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What's in Store for Medical Properties (MPW) in Q4 Earnings?

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Medical Properties Trust, Inc.  (MPW - Free Report) — also known as MPT — is scheduled to report fourth-quarter and full-year 2022 results on Feb 23, before the market opens. The company’s quarterly results are expected to reflect a year-over-year decline in revenues and funds from operations (FFO) per share.

In the last reported quarter, this real estate investment trust (REIT), which acquires and develops net-leased hospital facilities, posted normalized FFO per share of 45 cents, in line with the Zacks Consensus Estimate.

Over the trailing four quarters, MPT beat the Zacks Consensus Estimate on two occasions and met the same in the remaining two, the average being 1.10%. This is depicted in the graph below:

Factors at Play

In fourth-quarter 2022, Medical Properties is likely to have benefited from its premium acute care portfolio and healthy operator relationships. The company’s reliable, sustainable and inflation-protected cash-based business model and the improving operating fundamentals of its operators are likely to have driven its performance.

Also, MPW’s capital-recycling activities during the to-be-reported quarter are expected to have added to its balance-sheet strength.  

In October 2022, it entered definitive agreements to dispose of three Connecticut hospitals to Prospect Medical Holdings, the current lessee, for almost $457 million. The transaction is anticipated to be completed in 2023, subject to certain regulatory approvals.

MPT intends to utilize the proceeds from the transaction for debt reduction and to fund select acquisitions and other investment opportunities.

However, the impact of higher interest rates are expected to have cast a pall on its quarterly performance.

The Zacks Consensus Estimate for fourth-quarter 2022 rent billed is pegged at $244 million. While the figure suggests a 5.2% improvement from the prior quarter’s $232 million, it indicates a 6.2% decline from the year-ago period’s $260 million.

Straight-line rent is estimated at $59 million, implying a sequential increase from $26.55 million. However, it indicates a decline from $66 million reported in the prior-year quarter.

The consensus estimate for income from financing leases is pinned at $50 million, suggesting a decline from $51 million reported in the year-ago quarter.

The Zacks Consensus Estimate for quarterly revenues is pegged at $378.6 million, implying a 7.5% fall from the prior-year quarter’s reported figure.

Medical Properties’ activities during the fourth quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at 43 cents over the past month. The figure implies a year-over-year fall of 8.5%.

The company projected 2022 normalized FFO per share in the range of $1.80-$1.82.

For the full year, the Zacks Consensus Estimate for FFO per share has been unrevised at $1.81 over the past month. The figure, however, indicates a 3.4% rise from the year-earlier reported figure on revenues of $1.54 billion.

Earnings Whispers

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

Earnings ESP: MPW has an Earnings ESP of +0.29%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: MPW 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 from the REIT sector, which according to our model, have the right combination of elements to deliver a surprise this reporting cycle:

Park Hotels & Resorts (PK - Free Report) is scheduled to report quarterly figures on Feb 22. PK currently has an Earnings ESP of +3.66% and a Zacks Rank #3.

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 of 3.

DigitalBridge Group (DBRG - Free Report) is scheduled to report quarterly figures on Feb 24. DBRG currently has an Earnings ESP of +46.67% and 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 represents FFO — a widely used metric to gauge the performance of REITs.

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