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Why Is Realty Income Corp. (O) Up 1.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Realty Income Corp. (O - Free Report) . Shares have added about 1.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Realty Income Corp. 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.
Realty Income Q3 AFFO and Revenues Surpass Estimates
Realty Income’s third-quarter 2022 adjusted FFO (AFFO) per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure also compared favorably with the prior-year quarter’s 91 cents.
Results reflected better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Total revenues for the reported quarter came in at $837.3 million, exceeding the Zacks Consensus Estimate of $828.5 million. The top line also jumped 70.9% year over year.
Realty Income noted that for the third quarter of 2022, it collected around 85% of the contractual rent across its theater portfolio. This is because, Cineworld Group plc, the parent entity of the entities that lease certain of Realty Income’s theater properties, including Regal Cinemas, began Chapter 11 reorganization proceedings in September 2022.
As is customary, it was not yet required to pay the rent for September. However, for October 2022, the company collected all the contractual rent across its theater portfolio.
Quarter in Detail
In the third quarter of 2022, same-store rental revenues from 9,645 properties under lease increased 1.0% to $612.3 million from the prior-year period.
The portfolio occupancy of 98.9% as of Sep 30, 2022, remained unchanged sequentially but increased 10 bps year over year. The company achieved a rent recapture rate of 108.5% on re-leasing activity.
During the reported quarter, O invested $1.87 billion in 375 properties and properties under development or expansion, including $613.0 million in Europe.
Around 27% of rental revenues reaped from acquisitions during the September-end quarter came in from investment grade-rated tenants and their subsidiaries or affiliated companies.
The company sold 34 properties, generating net proceeds of $142.2 million, with a gain on sales of $42.6 million, during the July-September period.
Balance Sheet
Realty Income exited the third quarter with $2.5 billion of liquidity. This comprised cash and cash equivalents of $187.7 million and $2.3 billion of availability under its revolving credit facility after deducting $723.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.2X, while the fixed charge coverage ratio was 5.5.
In the third quarter, the company raised $0.7 billion from the sale of its common stock at a weighted average price of $73.05 per share, mainly through its At-The-Market Program.
Guidance
Realty Income revised its 2022 guidance and now projects the normalized FFO per share in the band of $3.99-$4.07 compared with the $3.92-$4.05 band projected earlier.
The AFFO per share is expected in the range of $3.87-$3.94 compared with the $3.84-$3.97 range guided earlier.
Management’s full-year 2022 projections assume same-store rent growth of 2.0% and occupancy of more than 98%, both unchanged from the prior guidance. Also, the full-year acquisition volume is projected to be more than $6 billion, the same as guided earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, Realty Income Corp. has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Realty Income Corp. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Realty Income Corp. belongs to the Zacks REIT and Equity Trust - Retail industry. Another stock from the same industry, SITE CENTERS CORP. (SITC - Free Report) , has gained 11.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
SITE CENTERS CORP. reported revenues of $136.19 million in the last reported quarter, representing a year-over-year change of +12.5%. EPS of $0.30 for the same period compares with $0.29 a year ago.
For the current quarter, SITE CENTERS CORP. is expected to post earnings of $0.28 per share, indicating a change of -6.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
SITE CENTERS CORP. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Realty Income Corp. (O) Up 1.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Realty Income Corp. (O - Free Report) . Shares have added about 1.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Realty Income Corp. 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.
Realty Income Q3 AFFO and Revenues Surpass Estimates
Realty Income’s third-quarter 2022 adjusted FFO (AFFO) per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure also compared favorably with the prior-year quarter’s 91 cents.
Results reflected better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Total revenues for the reported quarter came in at $837.3 million, exceeding the Zacks Consensus Estimate of $828.5 million. The top line also jumped 70.9% year over year.
Realty Income noted that for the third quarter of 2022, it collected around 85% of the contractual rent across its theater portfolio. This is because, Cineworld Group plc, the parent entity of the entities that lease certain of Realty Income’s theater properties, including Regal Cinemas, began Chapter 11 reorganization proceedings in September 2022.
As is customary, it was not yet required to pay the rent for September. However, for October 2022, the company collected all the contractual rent across its theater portfolio.
Quarter in Detail
In the third quarter of 2022, same-store rental revenues from 9,645 properties under lease increased 1.0% to $612.3 million from the prior-year period.
The portfolio occupancy of 98.9% as of Sep 30, 2022, remained unchanged sequentially but increased 10 bps year over year. The company achieved a rent recapture rate of 108.5% on re-leasing activity.
During the reported quarter, O invested $1.87 billion in 375 properties and properties under development or expansion, including $613.0 million in Europe.
Around 27% of rental revenues reaped from acquisitions during the September-end quarter came in from investment grade-rated tenants and their subsidiaries or affiliated companies.
The company sold 34 properties, generating net proceeds of $142.2 million, with a gain on sales of $42.6 million, during the July-September period.
Balance Sheet
Realty Income exited the third quarter with $2.5 billion of liquidity. This comprised cash and cash equivalents of $187.7 million and $2.3 billion of availability under its revolving credit facility after deducting $723.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.2X, while the fixed charge coverage ratio was 5.5.
In the third quarter, the company raised $0.7 billion from the sale of its common stock at a weighted average price of $73.05 per share, mainly through its At-The-Market Program.
Guidance
Realty Income revised its 2022 guidance and now projects the normalized FFO per share in the band of $3.99-$4.07 compared with the $3.92-$4.05 band projected earlier.
The AFFO per share is expected in the range of $3.87-$3.94 compared with the $3.84-$3.97 range guided earlier.
Management’s full-year 2022 projections assume same-store rent growth of 2.0% and occupancy of more than 98%, both unchanged from the prior guidance. Also, the full-year acquisition volume is projected to be more than $6 billion, the same as guided earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, Realty Income Corp. has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Realty Income Corp. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Realty Income Corp. belongs to the Zacks REIT and Equity Trust - Retail industry. Another stock from the same industry, SITE CENTERS CORP. (SITC - Free Report) , has gained 11.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
SITE CENTERS CORP. reported revenues of $136.19 million in the last reported quarter, representing a year-over-year change of +12.5%. EPS of $0.30 for the same period compares with $0.29 a year ago.
For the current quarter, SITE CENTERS CORP. is expected to post earnings of $0.28 per share, indicating a change of -6.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
SITE CENTERS CORP. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.