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Here's How Arbor Realty (ABR) is Placed Ahead of Q4 Earnings
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Arbor Realty Trust (ABR - Free Report) is scheduled to report fourth-quarter and 2020 results on Feb 19, before market open. The company’s results will likely reflect a year-over-year decline in interest income, while earnings per share are likely to improve.
In the last reported quarter, this New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, seniors housing, healthcare and other commercial real estate assets, posted core earnings per share of 50 cents, surpassing the Zacks Consensus Estimate of 35 cents.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and missed in the other, the average beat being 28.4%. The graph below depicts this surprise history:
With low mortgage rates and higher demand for home ownership, origination activity is expected to have remained strong in fourth-quarter 2020. This is expected to have boosted Arbor Realty’s GSE/Agency loan origination platform. Notably, in third-quarter 2020, the company produced strong origination volume — $1.5 billion of GSE Agency loans — and the momentum is expected to have continued in the quarter under review as well.
This is likely to have expanded the company’s fee-based servicing portfolio, thereby, driving sequential growth in net servicing revenues. In fact, the consensus mark for the same for the December-ended quarter is pinned at $13.80 million, indicating an increase from the prior quarter’s reported figure of $13.35 million.
However, the fiscal stimulus provided is unlikely to have been sufficient for the company’s customers to make payments. Amid this, delinquent loans outstanding and forbearances are expected to have marred its performance.
Also, the company owns a hotel and an office property. The hotel was sold in September 2020. While this seems a strategic fit amid a sharp decline in group and business travel as well as COVID-related disruptions, Arbor Realty’s property operating income is likely to have been affected by lost income from the sale. Moreover, the company’s office building is expected to have continued to remain unoccupied in the fourth quarter.
Amid the concerns, the consensus estimate for fourth-quarter property operating income is pinned at $0.3 million, suggesting a significant decline from the previous quarter’s reported figure of $1.03 million.
Moreover, while lower interest rates are expected to have boosted the company’s origination volume, it is likely to have hindered net interest income growth. In fact, borrowers continued resorting to refinancing in the quarter. This is likely to have resulted in higher amortization, thereby, affecting income.
Amid this, the Zacks Consensus Estimate for the company’s quarterly interest income is pegged at $81.1 million, suggesting a dip of 1.1% on a year-over-year basis.
Lastly, there has been a lack of any solid catalyst that could instill optimism prior to the fourth-quarter earnings release. The Zacks Consensus Estimate for quarterly EPS per share has been unchanged at 35 cents over the past month. It also suggests a 3% year-over-year rise.
For the year, the Zacks Consensus Estimate EPS is pinned at $1.62. The figure also indicates a 19.1% year-over-year decline. Revenues are projected to increase 5.8% year over year to $334.4 million.
Here is what our quantitative model predicts:
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is 0.00%.
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a beat their upcoming release:
American Tower Corporation (AMT - Free Report) , set to report quarterly numbers on Feb 25, currently has an Earnings ESP of +7.49% and a Zacks Rank of 3.
National Storage Affiliates Trust (NSA - Free Report) , slated to release quarterly earnings on Feb 22, currently has an Earnings ESP of +4.30% and a Zacks Rank of 2 (Buy).
Public Storage (PSA - Free Report) , scheduled to announce fourth-quarter results on Feb 24, has an Earnings ESP of +0.53% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Here's How Arbor Realty (ABR) is Placed Ahead of Q4 Earnings
Arbor Realty Trust (ABR - Free Report) is scheduled to report fourth-quarter and 2020 results on Feb 19, before market open. The company’s results will likely reflect a year-over-year decline in interest income, while earnings per share are likely to improve.
In the last reported quarter, this New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, seniors housing, healthcare and other commercial real estate assets, posted core earnings per share of 50 cents, surpassing the Zacks Consensus Estimate of 35 cents.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and missed in the other, the average beat being 28.4%. The graph below depicts this surprise history:
Arbor Realty Trust Price and EPS Surprise
Arbor Realty Trust price-eps-surprise | Arbor Realty Trust Quote
Factors at Play
With low mortgage rates and higher demand for home ownership, origination activity is expected to have remained strong in fourth-quarter 2020. This is expected to have boosted Arbor Realty’s GSE/Agency loan origination platform. Notably, in third-quarter 2020, the company produced strong origination volume — $1.5 billion of GSE Agency loans — and the momentum is expected to have continued in the quarter under review as well.
This is likely to have expanded the company’s fee-based servicing portfolio, thereby, driving sequential growth in net servicing revenues. In fact, the consensus mark for the same for the December-ended quarter is pinned at $13.80 million, indicating an increase from the prior quarter’s reported figure of $13.35 million.
However, the fiscal stimulus provided is unlikely to have been sufficient for the company’s customers to make payments. Amid this, delinquent loans outstanding and forbearances are expected to have marred its performance.
Also, the company owns a hotel and an office property. The hotel was sold in September 2020. While this seems a strategic fit amid a sharp decline in group and business travel as well as COVID-related disruptions, Arbor Realty’s property operating income is likely to have been affected by lost income from the sale. Moreover, the company’s office building is expected to have continued to remain unoccupied in the fourth quarter.
Amid the concerns, the consensus estimate for fourth-quarter property operating income is pinned at $0.3 million, suggesting a significant decline from the previous quarter’s reported figure of $1.03 million.
Moreover, while lower interest rates are expected to have boosted the company’s origination volume, it is likely to have hindered net interest income growth. In fact, borrowers continued resorting to refinancing in the quarter. This is likely to have resulted in higher amortization, thereby, affecting income.
Amid this, the Zacks Consensus Estimate for the company’s quarterly interest income is pegged at $81.1 million, suggesting a dip of 1.1% on a year-over-year basis.
Lastly, there has been a lack of any solid catalyst that could instill optimism prior to the fourth-quarter earnings release. The Zacks Consensus Estimate for quarterly EPS per share has been unchanged at 35 cents over the past month. It also suggests a 3% year-over-year rise.
For the year, the Zacks Consensus Estimate EPS is pinned at $1.62. The figure also indicates a 19.1% year-over-year decline. Revenues are projected to increase 5.8% year over year to $334.4 million.
Here is what our quantitative model predicts:
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is 0.00%.
Zacks Rank: American Tower currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a beat their upcoming release:
American Tower Corporation (AMT - Free Report) , set to report quarterly numbers on Feb 25, currently has an Earnings ESP of +7.49% and a Zacks Rank of 3.
National Storage Affiliates Trust (NSA - Free Report) , slated to release quarterly earnings on Feb 22, currently has an Earnings ESP of +4.30% and a Zacks Rank of 2 (Buy).
Public Storage (PSA - Free Report) , scheduled to announce fourth-quarter results on Feb 24, has an Earnings ESP of +0.53% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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