Contributed by: Zacks Market Commentaries (http://www.zacks.com/) -

Simon Property Group, Inc. (SPG) continues to deliver better-than-expected results on solid rent growth and improving occupancy rates.

And management recently raised its guidance for 2012, prompting analysts to revise their estimates higher. It is a Zacks #1 Rank (Strong Buy) stock.

The company also raised its quarterly dividend for the third straight quarter. It currently yields 2.6%.

Company Description

Simon Property Group is the largest real estate company in the world. It owns or has an interest in 337 retail real estate properties in North America and Asia comprising 244 million square feet.

The company is headquartered in Indianapolis, Indiana and has a market cap of $47 billion.

First Quarter Results

Simon Property Group delivered impressive first quarter results on April 27. Funds from operation (FFO) came in at $1.82, beating the Zacks Consensus Estimate by 9%. It was a 13% increase over the same quarter last year.

Revenue rose 10% to $1.119 billion, ahead of the consensus of $1.072 billion. The average rent per square foot rose 4.4% to $39.87 while the occupancy rate simultaneously improved 60 basis points to 93.6%.

Operating income increased 14% as the company leveraged its fixed expenses.

Guidance Raised

Given Simon Property Group's strong first quarter results and management's outlook for the remainder of 2012, the company raised its FFO guidance to a range of $7.50-$7.60.

This prompted analysts to revise the estimates higher too, sending the stock to a Zacks #1 Rank (Strong Buy) stock. As you can see in the Price & Consensus chart below, consensus estimates have made a steady march higher over the last several months:

The Zacks Consensus Estimate for 2012 is now $7.59, within guidance, and representing 10% growth over 2011 FFO. The 2013 consensus estimate is currently $8.04, corresponding with 6% growth.

Dividend Raised

Simon Property Group also recently announced another dividend increase, from $0.95 to $1.00 per share. This marked the company's third consecutive quarterly increase.

It currently yields a solid 2.6%.

Valuation

Shares of SPG trade at 20x 12-month forward FFO, above the industry median of 15x. But this premium seems justified considering the company's above average growth.

The Bottom Line

With strong earnings momentum, solid growth projections and a 2.6% yield, Simon Property Group offers investors a lot to like.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

 
SIMON PROPERTY (SPG): Free Stock Analysis Report
 
SIMON PROPERTY (SPG): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

About Zacks Market Commentaries (http://www.zacks.com/) Zacks Market Commentaries