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What's in Store for Equity Residential (EQR) in Q2 Earnings?

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Equity Residential (EQR - Free Report) is slated to report second-quarter 2022 earnings on Jul 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) reported a negative surprise of 3.75% in terms of FFO per share. The rental income also lagged the consensus mark.

Over the trailing four quarters, Equity Residential surpassed the Zacks Consensus Estimate on three occasions and missed the same on the other, the average surprise being 3.21%. 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 second quarter appears to be a solid one this year, with impressive demand for rental units.

Equity Residential too is expected to have benefitted from this improving trend due to its portfolio diversification in the urban and suburban markets. With robust demand, EQR is expected to have experienced solid leasing and renewal activity and a favorable pricing position in the second quarter. 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 $670.63 million, indicating a 12.13% increase year over year. The consensus estimate for total same-store revenues is currently pegged at $643 million, indicating growth from $618 million in the prior quarter and $589 million in the year-ago period. Equity Residential is also expected to have experienced higher same-store net operating income in the quarter.

Moreover, analysts seem to have become optimistic about the company’s second-quarter performance. The Zacks Consensus Estimate for the April-June quarter’s FFO per share has moved a cent up to 85 cents over the past month. It also suggests a year-over-year increase of nearly 9%.

For the second quarter of 2022, Equity Residential projected normalized FFO per share in the band of 82-86 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 FFO beat.

Earnings ESP: EQR has an Earnings ESP of +1.11%. 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 — Essex Property Trust, Inc. (ESS - Free Report) , Mid-America Apartment Communities, Inc. (MAA - Free Report) and UDR, Inc. (UDR - Free Report) — that you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter:

Essex Property Trust, slated to release second-quarter earnings on Jul 26, has an Earnings ESP of +1.21% and a Zacks Rank of 2 (Buy) at present.

Mid-America Apartment Communities, scheduled to report quarterly figures on Jul 27, has an Earnings ESP of + 1.78% and a Zacks Rank of 2 currently.

UDR, slated to report quarterly numbers on Jul 26, has an Earnings ESP of +0.66% and carries a Zacks Rank of 2.

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.