Back to top

Analyst Blog

Shares of Ventas Inc. (VTR - Analyst Report) crafted a new 52-week high, touching $81.80 at the end of the trading session on May 15. The closing price of this real estate investment trust (REIT) represents a solid year-to-date return of 26.7%. The trading volume for the session was over 1.8 million shares.

Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days and expected year-over-year funds from operations (FFO) growth of 17.7% for 2013.

Growth Drivers

Impressive first-quarter 2013 results – including an earnings surprise of 4.0% and increase in same store net operating income – strategic move in Atria Senior Living were the key growth drivers.

The company also has a strong balance sheet, which provides it adequate financial flexibility to aim at high-yielding acquisitions, high ROI (return on investments) capital projects and steady dividend payouts. Also, the healthcare sector is relatively immune to the downturn in the economy, and provides a steady source of income that insulates the company from short-term market volatility.

On Apr 26, Ventas reported first-quarter normalized FFO of $1.03 per share, 4.0% ahead of the Zacks Consensus Estimate of 99 cents and 13.2% above the year-ago FFO of 91 cents per share. The solid results at this REIT were primarily driven by the strategic investments in 2012.

Moreover, Ventas has now delivered positive earnings surprises for 4 straight quarters with an average beat of 2.9%.  

Estimate Revisions Show Potency

Over the last 30 days, 7 of the 10 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate for FFO per share by 1.0% to $4.10 per share. For 2014, 4 of the 10 estimates moved north, helping the Zacks Consensus Estimate FFO per share advance 0.5% to $4.30 per share.

A number of other REITs also touched 52-week highs this week. These include DDR Corp. (DDR - Analyst Report), HCP, Inc. (HCP - Analyst Report) and Taubman Centers Inc. (TCO - Analyst Report).

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.