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What's in the Cards for STORE Capital (STOR) in Q2 Earnings?

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STORE Capital Corporation (STOR - Free Report) is set to report second-quarter 2022 earnings on Aug 3 after the bell. The company’s results are projected to display year-over-year increases in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Scottsdale, AZ-based net-lease REIT delivered a surprise of 7.69% with respect to the FFO per share.

The company has a decent surprise history, having surpassed estimates in each of the trailing four quarters, resulting in an average beat of 3.49%. The graph below depicts the surprise history of the company:

STORE Capital Corporation Price and EPS Surprise

STORE Capital Corporation Price and EPS Surprise

STORE Capital Corporation price-eps-surprise | STORE Capital Corporation Quote

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

Factors to Consider

STORE Capital is engaged in the acquisition, investment and management of Single Tenant Operational Real Estate. This REIT has emerged as one of the fastest-growing net-lease REITs. Its customers consist of regional and national companies with a strong track record of growth. STORE Capital has a diverse investment portfolio. Also, geographically, investments are spread across 49 states.

This diversification is likely to have helped STOR enjoy steady rental revenues in the second quarter. It also has adequate financial flexibility, enjoying access to the equity and debt markets.

The company is also active on the investment front and capital recycling, and its second-quarter results are likely to reflect the benefits of an increase in the real estate investment portfolio size. An increase in property locations and customer base is anticipated to have bolstered its top line during the quarter under review.

Its direct origination model results in a healthy and active investment pipeline, and the company’s focus on service, manufacturing and service-oriented retail industries, which are essential and vital, helps secure steady cash flows.

The Zacks Consensus Estimate for second-quarter rental revenues is currently pegged at $200.67 million, suggesting an increase from $180.16 million in the year-ago period. The consensus mark for interest income on loans and financing stands at $13.18 million, calling for a rise from $11.66 million in the year-ago period. The company’s quarterly revenues are pegged at $207.58 million, calling for a 15.22% increase from the year-ago reported figure.

STORE Capital’s activities during the April-June period were adequate to secure analysts’ confidence. The consensus estimate for the second-quarter FFO per share has moved a cent north over the past month to 55 cents. The figure also suggests a 17.02% increase year over year.

Here Is What Our Quantitative Model Predicts:

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

STORE Capital currently carries a Zacks Rank #3 and has an Earnings ESP of +0.23%. 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 two other stocks from the broader REIT sector — Public Storage (PSA - Free Report) and Host Hotels & Resorts, Inc. (HST - 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.

Public Storage, slated to release quarterly numbers on Aug 4, has an Earnings ESP of +0.31% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Host Hotels & Resorts, scheduled to report quarterly numbers on Aug 3, currently has an Earnings ESP of +9.18 % 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 represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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