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Analyst Blog

Though the current reporting cycle is drawing to a close, results have still been pouring in from the real estate investment trust (REIT) industry. In fact, on Nov 7, Apple Hospitality REIT, Inc. (APLE - Free Report) , Outfront Media Inc. (OUT - Free Report) , National Health Investors Inc. (NHI - Free Report) , Colony Starwood Homes (SFR - Free Report) and Colony Capital, Inc. (CLNY - Free Report) are slated to release their quarterly figures.

However, the REIT industry has witnessed a mixed earnings season thus far. Though the industry benefited from a sustained low-rate environment in the third quarter, the economic environment and individual market dynamics equally played a crucial role in their performances.

While REITs like Prologis, Inc. (PLD - Free Report) and SL Green Realty Corp. (SLG - Free Report) reported better-than-expected numbers; AvalonBay Communities, Inc. (AVB - Free Report) failed to surpass expectations in the quarter.

Since, neither all REITs cater to the same asset class nor are they equally poised to surpass analyst’s expectations, we relied on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

Our proprietary methodology – Earnings ESP – shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are much high for the stocks.

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

Let’s take a look at what’s in store for these REITs, slated to report their third-quarter earnings on Nov 7.

Apple Hospitality REIT boasts a solid portfolio of upscale, select service hotels in the U.S. Though it has a favorable Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

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

Over the trailing four quarters, the stock has exceeded estimates in two occasions, met in another and missed in the other. This is depicted in the graph below.

APPLE HOSP REIT Price and EPS Surprise

 

APPLE HOSP REIT Price and EPS Surprise | APPLE HOSP REIT Quote

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Outfront Media, Inc. is a lessor of advertising space on out-of-home advertising structures and sites across the U.S. and Canada. This stock, too, has a Zacks Rank #3. Despite a favorable rank, surprise prediction becomes difficult due to its 0.00% Earnings ESP.

The stock has exceeded estimates in two occasions over the trailing four quarters and missed in the other two. This is demonstrated in the graph below.

OUTFRONT MEDIA Price and EPS Surprise

 

OUTFRONT MEDIA Price and EPS Surprise | OUTFRONT MEDIA Quote

National Health Investors, Inc. is a healthcare REIT, whose portfolio comprises independent, assisted and memory care communities, entrance-fee communities, skilled nursing facilities, medical office buildings and specialty hospitals.

This Zacks Rank #2 stock has an Earnings ESP of 0.80%. Our proven model shows that National Health Investors is likely to beat estimates this season because it has the right combination of the two key ingredients – Rank and Earnings ESP.

Over the trailing four quarters, the stock has surpassed estimates in two occasions and met in the other two, as shown in the following graph.

NATL HEALTH INV Price and EPS Surprise

 

NATL HEALTH INV Price and EPS Surprise | NATL HEALTH INV Quote

Colony Starwood Homes is engaged in the acquisition, renovation, leasing, maintaining and managing single family homes. Despite a favorable Zacks Rank #3, surprise prediction becomes difficult due to its 0.00% Earnings ESP. Notably, over the trailing four quarters, the company has posted an average beat of 16.40%.

COLONY STARWOOD Price and EPS Surprise

 

COLONY STARWOOD Price and EPS Surprise | COLONY STARWOOD Quote

Colony Capital, Inc. is a global real estate and investment management firm. Its investment portfolio is primarily composed of real estate equity, real estate debt, and investment management of company-sponsored private equity funds and vehicles. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Surprise prediction here too becomes inconclusive, with the company not having the right combination of ESP and rank.

However, over the trailing four quarters, the stock has surpassed estimates in three periods and missed in the other occasion. This is depicted in the graph below.

COLONY CAPITAL Price and EPS Surprise

 

COLONY CAPITAL Price and EPS Surprise | COLONY CAPITAL Quote

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