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Is Essex Property (ESS) Set to Beat This Earnings Season?
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Essex Property Trust, Inc. (ESS - Free Report) is slated to report second-quarter 2016 results on Jul 28, after the market closes.
This residential real estate investment trust (“REIT”) has a decent earnings surprise history. It reported a positive surprise of 1.52% in the prior quarter and has, in fact, beaten the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 2.21%.
For second-quarter 2016, the company expects core funds from operations (“FFO”) per share in the range of $2.61–$2.71. The Zacks Consensus Estimate for the same is currently pegged at $2.70.
Is the company poised for a winning quarter? Let’s see how things are shaping up prior to this announcement.
Essex has a strong property base and a sturdy balance sheet. The company’s substantial exposure to the West-Coast market offers ample scope to enhance its top line. This is because West Coast is home to all the leading technology companies that continue to carry on with large investments. As such, the region experiences solid growth in jobs and personal income.
Apart from this, demographic growth continues to be robust in the young adult age cohort, which has a higher propensity to rent. These are expected to drive demand for apartments in the company’s markets. However, rising supply remains a concern. Particularly, the supply deliveries in the San Francisco market are anticipated to restrict the growth tempo of the company and temper increase in rent and occupancies in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Essex Property will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.70. This leads to an Earnings ESP of 0.00% for Essex Property.
Zacks Rank: Essex Property currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes our surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter:
Mid-America Apartment Communities, Inc. (MAA - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2. The company will report results on Jul 27.
Taubman Centers, Inc. has an Earnings ESP of +7.22% and a Zacks Rank #3. The company will release results on Jul 28.
Regency Centers Corp. (REG - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3. The company will declare results on Aug 2.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All earnings per share numbers presented in this write up represent FFO per share.
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Is Essex Property (ESS) Set to Beat This Earnings Season?
Essex Property Trust, Inc. (ESS - Free Report) is slated to report second-quarter 2016 results on Jul 28, after the market closes.
This residential real estate investment trust (“REIT”) has a decent earnings surprise history. It reported a positive surprise of 1.52% in the prior quarter and has, in fact, beaten the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 2.21%.
For second-quarter 2016, the company expects core funds from operations (“FFO”) per share in the range of $2.61–$2.71. The Zacks Consensus Estimate for the same is currently pegged at $2.70.
Is the company poised for a winning quarter? Let’s see how things are shaping up prior to this announcement.
ESSEX PPTY TR Price and EPS Surprise
ESSEX PPTY TR Price and EPS Surprise | ESSEX PPTY TR Quote
Factors to Consider
Essex has a strong property base and a sturdy balance sheet. The company’s substantial exposure to the West-Coast market offers ample scope to enhance its top line. This is because West Coast is home to all the leading technology companies that continue to carry on with large investments. As such, the region experiences solid growth in jobs and personal income.
Apart from this, demographic growth continues to be robust in the young adult age cohort, which has a higher propensity to rent. These are expected to drive demand for apartments in the company’s markets. However, rising supply remains a concern. Particularly, the supply deliveries in the San Francisco market are anticipated to restrict the growth tempo of the company and temper increase in rent and occupancies in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Essex Property will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.70. This leads to an Earnings ESP of 0.00% for Essex Property.
Zacks Rank: Essex Property currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes our surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter:
Mid-America Apartment Communities, Inc. (MAA - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2. The company will report results on Jul 27.
Taubman Centers, Inc. has an Earnings ESP of +7.22% and a Zacks Rank #3. The company will release results on Jul 28.
Regency Centers Corp. (REG - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3. The company will declare results on Aug 2.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All earnings per share numbers presented in this write up represent FFO per share.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>