It has been about a month since the last earnings report for Ventas (VTR Quick QuoteVTR - Free Report) . Shares have added about 5.6% in that time frame, outperforming the S&P 500.

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

Ventas Q4 FFO Tops Estimates, Revenues & NOI Decline Y/Y

Ventas reported fourth-quarter 2020 normalized FFO per share of 83 cents, surpassing the Zacks Consensus Estimate of 73 cents. However, the figure declined 10% from the year-ago quarter’s number.

The company generated revenues of $921.2 million in the fourth quarter, which missed the Zacks Consensus Estimate of $930.7 million. Further, the top line declined 7.5% year over year.

Same-store cash NOI decline in SHOP and triple-net leased portfolio resulted in a year-over-year decrease in revenues.

Per management, “COVID-19 presented the most difficult clinical conditions across the country between November 2020 and through January of this year. As a result, occupancy in our SHOP, after benefitting from steadily improving trends through October 2020, declined in the fourth quarter and into 2021, as operators experienced elevated move-outs and limited tours and move-ins to keep residents safe.”

For 2020, the company reported normalized FFO per share of $3.32, down 13.8% from the prior year’s $3.85. The reported figure, nonetheless, outpaced the Zacks Consensus Estimate of $3.22. Total revenues of $3.79 billion declined 2% year over year.

Quarter in Detail

For the fourth quarter, same-store cash NOI growth for the total property portfolio (1,096 assets) declined 11.8% year over year. Segment wise, same-store cash NOI for the triple-net leased portfolio declined 10% year over year, while the SHOP portfolio fell 24.7%. Meanwhile, the office portfolio reported a year-over-year rise of 2.9%.

Balance Sheet Position

Ventas exited fourth-quarter 2020 with cash and cash equivalents of $413.3 million, up from $106.4 million recorded as of the 2019 end. Further, as of Dec 31, 2020, its full-year net debt to adjusted pro forma EBITDA ratio was 6.1X.

The company had $3 billion of liquidity, consisting of $0.3 billion of cash and cash equivalents, $2.7 billion of available capacity on hand, and no commercial paper outstanding as of Feb 16.

Outlook

Ventas expects first-quarter 2021 results to continue to be affected by the COVID-19 pandemic. Accordingly, first-quarter 2021 normalized FFO per share is guided at 66-71 cents.

Also, average occupancy at the company’s same-store SHOP business is expected to sequentially decline 250-325 bps in first-quarter 2021, while expenses are projected to remain elevated.

Further, Ventas is targeting nearly $1 billion in asset disposals across primarily seniors housing and MOB asset classes in the second half of 2021.

Sale proceeds are aimed to be used to repay debt and to fund future growth through development and redevelopment capital expenditure of $0.5 billion, primarily in the office segment and for development of the senior housing communities in Quebec with Le Groupe Maurice.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Ventas has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 C. 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. It's no surprise Ventas has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.