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Key Factors to Consider for Arbor Realty's (ABR) Q1 Earnings
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Arbor Realty Trust (ABR - Free Report) is scheduled to report first-quarter 2021 results on May 7, before market open. The company’s results will likely reflect a year-over-year decline in interest income, while earnings per share (EPS) are likely to improve.
In the last reported quarter, the 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 distributable EPS of 49 cents, reflecting a year-over-year decline. Moreover, for the December-end quarter, its Agency business generated revenues of $125.6 million (excluding gains and losses on derivative instruments).
Over the trailing four quarters, Arbor Realtysurpassed the Zacks Consensus Estimate on two occasions and missed in the other two, the average beat being 1.01%. The graph below depicts this surprise history:
In first-quarter 2021, Arbor Realty is likely to have continued to benefit from a stable income stream, owing to its diversified business lines and the longer duration investments. Notably, the company’s investment focus includes commercial real estate debt investments, mortgage servicing, and commercial MBS. This has likely enabled it to generate attractive income despite the changing economic environment.
Also, while mortgage rates have sequentially increased, mortgage volumes were strong in first-quarter 2021. This along with anticipated gain on sale margins is likely to have facilitated the company’s Agency origination business to generate higher income. New Agency loan originations are also expected to have propelled the expansion of its fee-based servicing portfolio.
Also, the consensus mark for first-quarter 2021 net servicing revenues is pegged at $15.10 million, indicating a marginal sequential rise.
Markedly, the company loan portfolio has significant exposure to multifamily assets. While fundamental strength in this asset class is expected to have lent support, it has been vulnerable to the impacts of the pandemic. Notably, payment delinquencies, defaults, loan modifications and foreclosures are expected to have marred the company’s performance in first-quarter 2021.
Moreover, while lower interest rates are expected to have boosted its origination volume, it is likely to have hindered net interest income growth as high-yielding loans are paid off and are replaced with low-yielding ones. In fact, borrowers continued to resort to refinancing in the quarter under review. This is anticipated 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 $86.9 million, suggesting a dip of 1.8% on a year-over-year basis.
Lastly, there has been a lack of any solid catalyst that could instill optimism prior to the first-quarter earnings release. The Zacks Consensus Estimate for quarterly EPS per share has been unchanged at 42 cents over the past month. It suggests a 35.5% year-over-year rise.
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:
Cedar Realty Trust, Inc. , set to report quarterly numbers on May 6, currently has an Earnings ESP of +1.54% and a Zacks Rank of 3.
Apple Hospitality REIT, Inc. (APLE - Free Report) , slated to release quarterly earnings on May 6, currently has an Earnings ESP of +20% and a Zacks Rank of 3.
Healthcare Trust of America, Inc. , scheduled to announce first-quarter results on May 6, has an Earnings ESP of +0.33% and a Zacks Rank of 2 (Buy) at present.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Image: Bigstock
Key Factors to Consider for Arbor Realty's (ABR) Q1 Earnings
Arbor Realty Trust (ABR - Free Report) is scheduled to report first-quarter 2021 results on May 7, before market open. The company’s results will likely reflect a year-over-year decline in interest income, while earnings per share (EPS) are likely to improve.
In the last reported quarter, the 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 distributable EPS of 49 cents, reflecting a year-over-year decline. Moreover, for the December-end quarter, its Agency business generated revenues of $125.6 million (excluding gains and losses on derivative instruments).
Over the trailing four quarters, Arbor Realtysurpassed the Zacks Consensus Estimate on two occasions and missed in the other two, the average beat being 1.01%. 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
In first-quarter 2021, Arbor Realty is likely to have continued to benefit from a stable income stream, owing to its diversified business lines and the longer duration investments. Notably, the company’s investment focus includes commercial real estate debt investments, mortgage servicing, and commercial MBS. This has likely enabled it to generate attractive income despite the changing economic environment.
Also, while mortgage rates have sequentially increased, mortgage volumes were strong in first-quarter 2021. This along with anticipated gain on sale margins is likely to have facilitated the company’s Agency origination business to generate higher income. New Agency loan originations are also expected to have propelled the expansion of its fee-based servicing portfolio.
Also, the consensus mark for first-quarter 2021 net servicing revenues is pegged at $15.10 million, indicating a marginal sequential rise.
Markedly, the company loan portfolio has significant exposure to multifamily assets. While fundamental strength in this asset class is expected to have lent support, it has been vulnerable to the impacts of the pandemic. Notably, payment delinquencies, defaults, loan modifications and foreclosures are expected to have marred the company’s performance in first-quarter 2021.
Moreover, while lower interest rates are expected to have boosted its origination volume, it is likely to have hindered net interest income growth as high-yielding loans are paid off and are replaced with low-yielding ones. In fact, borrowers continued to resort to refinancing in the quarter under review. This is anticipated 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 $86.9 million, suggesting a dip of 1.8% on a year-over-year basis.
Lastly, there has been a lack of any solid catalyst that could instill optimism prior to the first-quarter earnings release. The Zacks Consensus Estimate for quarterly EPS per share has been unchanged at 42 cents over the past month. It suggests a 35.5% year-over-year rise.
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:
Cedar Realty Trust, Inc. , set to report quarterly numbers on May 6, currently has an Earnings ESP of +1.54% and a Zacks Rank of 3.
Apple Hospitality REIT, Inc. (APLE - Free Report) , slated to release quarterly earnings on May 6, currently has an Earnings ESP of +20% and a Zacks Rank of 3.
Healthcare Trust of America, Inc. , scheduled to announce first-quarter results on May 6, has an Earnings ESP of +0.33% and a Zacks Rank of 2 (Buy) at present.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>