Back to top

Analyst Blog

Shares of UDR, Inc. (UDR - Analyst Report) reached a new 52-week high, touching $29.39 during the trading session on Aug 8 after gaining momentum on encouraging second-quarter 2014 results. The closing price of $29.29 of this residential real estate investment trust (REIT) reflected a strong year-to-date return of 29.6%. The trading volume for the session was over 0.9 million shares.

Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given its expected funds from operations (FFO) per share growth of 9.4% in 2014.

Growth Drivers

Riding on the winning track, UDR came up with encouraging results in the second quarter on the back of higher revenues and same-store net operating income. On Jul 29, the company reported second-quarter 2014 funds from operations (FFO) as adjusted of 39 cents per share, which exceeded the Zacks Consensus Estimate by a whisker and the year-ago quarter figure by 4 cents. The company also increased the lower end of its 2014 FFO per share range to $1.49 – $1.53 from $1.47–$1.53.

Going forward, we believe that the ongoing portfolio restructuring activities and improving U.S. apartment sector fundamentals position the company well in upscale markets and provide notable growth prospects. Moreover, UDR’s continued focus on its strategic priorities such as disciplined capital allocation, strong balance sheet position as well as cash flow enhancement to support dividend growth and operational efficiency bodes well.

Over the last 7 days, the Zacks Consensus Estimate for full-year 2014 and 2015 FFO per share remained stable at $1.52 and $1.61, respectively.

Other Stocks to Consider

Investors interested in residential REITs may consider stocks like Equity LifeStyle Properties, Inc. (ELS - Snapshot Report), Avalonbay Communities Inc. (AVB - Analyst Report) and American Campus Communities, Inc. (ACC - Snapshot Report). All three stocks have a Zacks Rank #2 (Buy).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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