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Vornado (VNO) to Report Q4 Earnings: What's in the Offing?
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Vornado Realty Trust (VNO - Free Report) is scheduled to report fourth-quarter and 2021 results on Feb 14, after the closing bell. The quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this New York-based real estate investment trust’s (REIT) FFO plus assumed conversions, as adjusted, missed the Zacks Consensus Estimate.
Over the trailing four quarters, Vornado’s results surpassed the Zacks Consensus Estimate on two occasions, missed the mark in one and came in line with the same in the remaining quarter, the average beat being 1.23%. This is depicted in the graph below.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
With relaxations of the pandemic-related restrictions and accelerated vaccination programs, there has been a noticeable return of the workforce to offices and other places of businesses of late. Per Cushman & Wakefield (CWK - Free Report) report, the U.S. office sector is already on the path of recovery.
Though the U.S. office sector witnessed a negative net absorption of 8.6 million square feet, the same improved 33% on a quarter-over-quarter basis. The vacancy rate has increased minimally since the pandemic, ending the year at 17.6%.
Amid an improvement in the office market, Vornado’s premium assets in a few select high-rent, high barrier-to-entry markets are likely to have aided cash flow and fueled revenue growth.
VNO noted improvement in conditions in the office leasing market, with leasing volume remaining modest and concessions stabilizing.
During the fourth quarter, Vornado entered into a 20-year lease agreement with Madison Square Garden Entertainment for 428,000 square feet at Vornado’s PENN 2.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $402.1 million, suggesting 6.8%growth from the year-ago quarter’s reported figure.
However, the rising supply of office properties remains a major concern for VNO. It faces intense competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants. This affects Vornado’s ability to attract and retain tenants on relatively higher rents than its competitors, thereby adversely affecting its long-term profitability.
The Zacks Consensus Estimate for Vornado’s New York property rentals is pegged at $256 million, indicating a 6.2% decrease from the prior-year quarter’s reported figure.
Analysts seem pessimistic about VNO’s prospects before the fourth-quarter earnings release as the Zacks Consensus Estimate for the quarterly FFO per share has remained unrevised at 74 cents over the past month. However, the same calls for a 12.1% increase from the prior-year period’s reported figure.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally to $2.80 over the past month, indicating a 10.7% increase from the year-earlier reported figure. The same for revenues stands at $1.55 billion.
Earnings Whispers
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for VNO 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 an FFO beat. However, 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.
Earnings ESP: Vornado has an Earnings ESP of 0.00%.
Zacks Rank: Vornado currently carries a Zacks Rank #5 (Sell).
Here are some stocks like MGM Growth Properties and National Storage Affiliates Trust (NSA - Free Report) which are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
MGM Growth Properties, slated to release fourth-quarter earnings on Feb 15, has an Earnings ESP of +1.01% and a Zacks Rank of 2 at present.
National Storage Affiliates, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +0.23% and a Zacks Rank #2 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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Vornado (VNO) to Report Q4 Earnings: What's in the Offing?
Vornado Realty Trust (VNO - Free Report) is scheduled to report fourth-quarter and 2021 results on Feb 14, after the closing bell. The quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this New York-based real estate investment trust’s (REIT) FFO plus assumed conversions, as adjusted, missed the Zacks Consensus Estimate.
Over the trailing four quarters, Vornado’s results surpassed the Zacks Consensus Estimate on two occasions, missed the mark in one and came in line with the same in the remaining quarter, the average beat being 1.23%. This is depicted in the graph below.
Vornado Realty Trust Price and EPS Surprise
Vornado Realty Trust price-eps-surprise | Vornado Realty Trust Quote
Let’s see how things have shaped up prior to this announcement.
Factors at Play
With relaxations of the pandemic-related restrictions and accelerated vaccination programs, there has been a noticeable return of the workforce to offices and other places of businesses of late. Per Cushman & Wakefield (CWK - Free Report) report, the U.S. office sector is already on the path of recovery.
Though the U.S. office sector witnessed a negative net absorption of 8.6 million square feet, the same improved 33% on a quarter-over-quarter basis. The vacancy rate has increased minimally since the pandemic, ending the year at 17.6%.
Amid an improvement in the office market, Vornado’s premium assets in a few select high-rent, high barrier-to-entry markets are likely to have aided cash flow and fueled revenue growth.
VNO noted improvement in conditions in the office leasing market, with leasing volume remaining modest and concessions stabilizing.
During the fourth quarter, Vornado entered into a 20-year lease agreement with Madison Square Garden Entertainment for 428,000 square feet at Vornado’s PENN 2.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $402.1 million, suggesting 6.8%growth from the year-ago quarter’s reported figure.
However, the rising supply of office properties remains a major concern for VNO. It faces intense competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants. This affects Vornado’s ability to attract and retain tenants on relatively higher rents than its competitors, thereby adversely affecting its long-term profitability.
The Zacks Consensus Estimate for Vornado’s New York property rentals is pegged at $256 million, indicating a 6.2% decrease from the prior-year quarter’s reported figure.
Analysts seem pessimistic about VNO’s prospects before the fourth-quarter earnings release as the Zacks Consensus Estimate for the quarterly FFO per share has remained unrevised at 74 cents over the past month. However, the same calls for a 12.1% increase from the prior-year period’s reported figure.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally to $2.80 over the past month, indicating a 10.7% increase from the year-earlier reported figure. The same for revenues stands at $1.55 billion.
Earnings Whispers
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for VNO 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 an FFO beat. However, 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.
Earnings ESP: Vornado has an Earnings ESP of 0.00%.
Zacks Rank: Vornado currently carries a Zacks Rank #5 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks That Warrant a Look
Here are some stocks like MGM Growth Properties and National Storage Affiliates Trust (NSA - Free Report) which are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
MGM Growth Properties, slated to release fourth-quarter earnings on Feb 15, has an Earnings ESP of +1.01% and a Zacks Rank of 2 at present.
National Storage Affiliates, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +0.23% and a Zacks Rank #2 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.