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Boston Properties (BXP) Q3 Earnings: What's in the Cards?

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Boston Properties, Inc. (BXP - Free Report) is slated to report third-quarter 2016 results on Oct 25, after the market closes. Last quarter, the company delivered a positive surprise of 2.1%.

In the trailing four quarters, this real estate investment trust (“REIT”), which mainly owns and develops Class A office real estates in the U.S., reported an average positive surprise of 2.3%. In fact, the stock beat estimates on all four occasions. The company expects its third quarter funds from operations (“FFO”) per share in the range of $1.40–$1.42.

Let’s see how things are shaping up for this announcement.

BOSTON PPTYS Price and EPS Surprise


BOSTON PPTYS Price and EPS Surprise | BOSTON PPTYS Quote

Factors to Consider

Boston Properties’ assets are mainly concentrated in select high-rent, high barrier-to-entry geographic markets. Further, its strong tenant and industry base, including several bellwethers, ensures steady rental revenue growth. In fact, over the past five years, the company recorded an annual compound revenue growth rate of 10.05%. This trend is likely to have continued in third-quarter 2016.

Per a report by CBRE Group, Inc. (CBG - Free Report) , during the quarter the national vacancy rate in the U.S. office sector was the lowest since 2008. Further, the office market was aided by limited new construction and robust demand for space.  

During the quarter, Boston Properties’ performance was inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged at $1.43 over the last seven days.

Earnings Whispers

Our proven model does not conclusively show that Boston Properties will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at $1.43, which translate into an Earnings ESP of 0.00%.

Zacks Rank: Boston Properties’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP as well to be confident about an earnings surprise.

Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are two other REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Post Properties Inc. , slated to release earnings results on Oct 31, has an Earnings ESP of +2.47% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Essex Property Trust Inc. (ESS - Free Report) , slated to release earnings results on Oct 27, has an Earnings ESP of +0.36% and a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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