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What Awaits Mid-America Apartment (MAA) This Earnings Season?

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Mid-America Apartment Communities, Inc. (MAA - Free Report) — commonly known as MAA — is slated to report second-quarter 2022 results on Jul 27 after market close. MAA’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.

The Germantown, TN-based residential real estate investment trust (REIT) delivered a surprise of 2.60% in terms of FFO per share in the last reported quarter. This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio.

Over the trailing four quarters, MAA surpassed the Zacks Consensus Estimate on all occasions, the average being 2.84%. This is depicted in the chart below:

Let’s see how things have shaped up for the 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. With a well-diversified portfolio, MAA is likely to have benefited from this improving trend.

Encouragingly, MAA’s diversified Sunbelt portfolio was less severely affected by the pandemic and the economic shutdown. Rather, the pandemic has accelerated employment shifts and a population inflow into the company’s markets, as renters seek more business-friendly, lower-taxed and low-density cities. These favorable longer-term secular dynamic trends are increasing the desirability of its markets. Also, the high pricing of single-family ownership units continues to drive the demand for rental apartments.

Amid this, MAA is well-poised to capture the recovery in demand and leasing compared to expensive coastal markets. During the second quarter, MAA is expected to have experienced strong rent growth and stable occupancy, thereby driving revenue growth.

Additionally, MAA continues to implement its three internal investment programs — interior redevelopment, property repositioning projects and Smart Home installations. The programs are expected to have helped the company capture the upside potential in rent growth, generate accretive returns and boost earnings from its existing asset base.

The Zacks Consensus Estimate for quarterly revenues is pegged at $491.43 million, suggesting a 12.47% rise from the year-ago quarter’s reported figure. Same-store revenues are projected at $470 million, indicating an increase from the $454 million reported in the prior quarter and $417 million in the year-ago period.

MAA projected second-quarter 2022 core FFO per share in the range of $1.89-$2.05, with $1.97 per share at the midpoint.

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 a cent upward to $2.00 in the past two months. This also suggests year-over-year growth of 18.3%.

Here Is What Our Quantitative Model Predicts:

Our proven model predicts a surprise in terms of FFO per share for MAA 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.

MAA currently carries a Zacks Rank of 2 and has an Earnings ESP of +1.78%. 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) , UDR Inc. (UDR - 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.

UDR, scheduled to report quarterly figures on Jul 26, has an Earnings ESP of +0.66% 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.