We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UDR to Report Q1 Earnings: What's in Store for the Stock?
Read MoreHide Full Article
UDR Inc. (UDR - Free Report) is slated to report first-quarter 2021 earnings on Apr 27, after the market closes. The company’s results will likely reflect year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Denver, CO-based residential real estate investment trust (REIT) reported an in-line performance in terms of FFO per share. Results displayed the adverse impacts of the coronavirus pandemic and its resultant economic challenges, especially in the urban markets.
In the last four quarters, the company met the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being 1.41%.
United Dominion Realty Trust, Inc. Price and EPS Surprise
Let’s see how things have shaped up for this announcement.
Factors to Consider
For the U.S. apartment market, the first quarter, which typically remains a slow leasing period in other years, appeared to be a solid one this year, with impressive demand for rental units. Thanks to employment growth that spurs household formation and housing absorption, demand for 52,661 apartments were registered across the country’s 150 largest metros during the quarter, per a report from the real estate technology and analytics firm RealPage .
This tally is well ahead of the year-ago volume of 29,657 units. Moreover, this year’s first-quarter demand is more than double the average first-quarter demand of about 25,200 units witnessed in the past 10 years. Considering that the first quarter comprises the cold weather months that affect leasing activity, this year’s performance is definitely a notable one. However, this healthy demand has been the most noticeable in the Sun Belt metros. Demand was also impressive in the sub-urban ones though situations still remain turbulent in some of the gateway markets.
The occupancy level was encouraging in March, though the rent results have been mixed. Particularly, March occupancy came in at 95.5% in the United States’ 150 largest metros. This suggests stability and the occupancy level has been somewhere between 95.2% and 95.8% since late 2019. Considering that the world has been battling a pandemic in the meantime, this stability is particularly encouraging.
Nonetheless, considering the annual rent change, it is important to note that with some of the largest markets having suffered significant declines, the national shift in effective asking rents is still a tad negative at -0.7%. Specifically, San Francisco, San Jose and New York saw significant annual declines in effective asking rents. Nevertheless, the U.S. apartment rents moved up in the first three months of 2021, with a 0.2% increase in January and 0.6% in February, prior to the 0.7% rise in March.
Also, the struggle to lure renters is likely to have continued in the first quarter as well, as supply volumes were elevated. During the March-end quarter, though demand was solid, apartment absorption still lagged the property completion tally, with new supply aggregating 84,794 units.
UDR’s geographically-diverse portfolio with a superior product-mix of A/B quality properties in urban and sub-urban markets has been its saving grace. The company’s portfolio includes properties across the United States, including both coastal and the Sun Belt locations. This strategy of maintaining a diversified portfolio is likely to have provided support in generating operating cash flows during the quarter under review.
In addition, the company is focused on curbing expenses through technological initiatives and process enhancements. The residential REIT is focused on enhancing cost control through its Next Generation Operating Platform. Such efforts to find efficiencies throughout its operating platform are likely to have boosted workforce productivity and residents’ experience. Adoption of technology is also anticipated to have bolstered the company’s margin during the period under review.
Moreover, in its March investor presentation, the company pointed out that through February, its cash revenue collections remained consistent with the prior months at similar times of the collection cycle.
However, the company has significant exposure to urban residential assets and this portfolio has been feeling the brunt. There have been regulatory restrictions, flexible work schedules, and varying paces of state/city re-openings, which might have affected UDR’s performances.
In addition, record-low mortgage rates are triggering demand for existing and new-home purchases, mainly for the young age cohorts, where homeownership rates have started to shoot up. Furthermore, use of concessions has been rampant in urban portfolios, which might have dented the company’s performance during the quarter under review. Nevertheless, signs of improvement are anticipated to have been witnessed by the REIT with respect to billed revenues, blended lease rate growth and concession usage.
The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $301.3 million, indicating a 5.9% year-over-year decline. The estimate for average occupancy is pegged at 96%.
For the first quarter, the company estimates FFO as adjusted per share of 46-48 cents.
Prior to the first-quarter earnings release, there is lack of any solid catalyst to become optimistic about the company’s prospects as the Zacks Consensus Estimate for the FFO per share remained unchanged at 48 cents over the past month. Also, it suggests a year-over year decline of 9.4%.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
UDR currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of -1.05%.
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 positive surprise this quarter:
CubeSmart (CUBE - Free Report) , slated to release quarterly numbers on Apr 29, has an Earnings ESP of +3.14% and carries 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.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
Image: Bigstock
UDR to Report Q1 Earnings: What's in Store for the Stock?
UDR Inc. (UDR - Free Report) is slated to report first-quarter 2021 earnings on Apr 27, after the market closes. The company’s results will likely reflect year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Denver, CO-based residential real estate investment trust (REIT) reported an in-line performance in terms of FFO per share. Results displayed the adverse impacts of the coronavirus pandemic and its resultant economic challenges, especially in the urban markets.
In the last four quarters, the company met the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being 1.41%.
United Dominion Realty Trust, Inc. Price and EPS Surprise
United Dominion Realty Trust, Inc. price-eps-surprise | United Dominion Realty Trust, Inc. Quote
Let’s see how things have shaped up for this announcement.
Factors to Consider
For the U.S. apartment market, the first quarter, which typically remains a slow leasing period in other years, appeared to be a solid one this year, with impressive demand for rental units. Thanks to employment growth that spurs household formation and housing absorption, demand for 52,661 apartments were registered across the country’s 150 largest metros during the quarter, per a report from the real estate technology and analytics firm RealPage .
This tally is well ahead of the year-ago volume of 29,657 units. Moreover, this year’s first-quarter demand is more than double the average first-quarter demand of about 25,200 units witnessed in the past 10 years. Considering that the first quarter comprises the cold weather months that affect leasing activity, this year’s performance is definitely a notable one. However, this healthy demand has been the most noticeable in the Sun Belt metros. Demand was also impressive in the sub-urban ones though situations still remain turbulent in some of the gateway markets.
The occupancy level was encouraging in March, though the rent results have been mixed. Particularly, March occupancy came in at 95.5% in the United States’ 150 largest metros. This suggests stability and the occupancy level has been somewhere between 95.2% and 95.8% since late 2019. Considering that the world has been battling a pandemic in the meantime, this stability is particularly encouraging.
Nonetheless, considering the annual rent change, it is important to note that with some of the largest markets having suffered significant declines, the national shift in effective asking rents is still a tad negative at -0.7%. Specifically, San Francisco, San Jose and New York saw significant annual declines in effective asking rents. Nevertheless, the U.S. apartment rents moved up in the first three months of 2021, with a 0.2% increase in January and 0.6% in February, prior to the 0.7% rise in March.
Also, the struggle to lure renters is likely to have continued in the first quarter as well, as supply volumes were elevated. During the March-end quarter, though demand was solid, apartment absorption still lagged the property completion tally, with new supply aggregating 84,794 units.
UDR’s geographically-diverse portfolio with a superior product-mix of A/B quality properties in urban and sub-urban markets has been its saving grace. The company’s portfolio includes properties across the United States, including both coastal and the Sun Belt locations. This strategy of maintaining a diversified portfolio is likely to have provided support in generating operating cash flows during the quarter under review.
In addition, the company is focused on curbing expenses through technological initiatives and process enhancements. The residential REIT is focused on enhancing cost control through its Next Generation Operating Platform. Such efforts to find efficiencies throughout its operating platform are likely to have boosted workforce productivity and residents’ experience. Adoption of technology is also anticipated to have bolstered the company’s margin during the period under review.
Moreover, in its March investor presentation, the company pointed out that through February, its cash revenue collections remained consistent with the prior months at similar times of the collection cycle.
However, the company has significant exposure to urban residential assets and this portfolio has been feeling the brunt. There have been regulatory restrictions, flexible work schedules, and varying paces of state/city re-openings, which might have affected UDR’s performances.
In addition, record-low mortgage rates are triggering demand for existing and new-home purchases, mainly for the young age cohorts, where homeownership rates have started to shoot up. Furthermore, use of concessions has been rampant in urban portfolios, which might have dented the company’s performance during the quarter under review. Nevertheless, signs of improvement are anticipated to have been witnessed by the REIT with respect to billed revenues, blended lease rate growth and concession usage.
The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $301.3 million, indicating a 5.9% year-over-year decline. The estimate for average occupancy is pegged at 96%.
For the first quarter, the company estimates FFO as adjusted per share of 46-48 cents.
Prior to the first-quarter earnings release, there is lack of any solid catalyst to become optimistic about the company’s prospects as the Zacks Consensus Estimate for the FFO per share remained unchanged at 48 cents over the past month. Also, it suggests a year-over year decline of 9.4%.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
UDR currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of -1.05%.
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 positive surprise this quarter:
Digital Realty Trust, Inc. (DLR - Free Report) , scheduled to report quarterly numbers on Apr 29, currently has an Earnings ESP of +1.06% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
CubeSmart (CUBE - Free Report) , slated to release quarterly numbers on Apr 29, has an Earnings ESP of +3.14% and carries 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.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>