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Analyst Blog

We are now in the final stretch of the Q3 earnings season, with most companies having reported their quarterly figures. Though a lot of activity has already been witnessed over the past weeks in the real estate investment trust (REIT) space, results are still pouring in from this industry.

In fact, on Nov 14, Communications Sales & Leasing, Inc. (CSAL - Free Report) , Parkway, Inc. (PKY - Free Report) and Gladstone Land Corporation (LAND - 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) and Federal Realty Investment Trust (FRT - 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 now check how the above-mentioned companies are expected to perform, when they report their quarterly results on Nov 14.

Communications Sales & Leasing is involved in the acquisition and construction of mission critical communications infrastructure and provides wireless infrastructure solutions for the communications industry. Though the company has a favorable Zacks #3, its chances of a beat are lowered due to its Earnings ESP of -3.18%.

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

The stock has a mixed record of surprises over the trailing four quarters. It has exceeded estimates in two occasions, met in another and missed in the other occasion. This is depicted in the graph below.

COMMUNICTNS S&L Price and EPS Surprise

 

COMMUNICTNS S&L Price and EPS Surprise | COMMUNICTNS S&L Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Parkway, Inc. is an office REIT and is engaged in the ownership, acquisition, development  and leasing of office assets primarily in Houston, TX. Parkway, Inc., formerly known as Parkway Properties Inc., is based in Orlando, U.S. Though it has a favorable Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

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

PARKWAY INC Price and EPS Surprise

 

PARKWAY INC Price and EPS Surprise | PARKWAY INC Quote

Gladstone Land Corporation is a REIT which acquires and leases farmland to corporate and independent farmers. Gladstone Land Corporation is based in McLean, Virginia. Despite a favorable Zacks Rank #3, surprise prediction becomes difficult due to its -7.69% Earnings ESP.

The stock has a mixed surprise history. It has exceeded estimates in two, met in the other and missed in another period over the trailing four quarters, as demonstrated in the graph below.

GLADSTONE LAND Price and EPS Surprise

 

GLADSTONE LAND Price and EPS Surprise | GLADSTONE LAND Quote

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