It has been about a month since the last earnings report for AvalonBay Communities (AVB Quick QuoteAVB - Free Report) . Shares have added about 4.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

AvalonBay Communities Q2 FFO & Revenues Miss Estimates

AvalonBay’s second-quarter 2020 core FFO per share of $2.23 edged down 1.8% year over year from the prior-year quarter’s $2.27. The reported figure also missed the Zacks Consensus Estimate of $2.25.

Results reflect uncollectible lease revenues from residential and retail properties as well as decline in economic occupancy.

Total revenues of $576.4 million slipped 0.1% year over year. The revenue figure also missed the Zacks Consensus Estimate of $587.6 million.

The company also noted about the second-quarter residential revenue collections for established communities, through Jul 28, 2020. The collected residential revenue improved to 97.7% for April compared with the 93.9% at month end, 96.4% for May compared with the 92.8% at month end and 95.5% for June compared with the 93.6% at month end. Moreover, collected residentialrevenues for July was 93.3% as of Jul 28, 2020.

Quarter in Detail

In the reported quarter, revenues from established communities decreased 3% year over year to $523.5 million. Residential and retail uncollectible lease revenues resulted in this decrease. Economic occupancy was down 120 basis points, while bad debt was 200 bps higher than normal.Operating expenses for established communities slid 1.1% on a year-over-year basis. Consequently, NOI from established communities dropped 3.7% year on year to $368.2 million.

During the April-June period, the company did not commence or complete any development communities. As of Jun 30, 2020, AvalonBay had 19 development communities under construction (expected to contain 6,198 apartment homes and 64,000 square feet of retail space). The estimated total capital cost at completion for these development communities is $2.34 billion at share.

As of Jun 30, 2020, the projected total capital cost of development rights increased to $4.2 billion from the prior-quarter end’s $4.1 billion.

Balance Sheet Position

As of Jun 30, 2020, AvalonBay did not have any borrowings outstanding under its $1.75-billion unsecured credit facility.The company had $415.7 million in unrestricted cash and cash in escrow as of the same date. In addition, its annualized net debt-to-core EBITDAre for the April-June quarter was 4.9 times and unencumbered NOI was 94%.

Stock-Repurchase Program

The company’s board of directors also approved a new stock-repurchase program, under which it might acquire shares of its common stock up to an aggregate purchase price of $500 million in open market or negotiated transactions. There is no expiration date for this stock-repurchase program.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, AvalonBay has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.