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HCP Inc. (HCP) Q3 Earnings Preview: What's in the Cards?
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HCP Inc. (HCP - Free Report) is slated to report third-quarter 2016 results on Nov 1, before the opening bell.
Last quarter, this healthcare real estate investment trust (“REIT”) reported a positive surprise of 5.71%. Over the trailing four quarters, the company exceeded estimates in three quarters and posted in-line results in one. Over the past year, the company recorded positive average annual surprise of 2.39%. The Zacks Consensus Estimate for the third-quarter funds from operations (“FFO”) is currently pegged at 71 cents.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
HCP enjoys a well diversified, high-quality and well-balanced portfolio in the healthcare sector with exposure to all types of facilities. This allows the company to explore the opportunities available in various areas. Further, the company is anticipated to gain from rising healthcare spending, and a growing aging population in the to-be-reported quarter.
The company primarily generates revenue by leasing healthcare properties under long-term leases, substantially under triple-net leases. This insulates the company from short-term market swings and facilitates steady top-line growth.
However, a large chunk of the company’s revenues is generated from a few geographical areas. So, the revenues of HCP are subject to increased exposure to the economic and other conditions of these geographic areas. Moreover, the cut-throat competitive market makes it more challenging for the company to increase its revenues.
HCP’s performance during the quarter was inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged over the last seven days.
Earnings Whispers
Our proven model does not conclusively show that HCP will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: HCP has an Earnings ESP of 0.00% – the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Zacks Rank: HCP has a Zacks Rank #3. Despite a favorable Zacks rank, a 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the real estate investment trust sector you may want to consider, as our model shows that they have the right combination of elements to post a positive surprise this quarter:
National Health Investors Inc. (NHI - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company will report its results on Nov 7.
Altisource Residential Corporation has an Earnings ESP of + 66.22% and a Zacks Rank #3. The company will report its results on Nov 7.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All earnings per share numbers presented in this write up represent FFO per share.
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HCP Inc. (HCP) Q3 Earnings Preview: What's in the Cards?
HCP Inc. (HCP - Free Report) is slated to report third-quarter 2016 results on Nov 1, before the opening bell.
Last quarter, this healthcare real estate investment trust (“REIT”) reported a positive surprise of 5.71%. Over the trailing four quarters, the company exceeded estimates in three quarters and posted in-line results in one. Over the past year, the company recorded positive average annual surprise of 2.39%. The Zacks Consensus Estimate for the third-quarter funds from operations (“FFO”) is currently pegged at 71 cents.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
HCP enjoys a well diversified, high-quality and well-balanced portfolio in the healthcare sector with exposure to all types of facilities. This allows the company to explore the opportunities available in various areas. Further, the company is anticipated to gain from rising healthcare spending, and a growing aging population in the to-be-reported quarter.
HCP INC Price and EPS Surprise
HCP INC Price and EPS Surprise | HCP INC Quote
The company primarily generates revenue by leasing healthcare properties under long-term leases, substantially under triple-net leases. This insulates the company from short-term market swings and facilitates steady top-line growth.
However, a large chunk of the company’s revenues is generated from a few geographical areas. So, the revenues of HCP are subject to increased exposure to the economic and other conditions of these geographic areas. Moreover, the cut-throat competitive market makes it more challenging for the company to increase its revenues.
HCP’s performance during the quarter was inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged over the last seven days.
Earnings Whispers
Our proven model does not conclusively show that HCP will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: HCP has an Earnings ESP of 0.00% – the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Zacks Rank: HCP has a Zacks Rank #3. Despite a favorable Zacks rank, a 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the real estate investment trust sector you may want to consider, as our model shows that they have the right combination of elements to post a positive surprise this quarter:
National Health Investors Inc. (NHI - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company will report its results on Nov 7.
Parkway, Inc. will also report its results on Nov 7. It has an Earnings ESP of +28.89% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altisource Residential Corporation has an Earnings ESP of + 66.22% and a Zacks Rank #3. The company will report its results on Nov 7.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All earnings per share numbers presented in this write up represent FFO per share.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>