity increasing steadily. A notable reduction in Total Debt from $4.36 billion to $0 in 2024 indicates improved financial leverage. However, the Equity Ratio could be stronger, and the potential risks of high liability relative to assets need monitoring.78
Positive
Cash Flow
Operating Cash Flow has shown a steady increase, supporting strong Free Cash Flow levels. The Free Cash Flow to Net Income Ratio is strong, indicating good cash generation relative to earnings. However, the Investing Cash Flow indicates significant outflows, which require careful management to ensure continued liquidity.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 869.27M | 828.11M | 773.05M | 726.41M | 660.68M | Gross Profit |
| 836.95M | 799.73M | 746.77M | 698.02M | 632.32M | EBIT |
| 577.87M | 555.10M | 482.54M | 449.10M | 374.49M | EBITDA |
| 830.53M | 793.73M | 706.37M | 654.32M | 571.11M | Net Income Common Stockholders |
| 396.83M | 392.34M | 186.71M | 152.24M | 99.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 8.73M | 1.19M | 2.50M | 171.32M | 267.24M | Total Assets |
| 8.87B | 8.66B | 8.15B | 7.75B | 7.64B | Total Debt |
| 4.37B | 4.36B | 3.92B | 3.75B | 3.22B | Net Debt |
| 4.37B | 4.36B | 3.91B | 3.58B | 2.95B | Total Liabilities |
| 4.51B | 4.50B | 4.02B | 3.85B | 3.32B | Stockholders Equity |
| 4.36B | 4.16B | 4.12B | 3.90B | 4.32B |
| Cash Flow | Free Cash Flow | |||
| 635.50M | 612.41M | 578.36M | 568.42M | 450.19M | Operating Cash Flow |
| 635.50M | 612.41M | 578.36M | 568.42M | 450.19M | Investing Cash Flow |
| -424.34M | -680.66M | -777.63M | -432.18M | -142.82M | Financing Cash Flow |
| -207.26M | 66.63M | 34.73M | -232.16M | -41.25M |
National Retail Properties Technical Analysis
Negative
38.49
Price Trends
41.19
Negative
41.04
Negative
42.87
Negative
Market Momentum
0.22
Positive
57.77
Neutral
79.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NNN, the sentiment is Negative. The current price of 38.49 is below the 20-day moving average (MA) of 41.79, below the 50-day MA of 41.19, and below the 200-day MA of 42.87, indicating a bearish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 57.77 is Neutral, neither overbought nor oversold. The STOCH value of 79.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NNN.
National Retail Properties Risk Analysis
National Retail Properties disclosed 36 risk factors in its most recent earnings report. National Retail Properties 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
National Retail Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $49.18B | 56.32 | 2.40% | 5.68% | 29.49% | -22.38% | |
79 Outperform | $7.63B | 18.84 | 9.32% | 5.68% | 4.97% | -0.26% | |
72 Outperform | $7.70B | 26.04 | 9.58% | 4.92% | 6.21% | 22.32% | |
72 Outperform | $12.95B | 28.30 | 5.38% | 5.94% | -9.09% | -36.58% | |
71 Outperform | $12.56B | 32.55 | 5.82% | 4.00% | 10.15% | 3.36% | |
63 Neutral | $13.13B | 34.97 | 4.03% | 5.07% | 14.51% | -45.53% | |
61 Neutral | $4.43B | 16.22 | -3.23% | 11.37% | 6.25% | -21.19% |
* Real Estate Sector Average
Performance Comparison
NNN
National Retail Properties
38.49
-1.92
-4.75%
KIM
Kimco Realty
18.70
0.58
3.20%
O
Realty Income
52.27
0.84
1.63%
REG
Regency Centers
67.54
9.65
16.67%
WPC
W. P. Carey Inc.
56.12
1.74
3.20%
FRT
Federal Realty
86.57
-12.13
-12.29%
National Retail Properties Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: 1.13% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a company in a stable position with solid performance in acquisitions, dividend growth, and maintaining a high occupancy rate. However, challenges with tenant bankruptcies and flat quarterly growth metrics were noted. The sentiment is balanced with optimistic guidance and a strong balance sheet offsetting the tenant-related issues.Highlights
Steady Core FFO and AFFO Growth
NNN delivered 1.8% core FFO growth for 2024 and a 2.8% increase in AFFO per share, in line with expectations and at the top of the previous guidance range.
High Occupancy Rate
The year concluded with a strong 98.5% occupancy rate, reflecting successful management despite challenges.
Successful Acquisitions and Dispositions
NNN invested $217 million in 31 new properties with an initial cap rate of 7.6% and sold nearly $150 million at a 7.3% cap, optimizing the portfolio through strategic acquisitions and dispositions.
Strong Balance Sheet and Liquidity
NNN ended the year with no outstanding amounts on a $1.2 billion bank line, maintaining a healthy leverage position with a net debt to gross book assets ratio of 40.5%.
Dividend Increase Streak
The company achieved 35 consecutive years of annual dividend increases, emphasizing shareholder value.
Lowlights
Tenant Bankruptcy Challenges
Badcock Furniture and Frisch's faced significant issues, leading to lease rejections and a temporary decline in occupancy.
Flat Quarterly Core FFO and AFFO
Quarterly core FFO and AFFO results of $0.82 per share were flat compared to the previous year, indicating stagnant growth for the quarter.
Credit Loss Concerns
Guidance for 2025 includes 60 basis points of rent loss, slightly below historical levels but still a concern given recent tenant bankruptcies.
Company Guidance
In the NNN REIT, Inc. Fourth Quarter 2024 Earnings Call, several key metrics were highlighted, reflecting their strategic performance in 2024 and guiding expectations for 2025. NNN REIT reported a 1.8% growth in core FFO for 2024 and a strong acquisition volume of over $550 million, maintaining an occupancy rate of 98.5%. Dispositions were executed at a cap rate 40 basis points lower than acquisition yields, contributing to a robust portfolio. The company anticipates between $500 million to $600 million in acquisitions and $80 million to $120 million in dispositions for 2025. The weighted average debt maturity stands at 12.1 years, and the AFFO dividend payout ratio for 2024 was 68.2%. Core FFO per share is forecasted to be between $3.33 and $3.38 for 2025, with AFFO per share expected within $3.39 to $3.44. The guidance reflects strategic goals such as maintaining long-term value and a top-tier payout ratio, alongside a disciplined acquisition and disposition strategy.National Retail Properties Corporate Events
Executive/Board Changes
National Retail Properties Announces CFO Transition Plan
Neutral
Jan 10, 2025
NNN REIT, Inc. announced the retirement of Kevin B. Habicht, their Executive Vice President, Chief Financial Officer, and Board member, effective March 31, 2025. Habicht will assist the company with transitional matters post-retirement. Vincent H. Chao has been appointed as Habicht’s successor, bringing extensive public company and investment banking experience. The company outlined a comprehensive severance plan for its executives, highlighting the terms of equity award vesting and severance payments in various termination scenarios.
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.