A month has gone by since the last earnings report for AvalonBay Communities (AVB Quick QuoteAVB - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.

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

AvalonBay Q3 FFO Beat Reflects Growth in Rental Rates

AvalonBay’s third-quarter 2018 core FFO per share of $2.28 surpassed the Zacks Consensus Estimate of $2.26. The figure also improved 4.1% from the year-ago tally of $2.19.

Total revenues of $576.0 million were up 4.6% year over year, as revenues from stabilized operating communities and development communities recorded growth. The reported figure also outpaced the Zacks Consensus Estimate of $574.3 million. Results highlight growth in average rental rates.

Quarter in Detail   

For the reported quarter, average rental rates were up 2.5% year over year, while economic occupancy edged down 0.2% from the year-ago quarter.

Revenues from established communities — consolidated communities that have stabilized operations as of Jan 1, 2017, are neither executing nor planning any significant redevelopment work, and are not held for sale or planned for disposition within the current year — improved 2.3% year over year to $427.0 million. This indicates increase in average rental rates, partly offset by a fall in economic occupancy.

Operating expenses for established communities escalated 0.5% on a year-over-year basis. Consequently, NOI from established communities increased 3.1% year over year to around $303.1 million.

Notable Portfolio Activity

During the third quarter, AvalonBay acquired Avalon Arundel Crossing, in Linthicum Heights, MD, for $83.0 million. The property comprises 310 apartment homes. Further, the company accomplished development of two communities, for an aggregate capital cost of $314.0 million. These communities contain a total of 591 apartment homes.

The company also began construction of two communities which are expected to have 652 apartment homes and 7,000 square feet of retail space. These communities will be developed for an aggregate estimated cost of $205.0 million.

As of Sep 30, 2018, AvalonBay had 19 communities under construction (expected to contain in total 6,107 apartment homes and 127,000 square feet of retail space), which will likely be accomplished for a projected total capital cost of $2.7 billion.

Liquidity Position

As of Sep 30, 2018, AvalonBay had $56.0 million outstanding under its $1.5-billion unsecured credit facility. The company had around $281.6 million in unrestricted cash and cash in escrow as of that date. In addition, the company’s annualized net debt-to-core EBITDA for the September quarter was 4.9 times.

Outlook

For fourth-quarter 2018, AvalonBay expects core FFO per share of $2.27-$2.35. For full-year 2018, the company expects core FFO per share of $8.96-$9.04.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, AvalonBay has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. 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.

Outlook

AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.