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What's in the Offing for Spirit Realty's (SRC) Q1 Earnings?
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Spirit Realty Capital, Inc. is scheduled to report first-quarter 2020 earnings on May 5, after the bell. While the company’s results will likely reflect year-over-year growth in its revenues, funds from operations (FFO) per share might display a decline.
In the last reported quarter, this retail real estate investment trust (REIT) reported a positive surprise of 1.33% in terms of FFO per share. Results displayed higher-than-expected revenues in the quarter.
Over the preceding four quarters, the company beat the Zacks Consensus Estimate on three occasions and met in the other, the average beat being 2.13%. The graph below depicts this surprise history:
Spirit Realty Capital, Inc. Price and EPS Surprise
Let’s see how things have shaped up prior to the first-quarter earnings release.
Factors at Play
The first quarter began on a positive note with a resilient economy and decent job-market strength. However, things got weary in the second half due to the coronavirus pandemic. As such the rent-paying capability of tenants has become a concern and demand of real estate space is likely to have been dampened. However, such impacts are likely to be more pronounced on retail real estate fundamentals in the second quarter than in the first.
Amid this, this net-lease REIT, which mainly invests in single-tenant, operationally essential real estate assets, maintained a strong operational performance, operating a portfolio of 1,772 owned properties at 99.4% of occupancy, ending the quarter with 11 vacant properties, per its preliminary financial and operating results for the March-end quarter issued on Apr 13.
Lost rent for the quarter was 0.6% and property cost leakage was 2.4%. In its conference call, management noted that leakage was high during the period under discussion due to property tax accruals for tenants from whom, the company believes, payment is doubtful. The company noted that these accruals together, with higher impairment charges during the first quarter, resulted from the coronavirus-related disruption in the second half of March.
Moreover, Spirit Realty focuses on growth through exploring accretive acquisition opportunities. The company noted that it made investments of $213.4 million in the first quarter in acquisitions and revenue-producing capital expenditures, with a weighted average cash yield of 6.5%. Meanwhile, it reaped $15.7 million in gross proceeds from the sale of seven properties, of which three were vacant.
Amid these, the Zacks Consensus Estimate for first-quarter revenues is currently pegged at $122.4 million, indicating a year-over-year improvement of 17.6%.
Additionally, the issuance of 0.4 million shares of common stock helped generate gross proceeds of $17.9 million and net proceeds of $17.6 million, under its At-the-Market program. The company also estimated adjusted debt to annualized adjusted EBITDAre of 5.2x–5.4x.
The company estimated FFO per share of 71-73 cents compared with the year-ago quarter’s 90 cents. Adjusted FFO per share is projected at 77-79 cents compared with the 86 cents reported in the year-earlier period. The Zacks Consensus Estimate for the same is pegged at 79 cents. It suggests an 8.1% decline year on year.
However, prior to the first-quarter earnings release, the Zacks Consensus Estimate of the quarterly FFO per share moved up a cent, over the past week.
Here is what our quantitative model predicts:
Our proven model predicts a positive surprise in terms of FFO per share for Spirit Realty 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 a FFO beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spirit Realty currently carries a Zacks Rank #3 and has an Earnings ESP of +0.32%.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Extra Space Storage Inc. (EXR - Free Report) , slated to release first-quarter earnings on May 6, has an Earnings ESP of +0.17% and carries a Zacks Rank of 3 at present.
Americold Realty Trust (COLD - Free Report) , scheduled to release earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
What's in the Offing for Spirit Realty's (SRC) Q1 Earnings?
Spirit Realty Capital, Inc. is scheduled to report first-quarter 2020 earnings on May 5, after the bell. While the company’s results will likely reflect year-over-year growth in its revenues, funds from operations (FFO) per share might display a decline.
In the last reported quarter, this retail real estate investment trust (REIT) reported a positive surprise of 1.33% in terms of FFO per share. Results displayed higher-than-expected revenues in the quarter.
Over the preceding four quarters, the company beat the Zacks Consensus Estimate on three occasions and met in the other, the average beat being 2.13%. The graph below depicts this surprise history:
Spirit Realty Capital, Inc. Price and EPS Surprise
Spirit Realty Capital, Inc. price-eps-surprise | Spirit Realty Capital, Inc. Quote
Let’s see how things have shaped up prior to the first-quarter earnings release.
Factors at Play
The first quarter began on a positive note with a resilient economy and decent job-market strength. However, things got weary in the second half due to the coronavirus pandemic. As such the rent-paying capability of tenants has become a concern and demand of real estate space is likely to have been dampened. However, such impacts are likely to be more pronounced on retail real estate fundamentals in the second quarter than in the first.
Amid this, this net-lease REIT, which mainly invests in single-tenant, operationally essential real estate assets, maintained a strong operational performance, operating a portfolio of 1,772 owned properties at 99.4% of occupancy, ending the quarter with 11 vacant properties, per its preliminary financial and operating results for the March-end quarter issued on Apr 13.
Lost rent for the quarter was 0.6% and property cost leakage was 2.4%. In its conference call, management noted that leakage was high during the period under discussion due to property tax accruals for tenants from whom, the company believes, payment is doubtful. The company noted that these accruals together, with higher impairment charges during the first quarter, resulted from the coronavirus-related disruption in the second half of March.
Moreover, Spirit Realty focuses on growth through exploring accretive acquisition opportunities. The company noted that it made investments of $213.4 million in the first quarter in acquisitions and revenue-producing capital expenditures, with a weighted average cash yield of 6.5%. Meanwhile, it reaped $15.7 million in gross proceeds from the sale of seven properties, of which three were vacant.
Amid these, the Zacks Consensus Estimate for first-quarter revenues is currently pegged at $122.4 million, indicating a year-over-year improvement of 17.6%.
Additionally, the issuance of 0.4 million shares of common stock helped generate gross proceeds of $17.9 million and net proceeds of $17.6 million, under its At-the-Market program. The company also estimated adjusted debt to annualized adjusted EBITDAre of 5.2x–5.4x.
The company estimated FFO per share of 71-73 cents compared with the year-ago quarter’s 90 cents. Adjusted FFO per share is projected at 77-79 cents compared with the 86 cents reported in the year-earlier period. The Zacks Consensus Estimate for the same is pegged at 79 cents. It suggests an 8.1% decline year on year.
However, prior to the first-quarter earnings release, the Zacks Consensus Estimate of the quarterly FFO per share moved up a cent, over the past week.
Here is what our quantitative model predicts:
Our proven model predicts a positive surprise in terms of FFO per share for Spirit Realty 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 a FFO beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spirit Realty currently carries a Zacks Rank #3 and has an Earnings ESP of +0.32%.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
SBA Communications Corporation (SBAC - Free Report) , set to report quarterly numbers on May 5, has an Earnings ESP of +0.67% and carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Extra Space Storage Inc. (EXR - Free Report) , slated to release first-quarter earnings on May 6, has an Earnings ESP of +0.17% and carries a Zacks Rank of 3 at present.
Americold Realty Trust (COLD - Free Report) , scheduled to release earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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