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Pebblebrook Gears Up to Report Q3 Earnings: Key Factors to Consider

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Pebblebrook Hotel Trust (PEB - Free Report) is scheduled to release third-quarter 2024 earnings results on Nov. 7, after market close. While the company’s quarterly results are likely to display a year-over-year rise in revenues, adjusted funds from operations (FFO) per share might display a decline.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

In the previous quarter, this Bethesda, MD-based lodging real estate investment trust (REIT) reported an adjusted FFO per share of 69 cents, surpassing the Zacks Consensus Estimate by 15%. Results reflected a year-over-year rise in revenues.

Over the trailing four quarters, Pebblebrook Hotel’s adjusted FFO per share surpassed estimates on all occasions, the average surprise being 23.3%. The graph below depicts this surprise history:

 

Pebblebrook Hotel Trust Price and EPS Surprise

Pebblebrook Hotel Trust Price and EPS Surprise

Pebblebrook Hotel Trust price-eps-surprise | Pebblebrook Hotel Trust Quote

 

Factors to Consider Ahead of PEB’s Upcoming Results

Pebblebrook Hotel is expected to have benefited from its well-located portfolio of urban and resort lifestyle hotels and resorts across the United States. These properties are strategically located near its primary target urban markets and selected destination resort markets, with an emphasis on major gateway coastal markets, which drive demand.

Demand from business group, transient and leisure travel is likely to have boosted its urban portfolio, while strong weekday and weekend demand is expected to have positively affected its resort portfolio in the third quarter. With a healthy demand for its properties, we expect the company to have witnessed decent occupancy rates at its properties.

Its recently redeveloped and repositioned properties are expected to have performed well during the to-be-reported quarter.

However, increasing geopolitical and economic uncertainties and high-interest expenses are likely to have been a spoilsport for PEB during the to-be-reported quarter.

PEB’s Projections

The Zacks Consensus Estimate for third-quarter room revenues is pegged at $262.2 million, indicating a rise from the year-ago quarter’s $259.4 million.

The consensus estimate for food and beverage revenues is pegged at $93.6 million, up from $91.7 million reported in the prior-year quarter. The consensus mark for other operating revenues is pinned at $44.9 million, slightly up from the prior-year quarter’s reported figure of $44.7 million.

The Zacks Consensus Estimate for PEB’s quarterly revenues is pegged at $401.8 million, implying growth of 1.5% from the prior-year period’s reported figure.

The consensus mark for the same property occupancy in the third quarter is pegged at 79.40%, indicating a rise from the prior-year quarter’s reported figure of 75.40%. The consensus mark for quarterly RevPAR is pinned at $237.6, indicating an increase from $234 reported in the year-ago quarter.

For the third quarter of 2024, the company expects adjusted FFO per share to be between 49 cents and 53 cents. The Zacks Consensus Estimate lies within the expectations.

However, the company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for adjusted FFO per share has been revised a cent downward to 53 cents in the past month. The figure implies a 13.1% fall from the year-ago reported number.

What Our Quantitative Model Predicts for PEB

Our proven model does not conclusively predict a surprise in terms of adjusted FFO per share for Pebblebrook Hotel 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.

Pebblebrook Hotel currently has an Earnings ESP of -3.56% and sports a Zacks Rank of 1. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other REITs

Digital Realty Trust (DLR - Free Report) reported third-quarter 2024 core FFO per share of $1.67, in line with the Zacks Consensus Estimate. The figure compared favorably with an FFO of $1.62 per share reported a year ago.

Results reflected healthy leasing activity and an increase in rental rates. However, the company witnessed a rise in rental property expenses and interest expenses in the quarter. DLR revised its outlook for 2024.

Healthpeak Properties, Inc. (DOC - Free Report) reported a third-quarter 2024 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a penny. The reported figure remained unchanged from the prior-year quarter.

Results reflected better-than-anticipated revenues. Growth in total merger-combined same-store cash (adjusted) net operating income was witnessed across the portfolio. However, higher interest expenses undermined the results to an extent. DOC revised its 2024 outlook.

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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