UDR Inc. (UDR Quick QuoteUDR - Free Report) is slated to report fourth-quarter and full-year 2022 results on Feb 6 after market close. Results are likely to reflect growth in revenues and funds from operations (FFO) per share from the respective year-ago reported figures.

In the last reported quarter, this Denver, CO-based residential real estate investment trust (REIT) delivered a surprise of 1.69% in terms of FFO as adjusted per share. The quarterly results reflected better-than-anticipated revenues, driven by robust operating trends and past accretive external growth investments.

In the last four quarters, UDR’s FFO as adjusted per share surpassed the Zacks Consensus Estimate on one occasion and met the same on the other three, the average surprise being 0.42%. The graph below depicts the surprise history of the company:

United Dominion Realty Trust, Inc. Price and EPS Surprise

United Dominion Realty Trust, Inc. price-eps-surprise | United Dominion Realty Trust, Inc. Quote

Let’s see how things have shaped up before this announcement.

Factors to Consider

UDR has a geographically diverse portfolio and a superior product mix of A/B quality properties in the urban and suburban markets. Moreover, UDR’s portfolio comprises properties throughout the United States, including the coastal and Sunbelt locations. This strategy of maintaining a diversified portfolio across various geographies and price points limits volatility and concentration risks and helps UDR generate steady operating cash flows.

However, for the U.S. apartment market, low consumer confidence and high inflation have taken a toll, with net demand for apartments ending in negative territory for calendar 2022, per a report from the real estate technology and analytics firm RealPage. Despite solid job growth and wage gains, there was weak demand for all types of housing.

Amid this soft demand, new-lease apartment rents fell in December for the fourth consecutive month, declining another 0.4%. The cumulative rent drop was around 1.6% since September. Also, the national apartment vacancy surged from a record seasonal low of 2.5% one year ago to 5.0% in December 2022.

This demand softness is likely to have impacted UDR as well. In its November 2022 Investor Presentation, for the fourth quarter, management expected 6-7% year-over-year effective blended lease rate growth.

Also, management projected 96.7-96.9% of weighted average occupancy, with the same for October being 96.8%. Consequently, management projected 11.25-12.25% year-over-year straight-line same-store revenue growth.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $399.8 million. This indicates a 15.2% year-over-year rise.

UDR enjoys a decent balance sheet position and banks on technological moves and process enhancements to fuel growth. This residential REIT focuses on enhancing cost control through its Next Generation Operating Platform.

Such efforts to find efficiencies throughout its operating platform are likely to have boosted workforce productivity and residents’ experiences in the fourth quarter. The adoption of technology is also anticipated to have bolstered UDR’s margin during the period under review.

In its third-quarter earnings release, UDR projected its fourth-quarter 2022 FFO as adjusted per share in the range of 60-62 cents.

Before the fourth-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO as adjusted per share has remained unchanged at 61 cents in the past month. This suggests year-over-year growth of 12.96%.

For 2022, UDR projected FFO as adjusted per share in the range of $2.32-$2.34. This projection is based on the company’s expectation of 10.75-11.25% year-over-year growth in same-store cash revenues and 13.25-14% growth in same-store NOI.

For the full year, the Zacks Consensus Estimate for FFO as adjusted per share is pegged at $2.33. The figure indicates a 15.9% increase year over year on 17.9% year-over-year growth in revenues to $1.52 billion.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

UDR currently carries a Zacks Rank of 3 and has an Earnings ESP of -1.82%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are three stocks from the broader REIT sector — First Industrial Realty Trust, Inc. (FR Quick QuoteFR - Free Report) , STAG Industrial, Inc. (STAG Quick QuoteSTAG - Free Report) and Gladstone Commercial Corporation (GOOD Quick QuoteGOOD - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

First Industrial Realty Trust is slated to report quarterly numbers on Feb 8. FR has an Earnings ESP of +7.65% and carries a Zacks Rank of 3 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

STAG Industrial, scheduled to report quarterly numbers on Feb 15, has an Earnings ESP of +2.89% and carries a Zacks Rank of 2.

Gladstone Commercial Corporation is slated to report quarterly numbers on Feb 22. GOOD has an Earnings ESP of +5.13% and sports a Zacks Rank of 1 presently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.