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What's in Store for Equity Residential (EQR) in Q1 Earnings?

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Equity Residential (EQR - Free Report) is slated to report first-quarter 2022 earnings on Apr 26 after the closing bell. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Chicago, IL-based residential real estate investment trust (REIT) delivered a surprise of 2.50% in terms of FFO per share. Results highlighted strong physical occupancy and a substantial improvement in pricing power.

Over the trailing four quarters, Equity Residential surpassed the Zacks Consensus Estimate on three occasions and met the same on the other, the average surprise being 4.15%. The graph below depicts this surprise history:

Equity Residential Price and EPS Surprise

Equity Residential Price and EPS Surprise

Equity Residential price-eps-surprise | Equity Residential Quote

Let’s see how things have shaped up for EQR before this announcement.

Key Factors

For the U.S. apartment market, the first quarter — typically a slow leasing period in other years — appears to be a solid one this year, with impressive demand for rental units, due to the pandemic that disrupted seasonal behavior.

Per a report from the real estate technology and analytics firm, RealPage, the U.S. apartment market witnessed robust demand, with net demand for market-rate apartments aggregating a whopping 712,899 units nationally in the year ending first-quarter 2022. This not only marks an 8% increase from the previous high a quarter earlier but also is 76% higher than the pre-pandemic-era highest established back in 2000. There is strong demand from young adults who are gaining from tight labor market conditions and record wage growth.

As a result of the high demand, the apartment occupancy inched up 0.1 percentage point to 97.6% instead of seasonal cooling in the first quarter. Rent growth reached another all-time high, with new lease effective asking rents increasing 15.2% year over year through March.

Equity Residential is expected to benefit from this improving trend due to its portfolio diversification in the urban and suburban markets. It has a healthy balance sheet and banks on technology, scale and organizational capabilities to drive growth.

The Zacks Consensus Estimate for the company’s quarterly revenues stands at $658.07 million, indicating a 10.12% increase year over year. The consensus estimate for total same-store revenues is currently pegged at $627 million, indicating growth from $612 million in the prior quarter and $593 million in the year-ago period.

The Zacks Consensus Estimate for the January-March quarter’s FFO per share has remained unrevised at 80 cents over the past month. However, it suggests a year-over-year increase of 17.6%.

For the first quarter of 2022, Equity Residential projected normalized FFO per share in the band of 76-80 cents.

Here Is What Our Quantitative Model Predicts:

Equity Residential has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

Earnings ESP: EQR has an Earnings ESP of +0.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Equity Residential currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks That Warrant a Look

Here are three other stocks from the residential REIT sector — AvalonBay Communities, Inc. (AVB - Free Report) , Camden Property Trust (CPT - Free Report) and American Homes 4 Rent (AMH - Free Report) — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter:

AvalonBay Communities, slated to release first-quarter earnings on Apr 27, has an Earnings ESP of +0.46% and a Zacks Rank of 3 at present.

Camden Property Trust, scheduled to report quarterly figures on Apr 28, has an Earnings ESP of +1.25 % and a Zacks Rank of 2 (Buy) currently.

American Homes 4 Rent, slated to report quarterly numbers on May 5, has an Earnings ESP of +0.76% and carries a Zacks Rank of 3.

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.