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United Dominion Realty (UDR) Up 1% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for United Dominion Realty Trust, Inc. (UDR - Free Report) . Shares have added about 1% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is UDR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

UDR Q1 FFO In Line With Expectations, Revenues Increase Y/Y

UDR reported FFO as adjusted per share of 47 cents for first-quarter 2018, in line with the Zacks Consensus Estimate. The figure surpassed the prior-year quarter’s tally of 45 cents.

Total revenues in the reported quarter rose 3.9% year over year to $253.3 million. Further, the top line marginally surpassed the Zacks Consensus Estimate of $253 million. Growth in revenues for the first quarter was due to rise in revenues from same-store communities along with stabilized, non-mature and development communities.

Inside the Headlines

During the quarter under review, same-store revenues increased 3% year over year while same-store expenses increased 3.6%. Consequently, same-store net operating income (NOI) rose 2.7% year over year. Same-store physical occupancy grew 30basis point (bps) to 96.9%. The first-quarter annualized-rate of turnover contracted 120 basis points from the prior-year period to 40%.

At the end of the first quarter, UDR’s development pipeline aggregated $810.5 million at its pro-rata ownership interest. Out of which, 91% has already been funded.

As of Mar 31, 2018, the company had around $843.4 million available from a combination of cash and undrawn capacity on its credit facilities. Further, its total debt was $3.7 billion as of the same date.

During the reported quarter, the company repurchased 593,000 shares at an average price of $33.69, totaling approximately $20 million.

Portfolio Activity

At the end of the first quarter, the company’s Developer Capital Program investment, including accrued return, totaled $159.3 million.

Guidance

For second-quarter 2018, UDR projects FFO as adjusted per share to be 47-49 cents range.

For full-year 2018, the company reaffirmed its estimates. The FFO as adjusted per share remains at $1.91-$1.95. Moreover, the company anticipates same-store revenues, expenses and same-store NOI to remain in the range of 2.5-3.5% for the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.

VGM Scores

At this time, UDR has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. The stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, UDR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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