It has been about a month since the last earnings report for Vornado (VNO - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Vornado due for a breakout? 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.
Vornado Realty's Q2 FFO & Revenues Miss Estimates
Vornado reported second-quarter 2020 FFO plus assumed conversions as adjusted of 55 cents per share, missing the Zacks Consensus Estimate of 74 cents. The reported figure also plunged 39.6% year over year.
A decline in same-store NOI in the New York portfolio, 555 California Street and theMART impacted the company’s quarterly results.
Total revenues were $343 million in the reported quarter, missing the Zacks Consensus Estimate of $365.2 million. Moreover, the revenue figure compares unfavorably with the year-ago number of $463.1 million.
During the reported quarter, the company collected 88% of rent due. This comprised collections of 93% from its office tenants and 72% from retail tenants.
Behind the Headline Numbers
In the New York portfolio, 304,000 square feet of office space (291,000 square feet of space at share) and 23,000 square feet of retail space (all at share) were leased during the June-end quarter. Also, 42,000 square feet of area (all at share) was leased at theMart and 5,000 square feet of space was leased at 555 California Street (3,000 square feet at share).
At the end of the June-end quarter, occupancy in the New York portfolio was 95.2%, which shrunk 150 basis points (bps) sequentially and 130 bps year over year. Occupancy in theMART was 91.4%, down 50 bps sequentially and 340 bps year over year. Furthermore, occupancy in 555 California Street was 99%, down 80 bps sequentially and 50 bps year over year.
During the reported quarter, total same-store NOI decreased 24.5% year over year. Same-store NOI in the company’s 555 California Street declined 5%. The same at theMART and New York portfolio declined 42.5% and 23.4%, respectively.
During the April-June period, Vornado Realty closed the sale of four condominium units at 220 CPS for net proceeds amounting to $157 million. This resulted in a financial statement net gain of $55.7 million.
As of Jun 30, 2020, Vornado Realty had $1.76 billion of cash and cash equivalents, up from the $1.52 billion reported as of Dec 31, 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -12.89% due to these changes.
At this time, Vornado has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Vornado has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.