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Will Federal Realty (FRT) Q2 Earnings Disappoint Investors?
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Federal Realty Investment Trust (FRT - Free Report) is set to report second-quarter 2016 results after the market closes on Aug 4. Last quarter, this retail real estate investment trust (“REIT”) had delivered a positive surprise of 0.73%.
Federal Realty beat estimates in three out of four trailing quarters, with a positive average surprise of 0.95%. The Zacks Consensus Estimate for second-quarter funds from operations (“FFO”) is currently $1.41 per share.
Let’s see how things are shaping up for this announcement.
Federal Realty’s portfolio of premium retail assets – mainly situated in the major coastal markets from Washington, D.C. to Boston and San Francisco and Los Angeles – coupled with a diverse tenant base, positions it well for decent growth.
However, in the second quarter, the company is anticipated to have experienced anchor rollover drag. Moreover, expenses are expected to rise with investments in the company’s platform. Finally, same store net operating income is likely to moderate in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Federal Realty 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: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of $1.38 and the Zacks Consensus Estimate of $1.41, is -2.13%.
Zacks Rank: Federal Realty currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP 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.
Stocks to Consider
Here are a few 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:
Ashford Hospitality Prime, Inc. has an Earnings ESP of +6.15% and a Zacks Rank #3. The company will report results on Aug 3.
ARMOUR Residential REIT, Inc. (ARR - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3. The company is expected to release results on Aug 3.
EPR Properties (EPR - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #3. The company will declare results on Aug 3.
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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Will Federal Realty (FRT) Q2 Earnings Disappoint Investors?
Federal Realty Investment Trust (FRT - Free Report) is set to report second-quarter 2016 results after the market closes on Aug 4. Last quarter, this retail real estate investment trust (“REIT”) had delivered a positive surprise of 0.73%.
Federal Realty beat estimates in three out of four trailing quarters, with a positive average surprise of 0.95%. The Zacks Consensus Estimate for second-quarter funds from operations (“FFO”) is currently $1.41 per share.
Let’s see how things are shaping up for this announcement.
FED RLTY INV Price and EPS Surprise
FED RLTY INV Price and EPS Surprise | FED RLTY INV Quote
Factors to Consider
Federal Realty’s portfolio of premium retail assets – mainly situated in the major coastal markets from Washington, D.C. to Boston and San Francisco and Los Angeles – coupled with a diverse tenant base, positions it well for decent growth.
However, in the second quarter, the company is anticipated to have experienced anchor rollover drag. Moreover, expenses are expected to rise with investments in the company’s platform. Finally, same store net operating income is likely to moderate in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Federal Realty 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: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of $1.38 and the Zacks Consensus Estimate of $1.41, is -2.13%.
Zacks Rank: Federal Realty currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP 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.
Stocks to Consider
Here are a few 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:
Ashford Hospitality Prime, Inc. has an Earnings ESP of +6.15% and a Zacks Rank #3. The company will report results on Aug 3.
ARMOUR Residential REIT, Inc. (ARR - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3. The company is expected to release results on Aug 3.
EPR Properties (EPR - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #3. The company will declare results on Aug 3.
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 >>