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Welltower (WELL) to Report Q4 Earnings: What's in the Cards?
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Welltower, Inc. (WELL - Free Report) is slated to report fourth-quarter and full-year 2023 results on Feb 13 after market close. The quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Toledo, Ohio-based healthcare real estate investment trust (REIT) witnessed a normalized FFO per share of 92 cents, beating the Zacks Consensus Estimate by 3.37%. Results reflected better-than-anticipated revenues.
Over the preceding four quarters, Welltower’s FFO per share beat the Zacks Consensus Estimate on each occasion, the average beat being 3.23%. The graph below depicts this surprise history:
Welltower owns a diversified portfolio in the healthcare real estate industry in the major, high-growth markets of the United States, Canada and the United Kingdom.
During the fourth quarter, the company’s Seniors Housing Operating (“SHO”) portfolio is likely to have continued to benefit from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. In addition, diminishing new supply and improved affordability are expected to have provided a favorable operating environment for the SHO portfolio.
In its January Business 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. However, as disclosed earlier, revenue per occupied room growth slowed from the third quarter of 2023, which was due to the base-year impact of a one-time pull forward of a large operator’s in-place rent increases to the fourth quarter of 2022.
Welltower also said 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%.
For its SHO 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%. The company attributed its asset management initiatives and additional improvement in demand/supply conditions to lead to favorable trends across all geographies.
Further, Welltower’s long-term leases with its healthcare management companies or operators are anticipated to have led to stable revenue generation, boosting its top line.
The Zacks Consensus Estimate for fourth-quarter resident fees and services is pegged at $1.22 billion, indicating an increase from the prior quarter’s reported number of $1.19 billion and from the year-ago quarter’s $1.1 billion. The consensus mark for quarterly rental income stands at $383.75 million, implying a rise from $372 million in the year-ago period.
The Zacks Consensus Estimate for quarterly total revenues is pegged at $1.71 billion, suggesting a rise of 12.33% from the prior-year period’s reported number.
Additionally, WELL’s accretive capital deployment activity has been driving growth across its portfolio. Per the January business update, Welltower completed pro rata gross investments of $2.8 billion in the fourth quarter and $4.8 billion during the full year 2023. The healthcare REIT noted that the second half of 2023 marked one of the most active periods of capital deployment in WELL’s history.
Further, Welltower had raised $1.7 billion of proceeds through an equity offering announced in November 2023, including the full exercise of the green shoe. The company also noted that its announced acquisition activity is to be fully equity-funded through cash on hand, with adequate cash on hand to meet its 2024 debt maturities.
WELL’s activities during the quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for fourth-quarter FFO per share has been revised 2 cents upward to 94 cents over the past three months. Moreover, the figure suggests an increase of 13.25% from the year-ago reported number.
Per its January 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.
For the full year, the Zacks Consensus Estimate for normalized FFO per share is pegged at $3.61. The figure indicates a 7.76% increase year over year on 12.57% year-over-year growth in revenues to $6.60 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Welltower this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Welltower currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — VICI Properties Inc. (VICI - Free Report) and American Homes 4 Rent (AMH - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Welltower (WELL) to Report Q4 Earnings: What's in the Cards?
Welltower, Inc. (WELL - Free Report) is slated to report fourth-quarter and full-year 2023 results on Feb 13 after market close. The quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Toledo, Ohio-based healthcare real estate investment trust (REIT) witnessed a normalized FFO per share of 92 cents, beating the Zacks Consensus Estimate by 3.37%. Results reflected better-than-anticipated revenues.
Over the preceding four quarters, Welltower’s FFO per share beat the Zacks Consensus Estimate on each occasion, the average beat being 3.23%. The graph below depicts this surprise history:
Welltower Inc. Price and EPS Surprise
Welltower Inc. price-eps-surprise | Welltower Inc. Quote
Factors at Play
Welltower owns a diversified portfolio in the healthcare real estate industry in the major, high-growth markets of the United States, Canada and the United Kingdom.
During the fourth quarter, the company’s Seniors Housing Operating (“SHO”) portfolio is likely to have continued to benefit from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. In addition, diminishing new supply and improved affordability are expected to have provided a favorable operating environment for the SHO portfolio.
In its January Business 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. However, as disclosed earlier, revenue per occupied room growth slowed from the third quarter of 2023, which was due to the base-year impact of a one-time pull forward of a large operator’s in-place rent increases to the fourth quarter of 2022.
Welltower also said 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%.
For its SHO 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%. The company attributed its asset management initiatives and additional improvement in demand/supply conditions to lead to favorable trends across all geographies.
Further, Welltower’s long-term leases with its healthcare management companies or operators are anticipated to have led to stable revenue generation, boosting its top line.
The Zacks Consensus Estimate for fourth-quarter resident fees and services is pegged at $1.22 billion, indicating an increase from the prior quarter’s reported number of $1.19 billion and from the year-ago quarter’s $1.1 billion. The consensus mark for quarterly rental income stands at $383.75 million, implying a rise from $372 million in the year-ago period.
The Zacks Consensus Estimate for quarterly total revenues is pegged at $1.71 billion, suggesting a rise of 12.33% from the prior-year period’s reported number.
Additionally, WELL’s accretive capital deployment activity has been driving growth across its portfolio. Per the January business update, Welltower completed pro rata gross investments of $2.8 billion in the fourth quarter and $4.8 billion during the full year 2023. The healthcare REIT noted that the second half of 2023 marked one of the most active periods of capital deployment in WELL’s history.
Further, Welltower had raised $1.7 billion of proceeds through an equity offering announced in November 2023, including the full exercise of the green shoe. The company also noted that its announced acquisition activity is to be fully equity-funded through cash on hand, with adequate cash on hand to meet its 2024 debt maturities.
WELL’s activities during the quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for fourth-quarter FFO per share has been revised 2 cents upward to 94 cents over the past three months. Moreover, the figure suggests an increase of 13.25% from the year-ago reported number.
Per its January 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.
For the full year, the Zacks Consensus Estimate for normalized FFO per share is pegged at $3.61. The figure indicates a 7.76% increase year over year on 12.57% year-over-year growth in revenues to $6.60 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Welltower this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Welltower currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — VICI Properties Inc. (VICI - Free Report) and American Homes 4 Rent (AMH - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
VICI Properties, scheduled to report quarterly numbers on Feb 22, has an Earnings ESP of +2.16% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Homes 4 Rent, slated to release quarterly numbers on Feb 22, has an Earnings ESP of +0.80% and carries a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.