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Is a Beat in the Offing for Ventas (VTR) in Q4 Earnings?
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Ventas, Inc. (VTR - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 14 after market close. The quarterly results are likely to display year-over-year growth in both revenues and normalized funds from operations (FFO) per share.
In the last reported quarter, this Chicago, IL-based healthcare real estate investment trust (REIT) delivered a normalized FFO per share of 75 cents, beating the Zacks Consensus Estimate by 1.35%. The quarterly results reflected better-than-anticipated revenues. Also, Ventas’ same-store cash net operating income (NOI) increased year over year on strong performance across the portfolio.
Ventas’ normalized FFO per share surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 2.45%. The graph below depicts this surprise history:
Ventas’ senior housing operating portfolio (SHOP) is likely to have benefited in the fourth quarter from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. With the segment witnessing positive net move-ins, occupancy is expected to have remained high.
Further, strong pricing power and moderating operating expenses are likely to have driven NOI growth for this segment during the quarter. We expect fourth-quarter SHOP’s NOI to increase 20% year over year.
Increasing life expectancy of the U.S. population and biopharma drug development growth opportunities are likely to have fueled the demand for life-science assets. Benefiting from this positive trend, Ventas’ research portfolio is anticipated to have fared well during the to-be-reported quarter. We estimate that fourth-quarter Outpatient Medical and Research Portfolio NOI will grow 6.2% year over year.
A well-diversified tenant base, which includes several industry bellwethers, is expected to have contributed to stable rental revenue generation, boosting the top line.
The Zacks Consensus Estimate for fourth-quarter triple-net leased rental income is pegged at $156.72 million, suggesting an increase from $147.08 million reported in the year-ago period. The consensus mark for outpatient medical and research portfolio rental income for the fourth quarter is pegged at $224.94 million, indicating growth from $200.51 reported in the year-ago period.
The Zacks Consensus Estimate for fourth-quarter resident fees and services is pegged at $760.96 million, suggesting an increase from $754.42 million reported in the prior quarter and $674.13 million in the year-ago period.
The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $1.15 billion, implying a 9.18% increase from the prior-year quarter’s reported figure.
Ventas is likely to have continued with its accretive investments in the research portfolio during the quarter, backed by a robust balance sheet position.
Ventas’ activities during the soon-to-be-reported quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for fourth-quarter FFO per share has been revised a cent upward over the past month to 76 cents. Moreover, the figure implies an increase of 4.11% from the year-ago quarter’s reported number.
For 2023, Ventas expects current-year normalized FFO per share in the range of $2.96-$2.99. The company estimated total same-store cash NOI growth between 7.5% and 8.5%. The SHOP segment's same-store cash NOI is projected between 17% and 19%. The Outpatient Medical and Research Portfolio segment's same-store cash NOI is expected in the range of 2.4-2.8%, while the estimation for triple-net leased same-store cash NOI is projected in the range of 2.3-2.7%.
Nonetheless, higher interest expenses are likely to have cast a pall on the company’s performance to some extent. We expect 2023 interest expenses to rise 14% year over year.
For the full year, the Zacks Consensus Estimate for normalized FFO per share is pegged at $2.99. The figure indicates no growth year over year, while revenues are projected to increase 8.41% year over year to $4.48 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Ventas 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 the case here.
Ventas currently has a Zacks Rank of 2 and an Earnings ESP of +0.82%. 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 — Extra Space Storage Inc. (EXR - 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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Is a Beat in the Offing for Ventas (VTR) in Q4 Earnings?
Ventas, Inc. (VTR - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 14 after market close. The quarterly results are likely to display year-over-year growth in both revenues and normalized funds from operations (FFO) per share.
In the last reported quarter, this Chicago, IL-based healthcare real estate investment trust (REIT) delivered a normalized FFO per share of 75 cents, beating the Zacks Consensus Estimate by 1.35%. The quarterly results reflected better-than-anticipated revenues. Also, Ventas’ same-store cash net operating income (NOI) increased year over year on strong performance across the portfolio.
Ventas’ normalized FFO per share surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 2.45%. The graph below depicts this surprise history:
Ventas, Inc. Price and EPS Surprise
Ventas, Inc. price-eps-surprise | Ventas, Inc. Quote
Factors at Play
Ventas’ senior housing operating portfolio (SHOP) is likely to have benefited in the fourth quarter from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. With the segment witnessing positive net move-ins, occupancy is expected to have remained high.
Further, strong pricing power and moderating operating expenses are likely to have driven NOI growth for this segment during the quarter. We expect fourth-quarter SHOP’s NOI to increase 20% year over year.
Increasing life expectancy of the U.S. population and biopharma drug development growth opportunities are likely to have fueled the demand for life-science assets. Benefiting from this positive trend, Ventas’ research portfolio is anticipated to have fared well during the to-be-reported quarter. We estimate that fourth-quarter Outpatient Medical and Research Portfolio NOI will grow 6.2% year over year.
A well-diversified tenant base, which includes several industry bellwethers, is expected to have contributed to stable rental revenue generation, boosting the top line.
The Zacks Consensus Estimate for fourth-quarter triple-net leased rental income is pegged at $156.72 million, suggesting an increase from $147.08 million reported in the year-ago period. The consensus mark for outpatient medical and research portfolio rental income for the fourth quarter is pegged at $224.94 million, indicating growth from $200.51 reported in the year-ago period.
The Zacks Consensus Estimate for fourth-quarter resident fees and services is pegged at $760.96 million, suggesting an increase from $754.42 million reported in the prior quarter and $674.13 million in the year-ago period.
The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $1.15 billion, implying a 9.18% increase from the prior-year quarter’s reported figure.
Ventas is likely to have continued with its accretive investments in the research portfolio during the quarter, backed by a robust balance sheet position.
Ventas’ activities during the soon-to-be-reported quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for fourth-quarter FFO per share has been revised a cent upward over the past month to 76 cents. Moreover, the figure implies an increase of 4.11% from the year-ago quarter’s reported number.
For 2023, Ventas expects current-year normalized FFO per share in the range of $2.96-$2.99. The company estimated total same-store cash NOI growth between 7.5% and 8.5%. The SHOP segment's same-store cash NOI is projected between 17% and 19%. The Outpatient Medical and Research Portfolio segment's same-store cash NOI is expected in the range of 2.4-2.8%, while the estimation for triple-net leased same-store cash NOI is projected in the range of 2.3-2.7%.
Nonetheless, higher interest expenses are likely to have cast a pall on the company’s performance to some extent. We expect 2023 interest expenses to rise 14% year over year.
For the full year, the Zacks Consensus Estimate for normalized FFO per share is pegged at $2.99. The figure indicates no growth year over year, while revenues are projected to increase 8.41% year over year to $4.48 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Ventas 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 the case here.
Ventas currently has a Zacks Rank of 2 and an Earnings ESP of +0.82%. 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 — Extra Space Storage Inc. (EXR - 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.
Extra Space Storage, scheduled to report quarterly numbers on Feb 27, has an Earnings ESP of +1.08% and carries a Zacks Rank of 3. 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 +1.68% 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.