AvalonBay Communities, Inc. (AVB Quick QuoteAVB - Free Report) is slated to report third-quarter 2022 earnings on Nov 3 after market close. 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 residential real estate investment trust (REIT) delivered a surprise of 3.40% in terms of FFO per share. The second-quarter results reflected a year-over-year increase in same-store residential rental revenues, driven by healthy lease rates.

Over the last four quarters, AvalonBay surpassed the Zacks Consensus Estimate on three occasions and met the same on the other, the average beat being 2.07%. The graph below depicts the surprise history of the company:

AvalonBay Communities, Inc. Price and EPS Surprise

AvalonBay Communities, Inc. price-eps-surprise | AvalonBay Communities, Inc. Quote

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

Factors to Consider

For the U.S. apartment market, demand remained healthy initially in the third quarter, though normal seasonality returned in September.

AVB, with its high-quality assets in some of the premium markets of the country, is likely to have benefited from the favorable environment. With the reopening of offices and the return of lifestyle amenities to established markets, a continued flow of residents is observed in the urban and job-centered suburban markets, which is encouraging.

Also, due to the high cost of homeownership, the transition from renters to homeowners is difficult, making the renting of apartment units a viable option. With these positives, AvalonBay is expected to have experienced a solid peak leasing session with healthy occupancy and rent.

The Zacks Consensus Estimate of $666.3 million for third-quarter revenues suggests a 14.7% year-over-year increase.

Moreover, AvalonBay is banking on technology, scale and organizational capabilities to drive innovation and margin expansion in its portfolio. It is also likely to retain its balance sheet strength.

In the second-quarter earnings release, AvalonBay projected core FFO per share in the range of $2.47-$2.57 for the third quarter.

The Zacks Consensus Estimate for the July-September quarter’s FFO per share has remained unchanged at $2.53 over the past month. Also, it suggests a year-over-year increase of 22.8%.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for AvalonBay 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 not the case here.

AvalonBay currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks from the broader REIT sector — Public Storage (PSA Quick QuotePSA - Free Report) , Extra Space Storage Inc. (EXR Quick QuoteEXR - Free Report) and SBA Communications Corporation (SBAC Quick QuoteSBAC - 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 Nov 1, has an Earnings ESP of +1.34% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SBA Communications Corporation, scheduled to report quarterly numbers on Oct 31, currently has an Earnings ESP of +0.44% and carries a Zacks Rank of 3.

Extra Space Storage, slated to report third-quarter earnings on Nov 1, currently has an Earnings ESP of +1.31% 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.