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Realty Income (O) to Post Q4 Earnings: What's in the Cards?
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Realty Income Corp. (O - Free Report) is slated to report fourth-quarter and 2022 results on Feb 21, after the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this monthly dividend-paying real estate investment trust (REIT) delivered a surprise of 2.08% in terms of adjusted FFO per share. Results reflected better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being 1.58%. This is depicted in the graph below:
Per a report from CBRE Group (CBRE - Free Report) , the retail real estate market remained robust in the fourth quarter, with resilient demand driving the retail availability rate to 4.9% after hitting a high of 6.6% in fourth-quarter 2020.
Retail asking rent improved 2.5% year over year for the second consecutive quarter to $22.78 per square foot in the fourth quarter. This was primarily driven by strong demand and limited supply.
Retail space absorption was 12.7 million square feet for fourth-quarter 2022, marking the ninth consecutive quarter of positive retail absorption per the CBRE Group report.
Realty Income, which signed a definitive agreement with the subsidiaries of CIM Real Estate Finance Trust, Inc. to acquire up to 185 single-tenant retail and industrial properties for $894 million in cash in December 2022, is anticipated to have benefited from the above-mentioned factors.
The increase in consumers’ preference for in-person shopping experiences, following the pandemic downtime, has been driving the recovery in the retail real estate industry. Amid this, the demand for O’s properties, comprising major industries that sell essential goods and services in all the U.S. states, Puerto Rico, the U.K. and Spain, is likely to have aided its fourth-quarter cashflows.
This retail REIT has a diversified tenant base and derives a majority of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and/or low-price-point component to their business. Benefiting from this, the company is likely to have enjoyed stable rental revenues in the quarter.
Realty Income’s solid underlying real estate quality and prudent underwriting at acquisitions helped it maintain its high occupancy levels consistently. In the fourth quarter, the occupancy level is likely to have been healthy.
Amid these tailwinds, Realty Income’s top line is expected to have improved. The Zacks Consensus Estimate for quarterly revenues is pegged at $853.3 million, suggesting a 24.6% increase from the year-ago quarter’s reported figure. The consensus mark for rental revenues (excluding reimbursable) is $774.31 million, up from the prior-year quarter’s $643.27 million.
Realty Income remained focused on the acquisition front in the to-be-reported quarter. In December 2022, it closed its $1.7-billion sale-leaseback of Encore Boston Harbor, which marked the company’s first acquisition in the gaming industry. The transaction reflected O’s strategy of utilizing its platform and scale, purchasing prime real estate assets across an array of industries and partnering with industry blue chips.
However, increasing interest expenses are anticipated to have cast a pall on the company’s quarterly performance.
The company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the fourth-quarter FFO per share has been revised 1% downward to 98 cents in the past month. The figure, however, implies 4.3% year-over-year growth.
For 2022, Realty Income projected an adjusted FFO per share of $3.87-$3.94. Same-store rent growth is estimated at 2% and occupancy is expected to be more than 98%. The full-year acquisition volume is projected to be more than $6 billion.
For the year, the Zacks Consensus Estimate for FFO per share has moved marginally southward to $3.95 over the past month. Nonetheless, the figure indicates a 10% year-over-year increase on revenues of $3.30 billion.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Realty Income this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher increases the odds of a beat. However, that is not the case here.
Earnings ESP: O has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: O currently carries a Zacks Rank #4 (Sell).
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Extra Space Storage (EXR - Free Report) is scheduled to report quarterly figures on Feb 22. EXR currently has an Earnings ESP of +4.01% and a Zacks Rank #3.
VICI Properties (VICI - Free Report) is scheduled to report quarterly figures on Feb 23. VICI currently has an Earnings ESP of +0.29% and a Zacks Rank #2 (Buy).
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.
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Realty Income (O) to Post Q4 Earnings: What's in the Cards?
Realty Income Corp. (O - Free Report) is slated to report fourth-quarter and 2022 results on Feb 21, after the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this monthly dividend-paying real estate investment trust (REIT) delivered a surprise of 2.08% in terms of adjusted FFO per share. Results reflected better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being 1.58%. This is depicted in the graph below:
Realty Income Corporation Price and EPS Surprise
Realty Income Corporation price-eps-surprise | Realty Income Corporation Quote
Per a report from CBRE Group (CBRE - Free Report) , the retail real estate market remained robust in the fourth quarter, with resilient demand driving the retail availability rate to 4.9% after hitting a high of 6.6% in fourth-quarter 2020.
Retail asking rent improved 2.5% year over year for the second consecutive quarter to $22.78 per square foot in the fourth quarter. This was primarily driven by strong demand and limited supply.
Retail space absorption was 12.7 million square feet for fourth-quarter 2022, marking the ninth consecutive quarter of positive retail absorption per the CBRE Group report.
Realty Income, which signed a definitive agreement with the subsidiaries of CIM Real Estate Finance Trust, Inc. to acquire up to 185 single-tenant retail and industrial properties for $894 million in cash in December 2022, is anticipated to have benefited from the above-mentioned factors.
The increase in consumers’ preference for in-person shopping experiences, following the pandemic downtime, has been driving the recovery in the retail real estate industry. Amid this, the demand for O’s properties, comprising major industries that sell essential goods and services in all the U.S. states, Puerto Rico, the U.K. and Spain, is likely to have aided its fourth-quarter cashflows.
This retail REIT has a diversified tenant base and derives a majority of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and/or low-price-point component to their business. Benefiting from this, the company is likely to have enjoyed stable rental revenues in the quarter.
Realty Income’s solid underlying real estate quality and prudent underwriting at acquisitions helped it maintain its high occupancy levels consistently. In the fourth quarter, the occupancy level is likely to have been healthy.
Amid these tailwinds, Realty Income’s top line is expected to have improved. The Zacks Consensus Estimate for quarterly revenues is pegged at $853.3 million, suggesting a 24.6% increase from the year-ago quarter’s reported figure. The consensus mark for rental revenues (excluding reimbursable) is $774.31 million, up from the prior-year quarter’s $643.27 million.
Realty Income remained focused on the acquisition front in the to-be-reported quarter. In December 2022, it closed its $1.7-billion sale-leaseback of Encore Boston Harbor, which marked the company’s first acquisition in the gaming industry. The transaction reflected O’s strategy of utilizing its platform and scale, purchasing prime real estate assets across an array of industries and partnering with industry blue chips.
However, increasing interest expenses are anticipated to have cast a pall on the company’s quarterly performance.
The company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the fourth-quarter FFO per share has been revised 1% downward to 98 cents in the past month. The figure, however, implies 4.3% year-over-year growth.
For 2022, Realty Income projected an adjusted FFO per share of $3.87-$3.94. Same-store rent growth is estimated at 2% and occupancy is expected to be more than 98%. The full-year acquisition volume is projected to be more than $6 billion.
For the year, the Zacks Consensus Estimate for FFO per share has moved marginally southward to $3.95 over the past month. Nonetheless, the figure indicates a 10% year-over-year increase on revenues of $3.30 billion.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Realty Income this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher increases the odds of a beat. However, that is not the case here.
Earnings ESP: O has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: O currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Extra Space Storage (EXR - Free Report) is scheduled to report quarterly figures on Feb 22. EXR currently has an Earnings ESP of +4.01% and a Zacks Rank #3.
VICI Properties (VICI - Free Report) is scheduled to report quarterly figures on Feb 23. VICI currently has an Earnings ESP of +0.29% and a Zacks Rank #2 (Buy).
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.