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What's in Store for Welltower (WELL) This Earnings Season?
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Welltower, Inc. (WELL - Free Report) is scheduled to report fourth-quarter and 2021 results on Feb 15, after market close. While the quarterly revenues are expected to reflect year-over-year growth, the funds from operations (FFO) per share might display a decline.
In the last reported quarter, this Toledo, OH-based healthcare real estate investment trust (REIT) witnessed normalized FFO per share of 80 cents, in line with the Zacks Consensus Estimate.
Over the preceding four quarters, Welltower’s bottom line beat the Zacks Consensus Estimate on three occasions and met the same in the remaining quarter, the average surprise being 4.59%. The graph below depicts this surprise history:
Let’s see how things have shaped up prior to the fourth-quarter earnings release.
Factors at Play
Going by its business update, Welltower seniors housing operating (“SHO”) portfolio experienced a recovery in occupancy in the fourth quarter. The SHO portfolio spot occupancy expanded 70 basis points (bps) in the fourth quarter of 2021. Moreover, average occupancy growth modestly advanced the guidance of 140bps.
During the fourth quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, the Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided Welltower’s performance, with move-in activity being impressive during the quarter. Also, the lead generation remaining ahead of the pre-COVID levels in the fourth quarter acted as a tailwind.
During the fourth quarter, Welltower closed $1.4 billion of pro rata investments with an expected initial yield of 5% and an unlevered internal rate of return in the high-single digit range. Since October 2020 till the end of fourth quarter, WELL has either completed or entered into definitive agreements with an expected initial yield of 6.1% and an expected three-year yield of 8.2%.
The Zacks Consensus Estimate for the fourth-quarter resident fees and services is pegged at $859 million, indicating a 2.8% increase from the previous quarter’s $836 million. The consensus estimate for quarterly revenues from the SHO portfolio is pinned at $851 million, calling for a 4.8% increase from the prior-year quarter’s actuals. Revenues from the Seniors Housing Triple Net portfolio are expected to be $200 million, indicating a 36.1% improvement from the year-earlier quarter’s reading.
Total revenues for the fourth quarter are pegged at $1.26 billion, suggesting a rise of 12% from the prior-year period’s reported number.
In November 2021, this healthcare REIT behemoth announced partnership with Kisco Senior. The alliance will bring together Kisco's next-generation senior housing and care model, and Welltower's unparalleled data analytics platform.
In the same month, Welltower announced its agreements to acquire four distinct seniors housing portfolios. These moves remain strategic fit for Welltower, given the significant cash flow growth scope from the recovery in seniors housing and portfolio reinvestment.
However, expenses flared up amid the surge in COVID-19 cases due to increased pandemic-related testing, PPE expenses and a rise in labor costs. This might have acted as a deterrent for the quarter to be reported.
Analysts seem pessimistic about WELL’s prospects before the fourth-quarter earnings release. Prior to the third-quarter earnings release, the Zacks Consensus Estimate for the fourth-quarter FFO per share has been unchanged at 81 cents over the past month, implying a decline of 3.6% from the year-earlier quarter’s reported figure.
Welltower projects fourth-quarter 2021 normalized FFO per share to be78-83 cents. For fourth-quarter 2021, the average pro rata occupancy is expected to sequentially expand140 bps.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally downward to $3.19 over the past month. However, the figure indicates a 1.38% increase from the prior-year on revenues of $4.67 billion.
What Our Quantitative Model Says:
Welltower does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some stocks worth considering from the REIT sector are Host Hotels & Resorts (HST - Free Report) , Life Storage and National Storage Affiliates Trust (NSA - Free Report) . Our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Host Hotels & Resorts, slated to release fourth-quarter earnings on Feb 16, has an Earnings ESP of +61.38% and a Zacks Rank #3 at present.
Life Storage, scheduled to report quarterly figures on Feb 24, has an Earnings ESP of +0.66% and a Zacks Rank of 3, currently.
National Storage Affiliates, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +1.06% and a Zacks Rank #2(Buy) at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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What's in Store for Welltower (WELL) This Earnings Season?
Welltower, Inc. (WELL - Free Report) is scheduled to report fourth-quarter and 2021 results on Feb 15, after market close. While the quarterly revenues are expected to reflect year-over-year growth, the funds from operations (FFO) per share might display a decline.
In the last reported quarter, this Toledo, OH-based healthcare real estate investment trust (REIT) witnessed normalized FFO per share of 80 cents, in line with the Zacks Consensus Estimate.
Over the preceding four quarters, Welltower’s bottom line beat the Zacks Consensus Estimate on three occasions and met the same in the remaining quarter, the average surprise being 4.59%. The graph below depicts this surprise history:
Welltower Inc. Price and EPS Surprise
Welltower Inc. price-eps-surprise | Welltower Inc. Quote
Let’s see how things have shaped up prior to the fourth-quarter earnings release.
Factors at Play
Going by its business update, Welltower seniors housing operating (“SHO”) portfolio experienced a recovery in occupancy in the fourth quarter. The SHO portfolio spot occupancy expanded 70 basis points (bps) in the fourth quarter of 2021. Moreover, average occupancy growth modestly advanced the guidance of 140bps.
During the fourth quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, the Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided Welltower’s performance, with move-in activity being impressive during the quarter. Also, the lead generation remaining ahead of the pre-COVID levels in the fourth quarter acted as a tailwind.
During the fourth quarter, Welltower closed $1.4 billion of pro rata investments with an expected initial yield of 5% and an unlevered internal rate of return in the high-single digit range. Since October 2020 till the end of fourth quarter, WELL has either completed or entered into definitive agreements with an expected initial yield of 6.1% and an expected three-year yield of 8.2%.
The Zacks Consensus Estimate for the fourth-quarter resident fees and services is pegged at $859 million, indicating a 2.8% increase from the previous quarter’s $836 million. The consensus estimate for quarterly revenues from the SHO portfolio is pinned at $851 million, calling for a 4.8% increase from the prior-year quarter’s actuals. Revenues from the Seniors Housing Triple Net portfolio are expected to be $200 million, indicating a 36.1% improvement from the year-earlier quarter’s reading.
Total revenues for the fourth quarter are pegged at $1.26 billion, suggesting a rise of 12% from the prior-year period’s reported number.
In November 2021, this healthcare REIT behemoth announced partnership with Kisco Senior. The alliance will bring together Kisco's next-generation senior housing and care model, and Welltower's unparalleled data analytics platform.
In the same month, Welltower announced its agreements to acquire four distinct seniors housing portfolios. These moves remain strategic fit for Welltower, given the significant cash flow growth scope from the recovery in seniors housing and portfolio reinvestment.
However, expenses flared up amid the surge in COVID-19 cases due to increased pandemic-related testing, PPE expenses and a rise in labor costs. This might have acted as a deterrent for the quarter to be reported.
Analysts seem pessimistic about WELL’s prospects before the fourth-quarter earnings release. Prior to the third-quarter earnings release, the Zacks Consensus Estimate for the fourth-quarter FFO per share has been unchanged at 81 cents over the past month, implying a decline of 3.6% from the year-earlier quarter’s reported figure.
Welltower projects fourth-quarter 2021 normalized FFO per share to be78-83 cents. For fourth-quarter 2021, the average pro rata occupancy is expected to sequentially expand140 bps.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally downward to $3.19 over the past month. However, the figure indicates a 1.38% increase from the prior-year on revenues of $4.67 billion.
What Our Quantitative Model Says:
Welltower does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Welltower currently has a Zacks Rank of 3 and an Earnings ESP of -0.34%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Some stocks worth considering from the REIT sector are Host Hotels & Resorts (HST - Free Report) , Life Storage and National Storage Affiliates Trust (NSA - Free Report) . Our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Host Hotels & Resorts, slated to release fourth-quarter earnings on Feb 16, has an Earnings ESP of +61.38% and a Zacks Rank #3 at present.
Life Storage, scheduled to report quarterly figures on Feb 24, has an Earnings ESP of +0.66% and a Zacks Rank of 3, currently.
National Storage Affiliates, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +1.06% and a Zacks Rank #2(Buy) at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.