Can Prologis Keep the Winning Streak Alive in Q4 Despite Challenges?

Prologis PLD is slated to report its fourth-quarter 2025 results on Jan. 21, before the opening bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.In the last reported quarter, this leading industrial REIT reported a surprise of 3.47% in terms of core funds from operations (FFO) per share. The quarterly results reflected a rise in rental revenues and healthy leasing activity. However, high interest expenses were an undermining factor.Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on all occasions, with the average beat being 4.66%. This is depicted in the graph below: Prologis, Inc. Price and EPS Surprise Prologis, Inc. price-eps-surprise | Prologis, Inc. Quote U.S. Industrial Real Estate Market in Q4Per a Cushman & Wakefield report, in the fourth quarter of 2025, the U.S. industrial real estate sector remained resilient amid headwinds, with net absorption reaching 54.5 million square feet (msf), a 29% increase from the prior-year quarter. Notably, 53% of U.S. industrial markets posted annual absorption gains in 2025.The U.S. industrial vacancy rate held steady for the third consecutive quarter at 7.1%, supported by stronger demand, slower speculative supply and moderating sublease space availability. In the fourth quarter of 2025, 53% of U.S. markets witnessed vacancy rates remaining flat or declining sequentially. Most importantly, the vacancy rate increased 45 basis points (bps) year over year, the smallest annual increase in three years.In the fourth quarter of 2025, the U.S. industrial asking rent growth slowed to 1.5% year over year to $10.18 per square foot, the lowest growth rate since the first quarter of 2020. As demand softened and vacancy increased in 2025, rents fell in the fourth quarter by 3.8% in the Northeast and 4.5% in the West.After declining for much of the past three years, the under-construction pipeline rose for the second straight quarter to 268.1 msf after bottoming at 264 msf midyear. One-third of U.S. markets reported higher development levels in the fourth quarter.Factors to Note Ahead of PLD’s Q4 Earnings ReleasePrologis continues to benefit from its strategic portfolio location in some of the world’s busiest distribution markets. Its emphasis on targeted acquisitions and developments is expected to support its fourth-quarter results and position it to benefit from emerging opportunities despite broader market challenges.Prologis’ scale and cost advantages are likely to have played a key role in supporting its growth strategy. Backed by a resilient balance sheet and efficient capital access, Prologis remains financially well-positioned. During the review period, the company is likely to have demonstrated strong liquidity and stability, reinforcing its leadership position.However, high interest expenses are a concern for Prologis. We expect interest expenses to have remained elevated during the fourth quarter.Projections for PLDThe Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $2.10 billion, which indicates a 8.6% year-over-year increase.Prologis’ activities during the to-be-reported quarter were not adequate for gaining analysts’ confidence. The Zacks Consensus Estimate for fourth-quarter FFO per share has been revised a cent downward to $1.44 in the past two months. It implies a 4% decrease year over year.For the full-year 2025, Prologis expects its core FFO per share to be in the range of $5.78-$5.81. The company expects average occupancy in the band of 94.75-95.25% and cash same-store NOI (Prologis share) within 4.75% to 5.25%.For the full year, the Zacks Consensus Estimate for FFO per share has risen 2 cents to $5.80 in the past three months. The figure indicates a 4.3% increase year over year, on revenues of $8.17 billion.What Our Quantitative Model Predicts for PLDOur proven model does not conclusively predict a surprise in terms of FFO per share for Prologis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.Prologis currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Stocks That Warrant a LookHere are two stocks from the broader REIT sector, BXP, Inc. BXP and EastGroup Properties EGP, you may want to consider, as our model shows that these have the right combination of elements to report an FFO beat this quarter.BXP is slated to report quarterly numbers on Jan. 27. BXP has an Earnings ESP of +0.28% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.EGP is slated to report quarterly numbers on Feb. 4. EGP has an Earnings ESP of +0.55% and a Zacks Rank of 3 at present.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prologis, Inc. (PLD): Free Stock Analysis Report BXP, Inc. (BXP): Free Stock Analysis Report EastGroup Properties, Inc. (EGP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks