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Scentre Group Ltd reports: Should you buy the stock?

Shopping centre giant Scentre Group Ltd (ASX: SCG) has strung together 21 consecutive months of positive specialty sales growth in Australia and delivered a solid update for the three-months ended 31 March, 2015.

During the latest quarter, the company said that Australian specialty sales had increased by 5.8% and 4% over the last 12 months, while they had grown by 5.9% in New Zealand as the retail sales environment continued to improve across the Tasman. Meanwhile, comparable specialty store rent also grew 2.4% over the last year.

Scentre Group is also working towards a number of key initiatives which it believes will enhance its customers’ experience. While it has commenced $505 million of developments in 2015, it is also rolling out Wi-Fi networks across its shopping centres and launching custom-designed SmartScreens to enhance its in-house advertising network which could ultimately improve overall sales growth.

The company reconfirmed its prior guidance on Funds from Operations, stating that it would grow by 3.5% to 22.5 cents per share in the 2015 calendar year, while distributions are expected to rise to 20.9 cents per share.

Should you buy?

Scentre Group has generated strong returns since it was created as part of the Westfield restructure last year. Since its inception to the ASX, the stock has risen almost 17% and many analysts believe it could continue climbing even higher.

While Scentre Group appears to be a reasonable prospect for investors, its counterpart Westfield Corp Ltd (ASX: WFD) is arguably a superior alternative. The company, which runs Westfield malls in the US and the UK, has strong growth prospects and will benefit as the Australian dollar weakens against the US greenback. The stock is currently trading at $9.23, down from a high of $10.66, and seems a decent buy today.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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