PECO earnings analysis
What we found in PECO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Phillips Edison delivered Q2 revenue of $189.6 million, up 6.7% year over year, with operating margin expanding to 28.8% from 24.2%; EPS increased to $0.33 from $0.10 but was supported by a $19.4 million disposal gain. Same-center NOI growth of 3.8% and lease spreads of 33.7% on new deals and 21.2% on renewals demonstrate healthy grocery-anchored retail fundamentals. Offsetting factors include a 6.0% rise in quarterly interest expense, debt growth to $2.478 billion, and retention declining to 89.6%. The filing did not provide explicit revenue or EPS guidance.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue rises 6.7% year over year
- Q2 revenue increased $11.9 million, or 6.7%, year over year to $189.6 million, driven by a $6.8 million same-center rental-income increase and $4.2 million from net acquisition activity. Revenue was down modestly from Q1's implied $190.7 million level.
- Operating margin expands year over year
- Operating income was $54.6 million, producing a 28.8% operating margin, versus $43.0 million and 24.2% a year earlier—an approximately 4.6-point margin expansion. Margin was lower than Q1 2026's implied 30.5%, as quarterly operating income fell from an implied $58.2 million.
- EPS and Core FFO per share improve
- Diluted EPS was $0.33, up from $0.10 in Q2 2025 and $0.24 in Q1 2026. Net income was aided by a $19.4 million gain on property disposals, while Core FFO per diluted share improved to $0.69 from $0.64.
- Same-center NOI grows 3.8%
- Same-Center NOI grew $4.4 million, or 3.8%, to $120.6 million. The company cited a $0.56 increase in average minimum rent per square foot and a 0.3% improvement in average occupancy as key rental-income drivers.
- Strong new and renewal lease spreads
- Leasing economics remained strong: Q2 new-lease comparable rent spreads were 33.7% and renewal comparable spreads were 21.2%. Inline leased occupancy improved to 95.5% from 94.8% year over year, while total occupancy was 97.3%.
- Operating cash flow rises; capex declines
- Six-month operating cash flow rose $16.9 million, or 10.8%, to $173.6 million. Cash capital expenditures were $50.5 million, equal to 29.1% of operating cash flow; this implies $123.1 million of operating cash flow after cash capex, before acquisitions and dispositions.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Higher debt drives interest-cost growth
- Interest expense increased $1.7 million, or 6.0%, year over year to $29.4 million in Q2, primarily because debt outstanding was higher. Gross debt obligations increased to $2.478 billion at June 30, 2026 from $2.402 billion at December 31, 2025.
- Retention rate declined 4.0 points
- Portfolio retention declined to 89.6% from 93.6% in Q2 2025, despite strong leasing spreads. Management notes that retailer rationalization, bankruptcies and strategic store closures can create near-term downtime.
- Reported earnings benefited from asset-sale gain
- Net income of $45.3 million included a $19.4 million property-disposal gain from two properties and one land parcel. This non-recurring gain accounted for a material portion of reported earnings growth versus Q2 2025 net income of $14.3 million.
- No risk-factor updates; tenant concentration remains
- Risk-factor disclosure was unchanged: Item 1A states there were no material changes from the 2025 Form 10-K. Nevertheless, tenant concentration remains notable, as the top 20 tenants represent 29.0% of annualized base rent.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.33
- Operating margin
- 28.8%
What they said about what is next.
The 10-Q contains no explicit company revenue or EPS guidance. Management said 2026 capital-improvement and redevelopment obligations are expected to be funded through operating cash flow, disposition proceeds and/or the revolving credit facility; in-process projects have an estimated $82.0 million total investment and underwritten incremental unlevered yields of 9%-12%.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 24, 2026
- Phillips Edison reported solid Q1 results with total revenues of $190,741,000, up $12,430,000 (7.0%) versus Q1 2025, driven by rental income growth and net acquisition activity. Same-center rental income rose $3,717,000…
- 10-Q · May 3, 2023
- Q1 2023 results showed revenue and EPS growth with margin expansion but meaningful investing outflows and higher net debt. Total revenues were $151,064,000 (up from $142,163,000 a year ago) and EPS was $0.14 (vs $0.09).…
- 10-Q · November 3, 2022
- Q3 2022 results show revenue growth and an operating-margin improvement but lower EPS and a sharp drawdown in cash. Total revenues were $145.7M (three months ended Sept. 30, 2022) vs $132.3M a year earlier; net income…
- 10-Q · August 5, 2022
- Phillips Edison & Company reported Q2 2022 revenue of $142.516M (up from $133.070M in Q2 2021) and net income attributable to stockholders of $13.528M (EPS $0.12 vs $0.06 prior-year quarter). Operating income expanded…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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