We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Arbor Realty (ABR) Retain Its Beat Streak in Q3 Earnings?
Read MoreHide Full Article
Arbor Realty Trust (ABR - Free Report) is scheduled to report third-quarter 2023 results on Oct 27, before market open. The company is expected to have witnessed year-over-year growth in net interest income, whereas its earnings are anticipated to have declined.
In the last reported quarter, the New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets, posted a distributable EPS of 57 cents, surpassing the Zacks Consensus Estimate of 47 cents. Net servicing revenues were $32.3 million in the quarter.
Over the trailing four quarters, Arbor Realty surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 28.6%. The graph below depicts this surprise history:
The mREIT sector was under pressure in the third quarter due to high volatility in the fixed-income markets and the wide spread between the 30-year Agency MBS and 10-year treasury rate. This is expected to have affected the book values of the industry players.
New Agency loan originations in the third quarter are expected to have expanded the company’s fee-based servicing portfolio, driving servicing revenues. The consensus mark for third-quarter 2023 net servicing revenues is pegged at $33.16 million, indicating a 2.5% sequential rise.
Arbor Realty’s diversified investment focus on commercial real estate debt investments, mortgage servicing and commercial mortgage-backed securities is likely to have enabled it to generate stable income in the third quarter despite the challenging economic environment.
Also, in the to-be-reported quarter, mortgage rates continued to rise, with the rate on a 30-year fixed mortgage reaching 7.31% in September, the highest level in nearly 23 years. Thus, mortgage originations and refinancing continued to decline in the quarter.
Lower levels of refinancing are anticipated to have reduced prepayment speed and driven asset yields. This is anticipated to have boosted net interest income in the quarter. The Zacks Consensus Estimate for the company’s quarterly net interest income is pegged at $329.1 million, suggesting an improvement of 26.7% on a year-over-year basis.
In the third quarter, the Federal Reserve increased policy rates by another 25 basis points, with the rates reaching a 22-year high of 5-5.25%. This is likely to have increased funding costs for ABR in the third quarter.
Also, the consensus estimate for third-quarter revenues from mortgage servicing rights is pinned at $14.1 million, suggesting a 13% sequential decline.
Lastly, there was a lack of any solid catalyst that could instill optimism prior to the third-quarter earnings release. The Zacks Consensus Estimate for quarterly earnings has been revised marginally downward to 48 cents over the past month, suggesting a year-over-year decline of 14.3%.
Here is What Our Quantitative Model Predicts
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is -6.74%.
Zacks Rank: Arbor Realty currently carries a Zacks Rank of 4 (Sell).
Stocks Worth a Look
Two stocks from the broader REIT sector, which you may want to consider as our model shows that these have the right combination of elements to report a surprise this time around, are Welltower (WELL - Free Report) and Simon Property Group (SPG - Free Report) .
Image: Bigstock
Can Arbor Realty (ABR) Retain Its Beat Streak in Q3 Earnings?
Arbor Realty Trust (ABR - Free Report) is scheduled to report third-quarter 2023 results on Oct 27, before market open. The company is expected to have witnessed year-over-year growth in net interest income, whereas its earnings are anticipated to have declined.
In the last reported quarter, the New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets, posted a distributable EPS of 57 cents, surpassing the Zacks Consensus Estimate of 47 cents. Net servicing revenues were $32.3 million in the quarter.
Over the trailing four quarters, Arbor Realty surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 28.6%. The graph below depicts this surprise history:
Arbor Realty Trust Price and EPS Surprise
Arbor Realty Trust price-eps-surprise | Arbor Realty Trust Quote
Factors at Play
The mREIT sector was under pressure in the third quarter due to high volatility in the fixed-income markets and the wide spread between the 30-year Agency MBS and 10-year treasury rate. This is expected to have affected the book values of the industry players.
New Agency loan originations in the third quarter are expected to have expanded the company’s fee-based servicing portfolio, driving servicing revenues. The consensus mark for third-quarter 2023 net servicing revenues is pegged at $33.16 million, indicating a 2.5% sequential rise.
Arbor Realty’s diversified investment focus on commercial real estate debt investments, mortgage servicing and commercial mortgage-backed securities is likely to have enabled it to generate stable income in the third quarter despite the challenging economic environment.
Also, in the to-be-reported quarter, mortgage rates continued to rise, with the rate on a 30-year fixed mortgage reaching 7.31% in September, the highest level in nearly 23 years. Thus, mortgage originations and refinancing continued to decline in the quarter.
Lower levels of refinancing are anticipated to have reduced prepayment speed and driven asset yields. This is anticipated to have boosted net interest income in the quarter. The Zacks Consensus Estimate for the company’s quarterly net interest income is pegged at $329.1 million, suggesting an improvement of 26.7% on a year-over-year basis.
In the third quarter, the Federal Reserve increased policy rates by another 25 basis points, with the rates reaching a 22-year high of 5-5.25%. This is likely to have increased funding costs for ABR in the third quarter.
Also, the consensus estimate for third-quarter revenues from mortgage servicing rights is pinned at $14.1 million, suggesting a 13% sequential decline.
Lastly, there was a lack of any solid catalyst that could instill optimism prior to the third-quarter earnings release. The Zacks Consensus Estimate for quarterly earnings has been revised marginally downward to 48 cents over the past month, suggesting a year-over-year decline of 14.3%.
Here is What Our Quantitative Model Predicts
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is -6.74%.
Zacks Rank: Arbor Realty currently carries a Zacks Rank of 4 (Sell).
Stocks Worth a Look
Two stocks from the broader REIT sector, which you may want to consider as our model shows that these have the right combination of elements to report a surprise this time around, are Welltower (WELL - Free Report) and Simon Property Group (SPG - Free Report) .
Welltower is slated to report its quarterly numbers on Oct 30. WELL presently has an Earnings ESP of +0.75% and a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Simon Property is slated to report its quarterly numbers on Oct 30. SPG has an Earnings ESP of +0.12% and a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.