Back to top

Growth & Income

Associated Estates Realty Corp (AEC - Snapshot Report) recently delivered its third consecutive positive earnings surprise, prompting analysts to revise their estimates higher. This propelled the stock to a coveted Zacks #1 Rank (Strong Buy).

This apartment REIT also pays a dividend that yields an attractive 4.3%.

Company Description

Associated Estates Realty Corp is a real estate investment trust specializing in the ownership and management of apartment communities. The company's portfolio consists of 52 properties in eight states throughout the Midwest, Mid-Atlantic and Southeast regions of the U.S.

It is headquartered in Richmond Heights, Ohio and has a market cap of $662 million.

Fourth Quarter Results

The company recently reported results for the fourth quarter of 2010. Funds from operations (FFO) came in at 24 cents per share, beating the Zacks Consensus Estimate by 2 cents. It was the company's third consecutive positive earnings surprise.

Total revenue was up 2.1% year-over-year. Physical occupance was up from 93.9% at the end of 2009 to 94.7% at the end of 2010. Average rent collected per unit increased 2.1% to $866 per month.

Meanwhile, net operating income increased 5% over the same quarter in 2009.


The apartment REIT industry has certainly benefited from a weak housing market. Home ownership rates have been declining over the past few years as the housing market has yet to find a bottom and credit is harder to come by.

This has resulted in increased demand for apartments, as reflected in the company's higher occupancy rates and average rents. Estimates have been rising for AEC over the last few months as the company has delivered three consecutive positive earnings surprises.

Management expects 2011 FFO between $1.02 and $1.06 per share. The Zacks Consensus Estimate is within this range at $1.05, representing 23% growth over 2010. The 2012 estimate is $1.18, equating to 13% growth.

It is a Zacks #1 Rank (Strong Buy) stock.


Associated Estates pays a dividend that yields an attractive 4.3%. It has paid the same 17 cent dividend every quarter since 2003.

Shares trade at 15.4x forward estimates, a slight premium to the industry average of 14.6x. Its price to book ratio of 2.1 is also above the peer group multiple of 1.5, but is still within reason.

Todd Bunton is the Growth & Income Stock Strategist for

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%