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UDR to Report Q2 Earnings: What's in the Cards for the Stock?

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UDR Inc. (UDR - Free Report) is slated to report second-quarter 2022 earnings on Jul 26 after market close. Results are likely to reflect growth in revenues and funds from operations (FFO) per share from the respective year-ago reported figures.

In the last reported quarter, the FFO as adjusted per share of this Denver, CO-based residential real estate investment trust (REIT) came in line with the Zacks Consensus Estimate. There was an increase in revenues from rental income, fueling the quarter’s top line. Decent operating trends and strong pricing power were major contributing factors.

In the last four quarters, UDR’s earnings met the Zacks Consensus Estimate on each occasion. The graph below depicts the surprise history of the company:

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

Factors to Consider

For the U.S. apartment market, the second quarter appears to be a solid one this year with the impressive demand for rental units. UDR too is likely to have gained from this improving trend with a geographically diverse portfolio and a superior product-mix of A/B quality properties in the urban and suburban markets.

UDR’s portfolio comprises properties throughout the United States, including the coastal and Sunbelt locations. This strategy of maintaining a diversified portfolio across various geographies and price points limits volatility and concentration risks and helps UDR generate steady operating cash flows.

With alternative housing options becoming less affordable compared to multifamily, UDR is expected to have experienced robust demand during the second quarter. As such, its occupancy level and blended lease rate growth are likely to have remained high in the quarter.

Earlier, management projected second-quarter blended lease rate growth in the range of 15%-18% and occupancy to average between 97% and 97.3%.

The Zacks Consensus Estimate for the average occupancy for the second quarter is currently pegged at 97%.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $366.16 million, indicating an 18.45% year-over-year rise.

UDR enjoys a decent balance sheet position and banks on technological moves and process enhancements to fuel growth. UDR focuses 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’ experiences during the second quarter. The adoption of technology is also anticipated to have bolstered UDR’s margin during the period under review.

In its first-quarter earnings release, UDR projected its second-quarter 2022 FFO as adjusted per share in the range of 55-57 cents.

Before the second-quarter earnings release, the company’s activities were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.8% upward to 57 cents in the past two months. This also suggests year-over-year growth of 16.3%.

Here Is What Our Quantitative Model Predicts:

Our proven model predicts a 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 chances of an FFO beat, which is the case here.

UDR currently carries a Zacks Rank of 2 and has an Earnings ESP of +0.66%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are three other stocks from the residential REIT sector — Equity Residential (EQR - Free Report) , Mid-America Apartment Communities, Inc. (MAA - Free Report) and Essex Property Trust, Inc. (ESS - 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:

Equity Residential, slated to release second-quarter earnings on Jul 26, has an Earnings ESP of +1.11% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

Essex Property Trust, slated to report quarterly numbers on Jul 26, has an Earnings ESP of +1.21 % 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.