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Vornado Realty (VNO) Down 4.3% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Vornado Realty Trust (VNO - Free Report) . Shares have lost about 4.3% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Vornado's Q1 FFO & Revenues Miss Estimates, Up Y/Y

Vornado reported first-quarter 2017 FFO per share of $1.08, missing the Zacks Consensus Estimate of $1.25. However, FFO per share came in $0.01 higher than the prior-year quarter’s figure.

Results reflect a fall in occupancy in the Washington DC portfolio.

In the reported quarter, total revenue came in at $620.8 million, up 1.3% year over year. However, it lagged the Zacks Consensus Estimate of $628 million.

Quarter in Detail

In its New York portfolio, Vornado leased 553,000 square feet of office space and 10,000 square feet of retail space. Also, the company leased 100,000 square feet and 66,000 square feet of space in theMart and 555 California Street, respectively. In the Washington DC portfolio, the company leased 545,000 square feet of office space.

At the quarter end, same-store occupancy in the New York portfolio was 96.6%, reflecting an expansion of 10 basis points (bps) sequentially and 40 bps year over year. However, same-store occupancy in the Washington DC portfolio was 90.2%, down 30 bps sequentially and 200 bps year over year.

Same-store earnings before interest, tax, depreciation and amortization for the New York portfolio increased 3.7% from a year ago and for Washington DC, it rose 0.7%.

As of Mar 31, 2017, Vornado had $1.48 billion of cash and cash equivalents, down from $1.5 billion as of Dec 31, 2016.

Other Important Developments

During the quarter, Vornado completed the demolition of two adjacent Washington, DC office properties, 1726 M Street and 1150 17th Street. These properties will be replaced by a new 335,000 square foot Class An office building at 1700 M Street with a total cost of around $170 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Vornado Realty Trust Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated also a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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