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Ventas (VTR) to Report Q1 Earnings: What's in the Cards?

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Healthcare real estate investment trust (REIT) Ventas, Inc. (VTR - Free Report) is expected to report first-quarter 2017 results on Apr 28, before the market opens. Last quarter, the company delivered in-line results.

Shares of the company gained 4.3% in the last three months. The Zacks Consensus Estimate for the first quarter funds from operations (FFO) is currently pegged at $1.02 per share.

Ventas posted an average positive surprise of 0.99% in the trailing four quarters, surpassing estimates twice and posting in-line results on the other occasions. The graph below depicts this surprise history.

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. Price and EPS Surprise | Ventas, Inc. Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Hike in interest rate is a concern for Ventas, as the company has considerable exposure to long-term leased assets. Rise in rate increases the cost of debt, which in turn adversely affects the profitability of the company.

Also, the company competes with national and local healthcare operators. This significantly limits its power to drive its top line as well as crack deals at attractive rates.

Nevertheless, Ventas has a large and diversified portfolio in the healthcare sector with exposure to all types of facilities. Also, the company focuses on quality acquisitions to boost its position in the healthcare REIT industry.

The Zacks Consensus Estimate for first-quarter 2017 declined 1% to $1.02 in the last seven days.

Earnings Whispers

Our proven model does not conclusively show that Ventas 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.  

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.02, which translates into an Earnings ESP of 0.00%.

Zacks Rank: Ventas has a Zacks Rank #3. Though this increases the predictive power of ESP, the company’s 0.00% ESP makes 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 witnessing negative estimate revisions.

Stocks That Warrant a Look

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 post an earnings beat this quarter.

EPR Properties (EPR - Free Report) , expected to release earnings on May 2, has an Earnings ESP of +0.84% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Physicians Realty Trust (DOC - Free Report) , expected to release earnings on May 3, has an Earnings ESP of +3.33% and a Zacks Rank #3.

STORE CAPITAL CORPSTORE CAPITAL CORP , expected to release first-quarter results on May 4, has an Earnings ESP of +2.44% and a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. 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.

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