A month has gone by since the last earnings report for AvalonBay Communities (AVB Quick QuoteAVB - Free Report) . Shares have lost about 4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AvalonBay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

AvalonBay Communities Q1 FFO & Revenues Top, '23 View Up

AvalonBay Communities reported first-quarter 2023 core FFO per share of $2.57, beating the Zacks Consensus Estimate of $2.54 and our estimate of $2.51. Moreover, the figure climbed 13.7% from the prior-year quarter’s tally.

The quarterly results reflect a year-over-year increase in same-store residential rental revenues driven by solid lease rate growth. The same-store average rental revenue per occupied home and occupancy improved sequentially. AvalonBay also raised its core FFO per share outlook for 2023.

Total revenues in the quarter came in at $674.7 million, outpacing the Zacks Consensus Estimate of $665.6 million. The figure increased 9.9% on a year-over-year basis and surpassed our estimate of $665.3 million.

Quarter in Detail

In the reported quarter, same-store residential rental revenues increased 9.5% year over year to $622.4 million. Same-store residential operating expenses rose 7.1% to $192.5 million. As a result, the same-store residential NOI climbed 10.7% to $430.4 million from the prior-year period.

Same-store average rental revenue per occupied home rose to $2,859 in the first quarter, up from $2,837 at the end of fourth-quarter 2022. The same-store economic occupancy improved 30 basis points sequentially to 96.1%. We projected the same to be 95.8%.

As of Mar 31, 2023, AvalonBay had 18 consolidated development communities under construction (expected to contain 5,762 apartment homes and 56,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.36 billion.

Balance Sheet

AvalonBay had $254.5 million in unrestricted cash and cash equivalents and $121.6 million in cash in escrow as of Mar 31, 2023. As of the same date, the company did not have any borrowings outstanding under its $2.25 billion unsecured revolving credit facility or its $500 million unsecured commercial paper note program.

Additionally, its annualized net debt-to-core EBITDAre for the January-March period was 4.6 times, and the unencumbered NOI for the three months ended Mar 31, 2023, was 95%.

2023 Outlook Raised

For second-quarter 2023, AvalonBay expects core FFO per share in the range of $2.54-$2.64.

For the full year, the company expects core FFO per share between $10.21 and $10.61, up from the prior guided range of $10.06-$10.56. This reflects an increase at the midpoint from $10.31 to $10.41.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, AvalonBay has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.