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The Zacks Analyst Blog Highlights American Tower, Welltower, VICI Properties, Kimco Realty and CBRE
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For Immediate Release
Chicago, IL – January 31, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: American Tower Corp. (AMT - Free Report) , Welltower Inc. (WELL - Free Report) , VICI Properties Inc. (VICI - Free Report) , Kimco Realty Corp. (KIM - Free Report) and CBRE Group (CBRE - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
4 REITs Likely to Emerge Victorious This Earnings Season
The fourth-quarter reporting cycle is underway, and investors can be lured by the profits of companies that have already released their quarterly figures. However, rather than adding the stock later to your portfolio, accumulating the ones poised to beat estimates can generate higher gains. This is because an earnings beat usually serves as a catalyst, raising investors' confidence in the stock and resulting in price appreciation.
This is likely to be reflected in the earnings releases of American Tower Corp., Welltower Inc., VICI Properties Inc. and Kimco Realty Corp..
Moreover, rather than fretting too much about the Fed's impending decision on rates, focusing on REITs will be a smart move. This is because with the industry offering the real estate structure for several economic activities, be it real or virtual, there are pockets of strength, even in a challenging environment.
For example, the advancement in mobile technology, such as 4G and 5G, and the proliferation of bandwidth-intensive applications propel growth in mobile data usage globally. Moreover, the advent of next-generation technologies, including autonomous vehicle networks and the Internet of Things, along with the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios, has rapidly increased wireless connectivity usage. Amid this, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. This is likely to have helped the tower REITs experience a favorable environment in the fourth quarter.
Similarly, an aging population and a rise in senior citizens' healthcare expenditure are likely to aid the senior housing properties. The outpatient medical segment is also expected to benefit from favorable outpatient visit trends, in turn boosting the performance of the healthcare REITs dealing in such assets. Moreover, the rebound in demand for gaming facilities and other hospitality and entertainment destinations following the waning of pandemic concerns is likely to have aided the REITs' performances, which are dealing with such assets in the quarter.
In the case of retail real estate, we note that per a report from CBRE Group, the U.S. overall retail availability rate hit a record-low 4.7% at year-end, down 10 basis points (bps) quarter over quarter and 31 bps year over year. Among the categories, the neighborhood, community & strip center segment tightened the most. This property type continues to experience positive net absorption, with the fourth quarter net absorption of 12.5 million square feet, bringing the 2023 annual total to 40 million square feet.
There is a dearth of supply, and elevated construction costs and interest rates are likely to continue to keep new supply in check. Fourth-quarter and full-year construction completions of 5.3 million and 27 million square feet marked record lows. The average asking rent was up by 0.8% in the fourth quarter and 2.4% for the year to $23.76 per square foot, and both the growth rates were above their 10-year averages, per the CBRE report.
The Zacks Methodology
Picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that for stocks with this combination of the Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70%.
Here are four REITs that have the right combination of elements to deliver positive surprises this season.
American Tower Corp currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.05% for the quarter under review. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 6.42%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Tower is poised to benefit from its extensive and geographically diversified communication real estate portfolio. The high capital spending by wireless carriers amid growing wireless penetration, accelerated 5G network deployment efforts and spectrum auctions are likely to have kept demand up, poising it well to grow. Long-term leases with its tenants assure stable cash flows. Along with a decent financial position, AMT's continued efforts toward macro-tower investments to expand its global footprint and address the demand in these markets bode well.
American Tower is scheduled to release earnings on Feb 27 before market open.
The Zacks Consensus Estimate of $2.73 billion for quarterly revenues suggests a 1.03% increase year over year. The consensus estimate for the quarterly funds from operations (FFO) per share is pegged at $2.18.
Welltower carries a Zacks Rank of 3 and has an Earnings ESP of +0.80% for the to-be-reported quarter at present. Over the trailing four quarters, this healthcare REIT surpassed the Zacks Consensus Estimate on each occasion, the average surprise being 3.23%. You can see the complete list of today's Zacks #1 Rank stocks here.
According to its latest business update, Welltower expects its 2023 normalized FFO at the high end of its previously issued guidance range of $3.59-$3.63 per share. The Zacks Consensus Estimate for the same is currently pegged at $3.61.
With respect to its Seniors Housing Operating portfolio, the company expects to achieve full-year 2023 same-store year-over-year revenue growth in line with the prior issued guidance of 9.8%. Welltower attributed its asset management initiatives and additional improvement in demand/supply conditions to lead to favorable trends across all geographies.
While giving its update, WELL noted that the year-over-year occupancy growth in the fourth quarter of 2023 "meaningfully outperformed historical seasonality" and marked the strongest quarterly growth of the year. Welltower also noted that its same-store expenses per occupied room growth continued to decelerate in the fourth quarter as labor market conditions continued to normalize, while broader inflationary pressures continued to subside. Consequently, WELL expects its year-over-year same-store net operating income growth to come in at around the midpoint of its prior issued guidance of 23-26%.
Welltower is set to release earnings results on Feb 13 after market close.
Currently, the Zacks Consensus Estimate for the company's quarterly revenues stands at $1.71 billion, indicating a 12.58% increase year over year. The Zacks Consensus Estimate for the quarterly normalized FFO per share of 94 cents suggests year-over-year growth of 13.25%.
VICI Properties Inc. holds a Zacks Rank #2 and has an Earnings ESP of +2.16% at present. Over the trailing four quarters, VICI surpassed estimates on each occasion, the average surprise being 1.93%.
VICI Properties owns a geographically diverse portfolio, which includes a mix of gaming, hotel and entertainment assets that are located in the high barriers-to-entry markets across the United States and Canada. It enjoys ownership of three of the most iconic entertainment facilities on the Las Vegas Strip, namely Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas.
VICI's healthy relationships with the highest quality experiential operators are likely to have paid off well. The long-term triple-net leases with such tenants that are embedded with CPI-based rent escalators are likely to have aided stable revenue generation during the quarter, boosting its top-line growth. Further, the company's robust balance sheet position is likely to have supported its growth endeavors.
VICI Properties is scheduled to report its quarterly figures on Feb 22 after market close.
The Zacks Consensus Estimate for quarterly revenues stands at $926.32 million, calling for a 20.32% year-over-year increase. The consensus mark for the fourth-quarter FFO per share of 55 cents implies 7.84% year-over-year growth.
Kimco Realty Corporation currently carries a Zacks Rank of 2 and has an Earnings ESP of +2.56% for the quarter under review. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on one occasion, met in two and missed in the other period.
In the fourth quarter, Kimco Realty is expected to have benefited from its portfolio of premium shopping centers, which are predominantly grocery-anchored and are in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, having several growth levers. A diversified tenant base assures stable cash flows. A solid balance sheet is likely to have supported its growth endeavors.
Kimco Realty is scheduled to announce fourth-quarter figures on Feb 8 before market open.
The Zacks Consensus Estimate of $448.77 million for quarterly revenues suggests a 2.03% increase year over year. The consensus estimate for the quarterly FFO per share is currently pegged at 39 cents, calling for a 2.63% increase year over year.
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.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights American Tower, Welltower, VICI Properties, Kimco Realty and CBRE
For Immediate Release
Chicago, IL – January 31, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: American Tower Corp. (AMT - Free Report) , Welltower Inc. (WELL - Free Report) , VICI Properties Inc. (VICI - Free Report) , Kimco Realty Corp. (KIM - Free Report) and CBRE Group (CBRE - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
4 REITs Likely to Emerge Victorious This Earnings Season
The fourth-quarter reporting cycle is underway, and investors can be lured by the profits of companies that have already released their quarterly figures. However, rather than adding the stock later to your portfolio, accumulating the ones poised to beat estimates can generate higher gains. This is because an earnings beat usually serves as a catalyst, raising investors' confidence in the stock and resulting in price appreciation.
This is likely to be reflected in the earnings releases of American Tower Corp., Welltower Inc., VICI Properties Inc. and Kimco Realty Corp..
Moreover, rather than fretting too much about the Fed's impending decision on rates, focusing on REITs will be a smart move. This is because with the industry offering the real estate structure for several economic activities, be it real or virtual, there are pockets of strength, even in a challenging environment.
For example, the advancement in mobile technology, such as 4G and 5G, and the proliferation of bandwidth-intensive applications propel growth in mobile data usage globally. Moreover, the advent of next-generation technologies, including autonomous vehicle networks and the Internet of Things, along with the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios, has rapidly increased wireless connectivity usage. Amid this, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. This is likely to have helped the tower REITs experience a favorable environment in the fourth quarter.
Similarly, an aging population and a rise in senior citizens' healthcare expenditure are likely to aid the senior housing properties. The outpatient medical segment is also expected to benefit from favorable outpatient visit trends, in turn boosting the performance of the healthcare REITs dealing in such assets. Moreover, the rebound in demand for gaming facilities and other hospitality and entertainment destinations following the waning of pandemic concerns is likely to have aided the REITs' performances, which are dealing with such assets in the quarter.
In the case of retail real estate, we note that per a report from CBRE Group, the U.S. overall retail availability rate hit a record-low 4.7% at year-end, down 10 basis points (bps) quarter over quarter and 31 bps year over year. Among the categories, the neighborhood, community & strip center segment tightened the most. This property type continues to experience positive net absorption, with the fourth quarter net absorption of 12.5 million square feet, bringing the 2023 annual total to 40 million square feet.
There is a dearth of supply, and elevated construction costs and interest rates are likely to continue to keep new supply in check. Fourth-quarter and full-year construction completions of 5.3 million and 27 million square feet marked record lows. The average asking rent was up by 0.8% in the fourth quarter and 2.4% for the year to $23.76 per square foot, and both the growth rates were above their 10-year averages, per the CBRE report.
The Zacks Methodology
Picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that for stocks with this combination of the Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70%.
Here are four REITs that have the right combination of elements to deliver positive surprises this season.
American Tower Corp currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.05% for the quarter under review. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 6.42%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Tower is poised to benefit from its extensive and geographically diversified communication real estate portfolio. The high capital spending by wireless carriers amid growing wireless penetration, accelerated 5G network deployment efforts and spectrum auctions are likely to have kept demand up, poising it well to grow. Long-term leases with its tenants assure stable cash flows. Along with a decent financial position, AMT's continued efforts toward macro-tower investments to expand its global footprint and address the demand in these markets bode well.
American Tower is scheduled to release earnings on Feb 27 before market open.
The Zacks Consensus Estimate of $2.73 billion for quarterly revenues suggests a 1.03% increase year over year. The consensus estimate for the quarterly funds from operations (FFO) per share is pegged at $2.18.
Welltower carries a Zacks Rank of 3 and has an Earnings ESP of +0.80% for the to-be-reported quarter at present. Over the trailing four quarters, this healthcare REIT surpassed the Zacks Consensus Estimate on each occasion, the average surprise being 3.23%. You can see the complete list of today's Zacks #1 Rank stocks here.
According to its latest business update, Welltower expects its 2023 normalized FFO at the high end of its previously issued guidance range of $3.59-$3.63 per share. The Zacks Consensus Estimate for the same is currently pegged at $3.61.
With respect to its Seniors Housing Operating portfolio, the company expects to achieve full-year 2023 same-store year-over-year revenue growth in line with the prior issued guidance of 9.8%. Welltower attributed its asset management initiatives and additional improvement in demand/supply conditions to lead to favorable trends across all geographies.
While giving its update, WELL noted that the year-over-year occupancy growth in the fourth quarter of 2023 "meaningfully outperformed historical seasonality" and marked the strongest quarterly growth of the year. Welltower also noted that its same-store expenses per occupied room growth continued to decelerate in the fourth quarter as labor market conditions continued to normalize, while broader inflationary pressures continued to subside. Consequently, WELL expects its year-over-year same-store net operating income growth to come in at around the midpoint of its prior issued guidance of 23-26%.
Welltower is set to release earnings results on Feb 13 after market close.
Currently, the Zacks Consensus Estimate for the company's quarterly revenues stands at $1.71 billion, indicating a 12.58% increase year over year. The Zacks Consensus Estimate for the quarterly normalized FFO per share of 94 cents suggests year-over-year growth of 13.25%.
VICI Properties Inc. holds a Zacks Rank #2 and has an Earnings ESP of +2.16% at present. Over the trailing four quarters, VICI surpassed estimates on each occasion, the average surprise being 1.93%.
VICI Properties owns a geographically diverse portfolio, which includes a mix of gaming, hotel and entertainment assets that are located in the high barriers-to-entry markets across the United States and Canada. It enjoys ownership of three of the most iconic entertainment facilities on the Las Vegas Strip, namely Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas.
VICI's healthy relationships with the highest quality experiential operators are likely to have paid off well. The long-term triple-net leases with such tenants that are embedded with CPI-based rent escalators are likely to have aided stable revenue generation during the quarter, boosting its top-line growth. Further, the company's robust balance sheet position is likely to have supported its growth endeavors.
VICI Properties is scheduled to report its quarterly figures on Feb 22 after market close.
The Zacks Consensus Estimate for quarterly revenues stands at $926.32 million, calling for a 20.32% year-over-year increase. The consensus mark for the fourth-quarter FFO per share of 55 cents implies 7.84% year-over-year growth.
Kimco Realty Corporation currently carries a Zacks Rank of 2 and has an Earnings ESP of +2.56% for the quarter under review. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on one occasion, met in two and missed in the other period.
In the fourth quarter, Kimco Realty is expected to have benefited from its portfolio of premium shopping centers, which are predominantly grocery-anchored and are in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, having several growth levers. A diversified tenant base assures stable cash flows. A solid balance sheet is likely to have supported its growth endeavors.
Kimco Realty is scheduled to announce fourth-quarter figures on Feb 8 before market open.
The Zacks Consensus Estimate of $448.77 million for quarterly revenues suggests a 2.03% increase year over year. The consensus estimate for the quarterly FFO per share is currently pegged at 39 cents, calling for a 2.63% increase year over year.
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.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.