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Why Is Vornado (VNO) Up 15.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Vornado (VNO - Free Report) . Shares have added about 15.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vornado 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 drivers.

Vornado Realty's Q3 FFO Misses, Revenues Top Estimates

Vornado reported third-quarter 2020 FFO plus assumed conversions as adjusted of 59 cents per share, missing the Zacks Consensus Estimate of 64 cents. The reported figure also plunged 33.7% year over year.

A decline in same-store NOI in the New York portfolio and theMART affected the company’s quarterly results.

Total revenues were $363.9 million in the reported quarter, surpassing the Zacks Consensus Estimate of $363 million. However, the revenue figure compares unfavorably with the year-ago number of $466 million.

During the reported quarter, the company collected 93% of rent due. This comprised collections of 95% from its office tenants and 82% from retail tenants.

Behind the Headline Numbers

In the New York portfolio, 1,453,000 square feet of office space (1,121,000 square feet of space at share) and 25,000 square feet of retail space (22,000 square feet at share) were leased during the September-end quarter. Also, 44,000 square feet of area (all at share) was leased at theMart and 90,000 square feet of space was leased at 555 California Street (63,000 square feet at share).

At the end of the third quarter, occupancy in the New York portfolio was 94.3%, which shrunk 90 basis points (bps) sequentially and 250 bps year over year. Occupancy in theMART was 89.8%, down 160 bps sequentially and 520 bps year over year. Furthermore, occupancy in 555 California Street was 98.4%, down 60 bps sequentially and 160 bps year over year.

During the reported quarter, total same-store NOI decreased 16.4% year over year. Same-store NOI in the company’s 555 California Street increased 2%. However, same-store NOI at theMART and New York portfolio declined 46.3% and 14.5%, respectively.

During the July-September period, Vornado closed the sale of 19 condominium units at 220 CPS for net proceeds amounting to $591.1 million. This resulted in a financial statement net gain of $214.6 million.

As of Sep 30, 2020, Vornado had $1.41 billion of cash and cash equivalents, down from the $1.52 billion reported as of Dec 31, 2019.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Vornado has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

Vornado has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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