Back to top

Momentum

Shares of Select Income REIT (SIR - Snapshot Report) are currently trading at an all-time high of $24.70, driven by an earnings surprise of 123.3% in the first quarter of 2012. This office REIT (real estate investment trust) presently retains a Zacks #1 Rank (Strong Buy). As its shares continue to move upwards, Select Income REIT promises to be a solid pick for investors seeking both growth and income.

Strong First Quarter

On May 2, Select Income REIT reported strong first quarter results with funds from operations (FFO) of $1.55 per share that surpassed the Zacks Consensus Estimate by a phenomenal 123.3%. Total revenues stood at $27.6 million, while total rentable square feet were 95.2% leased at quarter-end.

During the quarter, Select Income REIT sold 29.5% of its stock or 9.2 million shares in an initial public offering for $21.50 each, raising net proceeds of approximately $181.0 million. In addition, the company issued 22.0 million shares to CommonWealth REIT (CWH) in connection with its formation as a wholly-owned subsidiary of the latter.

Surge in Earnings Estimate Revisions

Over the past 60 days, the Zacks Consensus Estimate for 2012 increased 10.6% to $2.71. For 2013, the Zacks Consensus Estimate has increased 9.3% to $2.59 over the same period.

Reasonable Valuation Metrics

Select Income REIT’s valuation looks reasonable on a price-to-earnings (P/E) and price-to-book (P/B) basis. Shares of Select Income REIT are trading at a forward P/E of 9.12x, a 4.2% discount to the peer group average of 9.52x. On a P/B basis, the company is currently trading at 1.06x versus the peer group average of 0.93x.

Chart Resonates Growth Potential

Since June 14, 2012, Select Income REIT shares have fared relatively better than the simple moving average for 50 days or SMA (50). The continuous uptrend in stock prices, as mirrored in the following chart, offers an enticing upside potential going forward. Volume is fairly strong, averaging 154K daily. The year-to-date return for the stock is also noteworthy at 13.56% compared to an S&P 500 tally of (1.32%).

Based in Newton, Massachusetts, Select Income REIT owns office and industrial properties that are net leased to single tenants. The company was formed on December 19, 2011 as a wholly owned subsidiary of CommonWealth REIT. The company presently owns 251 properties spanning 21.4 million square feet in the U.S., the bulk of which are located in Hawaii. The company currently has a market cap of $770.64 million.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

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 Zacks.com. 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
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%