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Key Factors to Know Ahead of Arbor Realty's (ABR) Q2 Earnings
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Arbor Realty Trust (ABR - Free Report) is expected to report second-quarter 2024 results in early August. The company is likely to have registered year-over-year declines in interest income and earnings.
In the last reported quarter, this New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets, posted distributable earnings of 47 cents. The figure surpassed the Zacks Consensus Estimate of 44 cents. Net servicing revenues were $321.29 million in the quarter.
Over the trailing four quarters, Arbor Realty surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 12.2%. The graph below depicts this surprise history:
The mREIT sector witnessed a favorable scenario in the second quarter, owing to the lower volatility in the fixed-income markets. This is likely to have driven mortgage spreads tighter, thus increasing ABR’s book value per share.
Muted new Agency loan originations in the quarter under discussion are expected to have impacted the company’s fee-based servicing portfolio. Yet, a high interest rate regime might have offered some support. The consensus mark for ABR's net servicing revenues is pegged at $32.73 million, indicating a 3.8% sequential rise.
Arbor Realty’s loan portfolio has significant exposure to multi-family assets. Persistent weakness in the multifamily asset market because of the challenging rate environment is expected to have marred the company’s performance in the to-be-reported quarter.
In the second quarter, mortgage rates dropped marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained lower than in the prior quarter due to home price appreciation.
Yet, supported by lower mortgage rates, there is a likelihood of a modest improvement in refinancing activities. Amid this, a significant portion of ABR’s (mortgage-backed securities) MBS holdings are anticipated to have witnessed elevated levels of constant prepayment rate (CPR). This is likely to have resulted in a modest uptick in (mortgage servicing rights) MSR amortization in the quarter under review. The consensus estimate for ABR’s revenues from mortgage servicing rights is pinned at $14.15 million, suggesting a 38.7% sequential rise.
Primary-secondary spreads, which represent the difference between borrower mortgage rates and the yield on newly issued agency MBS were modestly lower in the second quarter compared with prior quarter levels. This is likely to have lowered the gain on sale margins. The Zacks Consensus Estimate for the gain on sales revenues is pegged at $15.54 million, down 6.8% from the prior quarter’s reported figure.
The Federal Reserve kept the interest rates steady during the quarter at a 23-year high of 5.25-5.5%. Given the high interest rates, the company is expected to have seen higher funding costs. This is likely to have affected net interest income growth in the to-be-reported quarter. The consensus estimate for interest income is $301 million, suggesting a 6.3% year-over-year decline.
Lastly, there was a lack of any solid catalyst that could instill optimism before the second-quarter earnings release. The Zacks Consensus Estimate for ABR's quarterly earnings has remained unchanged at 44 cents over the past month, suggesting a year-over-year decline of 22.8%.
Here is What Our Quantitative Model Predicts
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is 0.00%.
Starwood Property Trust, Inc. (STWD - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 48 cents per share, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Invesco Mortgage Capital Inc. (IVR - Free Report) is slated to post quarterly results on Aug 8.
In the past month, the Zacks Consensus Estimate for IVR’s quarterly earnings has been unchanged at 75 cents per share, indicating a decline of 48.3% from the prior-year quarter’s reported figure.
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Key Factors to Know Ahead of Arbor Realty's (ABR) Q2 Earnings
Arbor Realty Trust (ABR - Free Report) is expected to report second-quarter 2024 results in early August. The company is likely to have registered year-over-year declines in interest income and earnings.
In the last reported quarter, this New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets, posted distributable earnings of 47 cents. The figure surpassed the Zacks Consensus Estimate of 44 cents. Net servicing revenues were $321.29 million in the quarter.
Over the trailing four quarters, Arbor Realty surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 12.2%. The graph below depicts this surprise history:
Arbor Realty Trust Price and EPS Surprise
Arbor Realty Trust price-eps-surprise | Arbor Realty Trust Quote
Factors at Play
The mREIT sector witnessed a favorable scenario in the second quarter, owing to the lower volatility in the fixed-income markets. This is likely to have driven mortgage spreads tighter, thus increasing ABR’s book value per share.
Muted new Agency loan originations in the quarter under discussion are expected to have impacted the company’s fee-based servicing portfolio. Yet, a high interest rate regime might have offered some support. The consensus mark for ABR's net servicing revenues is pegged at $32.73 million, indicating a 3.8% sequential rise.
Arbor Realty’s loan portfolio has significant exposure to multi-family assets. Persistent weakness in the multifamily asset market because of the challenging rate environment is expected to have marred the company’s performance in the to-be-reported quarter.
In the second quarter, mortgage rates dropped marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained lower than in the prior quarter due to home price appreciation.
Yet, supported by lower mortgage rates, there is a likelihood of a modest improvement in refinancing activities. Amid this, a significant portion of ABR’s (mortgage-backed securities) MBS holdings are anticipated to have witnessed elevated levels of constant prepayment rate (CPR). This is likely to have resulted in a modest uptick in (mortgage servicing rights) MSR amortization in the quarter under review. The consensus estimate for ABR’s revenues from mortgage servicing rights is pinned at $14.15 million, suggesting a 38.7% sequential rise.
Primary-secondary spreads, which represent the difference between borrower mortgage rates and the yield on newly issued agency MBS were modestly lower in the second quarter compared with prior quarter levels. This is likely to have lowered the gain on sale margins. The Zacks Consensus Estimate for the gain on sales revenues is pegged at $15.54 million, down 6.8% from the prior quarter’s reported figure.
The Federal Reserve kept the interest rates steady during the quarter at a 23-year high of 5.25-5.5%. Given the high interest rates, the company is expected to have seen higher funding costs. This is likely to have affected net interest income growth in the to-be-reported quarter. The consensus estimate for interest income is $301 million, suggesting a 6.3% year-over-year decline.
Lastly, there was a lack of any solid catalyst that could instill optimism before the second-quarter earnings release. The Zacks Consensus Estimate for ABR's quarterly earnings has remained unchanged at 44 cents over the past month, suggesting a year-over-year decline of 22.8%.
Here is What Our Quantitative Model Predicts
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Release Dates of Other REITs
Starwood Property Trust, Inc. (STWD - Free Report) is slated to post quarterly results on Aug 6.
In the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 48 cents per share, indicating a decline of 2.04% from the prior-year quarter’s reported figure.
Invesco Mortgage Capital Inc. (IVR - Free Report) is slated to post quarterly results on Aug 8.
In the past month, the Zacks Consensus Estimate for IVR’s quarterly earnings has been unchanged at 75 cents per share, indicating a decline of 48.3% from the prior-year quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.