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Welltower (WELL) Up 8.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Welltower (WELL - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Welltower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Welltower’s fourth-quarter 2021 normalized FFO per share of 83 cents exceeded the Zacks Consensus Estimate of 81 cents. However, the reported figure marginally fell short of the year-ago quarter’s 84 cents.
The company generated revenues of $1.31 billion, outpacing the Zacks Consensus Estimate of $1.26 billion. Further, the top line increased 16.7% year over year.
Welltower SHO portfolio is seeing recovery in occupancy. However, Welltower noted that in the fourth quarter, expenses for the SHO portfolio were considerably higher than expectations due to higher pandemic-related expenses, including personal protective equipment and testing costs, and raised labor expenses.
Concurrent with the fourth-quarter earnings release, Welltower and Reuben Brothers announced a long-term strategic partnership formation in tandem with the Reuben Brothers' acquisition of Avery Healthcare, which is one of Welltower's largest operating partners and the company's largest partner in the United Kingdom. This 50/50 joint venture partnership is expected to generate substantial future growth opportunities through the development of next-generation seniors housing properties. Also, Avery is poised to grow and capitalize on the high demand of the aging population in the United Kingdom.
Quarter in Detail
During the fourth quarter, property operating expenses were $785.2 million, reflecting an increase of 26.5% year over year.
SHO portfolio spot occupancy increased roughly 70 bps during the quarter to 77.7%. Average pro rata occupancy growth topped the guidance of 140 bps.
SHO’s same store revenues were up 4.8% year over year. Moreover, during the fourth quarter, within the SHO portfolio, the company achieved same store REVPOR (average revenues generated per occupied room per month) growth of 3.4% compared with 2.2% in the third quarter.
Welltower's pro-rata gross investments in the fourth quarter totaled $1.5 billion. This included $1.4 billion in acquisitions and loan funding and $142 million in development funding. It converted five development projects for a total pro-rata investment amount of $189 million. Welltower also accomplished pro rata property dispositions and loan payoffs of $200 million during the quarter.
Balance Sheet Position
Welltower exited 2021 with $269.3 million of cash and cash equivalents, down from $1.55 billion recorded at the 2020 end.
Along with available borrowings under its line of credit, as of Dec 31, 2021, the company had $4.0 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
Guidance
Welltower projects first-quarter 2022 normalized FFO per share in the range of 79-84 cents.
The company’s first-quarter guidance assumes average blended same store net operating income growth of 7.0%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Welltower has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Welltower (WELL) Up 8.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Welltower (WELL - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Welltower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Welltower Q4 FFO Beats Estimates Despite Higher Expenses
Welltower’s fourth-quarter 2021 normalized FFO per share of 83 cents exceeded the Zacks Consensus Estimate of 81 cents. However, the reported figure marginally fell short of the year-ago quarter’s 84 cents.
The company generated revenues of $1.31 billion, outpacing the Zacks Consensus Estimate of $1.26 billion. Further, the top line increased 16.7% year over year.
Welltower SHO portfolio is seeing recovery in occupancy. However, Welltower noted that in the fourth quarter, expenses for the SHO portfolio were considerably higher than expectations due to higher pandemic-related expenses, including personal protective equipment and testing costs, and raised labor expenses.
Concurrent with the fourth-quarter earnings release, Welltower and Reuben Brothers announced a long-term strategic partnership formation in tandem with the Reuben Brothers' acquisition of Avery Healthcare, which is one of Welltower's largest operating partners and the company's largest partner in the United Kingdom. This 50/50 joint venture partnership is expected to generate substantial future growth opportunities through the development of next-generation seniors housing properties. Also, Avery is poised to grow and capitalize on the high demand of the aging population in the United Kingdom.
Quarter in Detail
During the fourth quarter, property operating expenses were $785.2 million, reflecting an increase of 26.5% year over year.
SHO portfolio spot occupancy increased roughly 70 bps during the quarter to 77.7%. Average pro rata occupancy growth topped the guidance of 140 bps.
SHO’s same store revenues were up 4.8% year over year. Moreover, during the fourth quarter, within the SHO portfolio, the company achieved same store REVPOR (average revenues generated per occupied room per month) growth of 3.4% compared with 2.2% in the third quarter.
Welltower's pro-rata gross investments in the fourth quarter totaled $1.5 billion. This included $1.4 billion in acquisitions and loan funding and $142 million in development funding. It converted five development projects for a total pro-rata investment amount of $189 million. Welltower also accomplished pro rata property dispositions and loan payoffs of $200 million during the quarter.
Balance Sheet Position
Welltower exited 2021 with $269.3 million of cash and cash equivalents, down from $1.55 billion recorded at the 2020 end.
Along with available borrowings under its line of credit, as of Dec 31, 2021, the company had $4.0 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
Guidance
Welltower projects first-quarter 2022 normalized FFO per share in the range of 79-84 cents.
The company’s first-quarter guidance assumes average blended same store net operating income growth of 7.0%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Welltower has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.