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Why Is Essex Property Trust (ESS) Up 4.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Essex Property Trust (ESS - Free Report) . Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Essex Property Trust due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Essex Property Beats on Q2 FFO Estimates, Raises View

Essex Property Trust reported second-quarter 2018 core FFO per share of $3.14, beating the Zacks Consensus Estimate of $3.10. Core FFO per share improved 5.7% from the year-ago quarter figure of $2.97.

Results reflect growth in same-property NOI and high occupancy level. Improving economic environment and job growth helped drive housing demand in the prime leasing period, management noted. Moreover, Essex Property raised its guidance for full-year 2018 backed by strength of its second-quarter results.

Total revenues of $348.7 million in the quarter grew 2.8% year over year. The figure also marginally topped the Zacks Consensus Estimate of $348.6 million.

Quarter in Detail

During the reported quarter, Essex Property’s same-property gross revenues grew 2.8% from the prior-year quarter, while same-property NOI improved 3.0% year over year. Financial occupancies of 96.7% expanded 30 basis points (bps) year over year.

Essex Property exited second-quarter 2018 with cash and cash equivalents, including restricted cash of $177.6 million, up from $61.1 million recorded at the end of 2017. As of Jul 30, 2018, the company had $1.2 billion in undrawn capacity on its unsecured credit facilities.

Notably, the company did not issue any shares of common stock under its equity distribution program in the second quarter. Moreover, the company did not repurchase any shares of common stock in the quarter.

Outlook

For full-year 2018, the company now projects core FFO per share in the range of $12.44-$12.62, denoting 7 cents per share increase at the mid-point. The current-year projection is backed by expectations for same-property revenue growth in the band of 2.6-3.0%, denoting increase of 15 bps at the mid-point, and same-property NOI growth in the 2.5- 3.2% range, marking 15-bps growth at the midpoint.

For third-quarter 2018, the company projects core FFO per share of $3.07-$3.17.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Essex Property Trust has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our style scores.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Essex Property Trust has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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