We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Equity Residential (EQR) in Q2 Earnings?
Read MoreHide Full Article
Equity Residential (EQR - Free Report) is slated to report second-quarter 2024 results after the closing bell on Jul 29. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Chicago, IL-based residential real estate investment trust (REIT) came up with a positive surprise of 2.20% in terms of normalized FFO per share. Results reflected decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also experienced the lowest quarterly same-store turnover in its history.
Over the trailing four quarters, Equity Residential met the Zacks Consensus Estimate on two occasions, surpassed once and missed on the other, the average positive surprise being 0.29%. The graph below depicts this surprise history:
As we approach the release of Equity Residential's second-quarter 2024 earnings report, it is important to examine how this residential REIT is likely to have performed amid the current market conditions.
US Apartment Market in Q2
Per RealPage data, the U.S. apartment market witnessed a surge in demand in the second quarter despite supply continuing to grab headlines.
This is evidenced by high absorption rates. Around 389,629 apartment units were absorbed on net over the past 12 months, with some 257,000 units being absorbed during the first two quarters of 2024. However, there were massive amounts of new supply, with 522,743 new market-rate apartment units delivered in the past 12 months.
With the narrow gap between demand and supply, national occupancy and rent growth rates have stabilized. Occupancy held steady for three straight months, remaining at 94.2% in June. Rents rose 0.2% in the year ending June, and the monthly effective rent change was north 0.4%. The average effective rent was $1,838.
Projections
Amid this surge in demand, Equity Residential’s quarterly performance is likely to have benefited from its efforts to diversify its portfolio across urban and suburban markets. EQR’s target residents are more affluent, experience lower unemployment and have favorable prospects ahead.
The company maintains a strong balance sheet and relies on technology, scale and organizational capabilities to drive growth. EQR’s solid financial position is expected to have supported its development activities during the upcoming quarter. However, the increasing supply is likely to have been a hindrance.
Per its second-quarter update, this residential REIT is experiencing sustained high demand across its market, which is pushing physical occupancy above expectations. Also, strong pricing power in its East Coast markets and continued recovery in its West Coast markets are tailwinds.
Equity Residential noted that in May (preliminary data as of May 24, 2024), physical occupancy reached 96.5%, up from 96.3% in the first quarter of 2024 and 95.8% in the fourth quarter of 2023. The blended rate for May is 2.9%, improving from 1.6% in the first quarter and 0.7% in the fourth quarter. Particularly, the new lease change was 0.4% in May against a decline of 2.2% in the first quarter of 2024 and a fall of 4.6% in the fourth quarter of 2023.
We expect second-quarter same-store revenues to increase 2.4% year over year, while same-store net operating income (NOI) is estimated to grow 1.4%. Physical occupancy is expected at 96%.
Currently, the Zacks Consensus Estimate for the company’s quarterly revenues stands at $734.1 million, which indicates a 2.4% increase year over year.
For the second quarter of 2024, Equity Residential projected normalized FFO per share in the band of 92-96 cents.
However, before the second-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly normalized FFO per share has remained unchanged in the past month at 96 cents. Nevertheless, it suggests year-over-year growth of 2.1%.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Equity Residential 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.
Equity Residential currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.00%. 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 two stocks from the residential REIT sector — Essex Property Trust, Inc. (ESS - Free Report) and American Homes 4 Rent (AMH - 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.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's in Store for Equity Residential (EQR) in Q2 Earnings?
Equity Residential (EQR - Free Report) is slated to report second-quarter 2024 results after the closing bell on Jul 29. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Chicago, IL-based residential real estate investment trust (REIT) came up with a positive surprise of 2.20% in terms of normalized FFO per share. Results reflected decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also experienced the lowest quarterly same-store turnover in its history.
Over the trailing four quarters, Equity Residential met the Zacks Consensus Estimate on two occasions, surpassed once and missed on the other, the average positive surprise being 0.29%. The graph below depicts this surprise history:
Equity Residential Price and EPS Surprise
Equity Residential price-eps-surprise | Equity Residential Quote
As we approach the release of Equity Residential's second-quarter 2024 earnings report, it is important to examine how this residential REIT is likely to have performed amid the current market conditions.
US Apartment Market in Q2
Per RealPage data, the U.S. apartment market witnessed a surge in demand in the second quarter despite supply continuing to grab headlines.
This is evidenced by high absorption rates. Around 389,629 apartment units were absorbed on net over the past 12 months, with some 257,000 units being absorbed during the first two quarters of 2024. However, there were massive amounts of new supply, with 522,743 new market-rate apartment units delivered in the past 12 months.
With the narrow gap between demand and supply, national occupancy and rent growth rates have stabilized. Occupancy held steady for three straight months, remaining at 94.2% in June. Rents rose 0.2% in the year ending June, and the monthly effective rent change was north 0.4%. The average effective rent was $1,838.
Projections
Amid this surge in demand, Equity Residential’s quarterly performance is likely to have benefited from its efforts to diversify its portfolio across urban and suburban markets. EQR’s target residents are more affluent, experience lower unemployment and have favorable prospects ahead.
The company maintains a strong balance sheet and relies on technology, scale and organizational capabilities to drive growth. EQR’s solid financial position is expected to have supported its development activities during the upcoming quarter. However, the increasing supply is likely to have been a hindrance.
Per its second-quarter update, this residential REIT is experiencing sustained high demand across its market, which is pushing physical occupancy above expectations. Also, strong pricing power in its East Coast markets and continued recovery in its West Coast markets are tailwinds.
Equity Residential noted that in May (preliminary data as of May 24, 2024), physical occupancy reached 96.5%, up from 96.3% in the first quarter of 2024 and 95.8% in the fourth quarter of 2023. The blended rate for May is 2.9%, improving from 1.6% in the first quarter and 0.7% in the fourth quarter. Particularly, the new lease change was 0.4% in May against a decline of 2.2% in the first quarter of 2024 and a fall of 4.6% in the fourth quarter of 2023.
We expect second-quarter same-store revenues to increase 2.4% year over year, while same-store net operating income (NOI) is estimated to grow 1.4%. Physical occupancy is expected at 96%.
Currently, the Zacks Consensus Estimate for the company’s quarterly revenues stands at $734.1 million, which indicates a 2.4% increase year over year.
For the second quarter of 2024, Equity Residential projected normalized FFO per share in the band of 92-96 cents.
However, before the second-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly normalized FFO per share has remained unchanged in the past month at 96 cents. Nevertheless, it suggests year-over-year growth of 2.1%.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Equity Residential 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.
Equity Residential currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.00%. 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 two stocks from the residential REIT sector — Essex Property Trust, Inc. (ESS - Free Report) and American Homes 4 Rent (AMH - 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.
Essex Property Trust is scheduled to report quarterly numbers on Jul 30. ESS has an Earnings ESP of +1.00% and a Zacks Rank of 2 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Homes 4 Rent is slated to report quarterly numbers on Aug 1. AMH has an Earnings ESP of +2.33% and carries a Zacks Rank of 2 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.