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Mid-America Apartment (MAA) Up 3.4% Since Earnings Report: Can It Continue?

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About a month has gone by since the last earnings report for Mid-America Apartment Communities, Inc. (MAA - Free Report) . Shares have added about 3.4% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.

MAA's Q2 FFO Beats Estimates, Revenues Grow, View Updated

MAA reported second-quarter 2017 FFO of $1.48 per share, beating the Zacks Consensus Estimate of $1.45. However, the figure decreased from $1.54 reported in the prior-year quarter.

The company’s quarterly results reflected growth in same store property NOI and rise in average effective rent per unit for the same store portfolio.

Total operating revenue came in at $382.8 million in second-quarter 2017, exceeding the prior-year quarter figure by 40.6%. The Zacks Consensus estimate for revenues was also $382.8 million.

Quarter in Detail

During the quarter, adjusted same store NOI grew 2.8% compared with the prior-year quarter. This was because of 2.3% growth in revenues and a 1.6% rise in operating expenses.

In the large market, 2.1% growth in revenues and a 1.3% increase in expenses resulted in NOI to increase 2.6%. Again, in the secondary market, 2.9% rise in revenues and 2.5% increase in expenses led to 3.1% growth in NOI.

The quarter witnessed 2.4% year-over-year increase in average effective rent per unit. Further, during the quarter, average physical occupancy for same store portfolio was 96.1%, in line with the prior-year quarter.

As of Jun 30, 2017, MAA held cash and cash equivalent of $39.7 million, up from $33.5 million as of Dec 31, 2016. Further, as of the same date, around $877.3 million of combined cash and capacity was available under its unsecured credit facility.

Post Properties Merger

MAA incurred merger costs of $1 million, or 1 cent per share in the quarter, for the merger with Post Properties Inc., which primarily comprised severance, legal, professional and advisory costs.

Other Portfolio Activities

During the quarter, the company did not go for any property acquisitions. As of Jun 30, 2017, MAA had six development projects underway.

2017 Outlook

MAA expects 2017 FFO per share to be in the range of $5.77-$5.97, up from the prior guidance of $5.74-$5.94.

For the third-quarter 2017, FFO per share is anticipated to be in the range of $1.39–$1.49 per share.

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.

VGM Scores

At this time, the stock has a subpar Growth Score of D, while its Momentum is doing a bit better with a B. However, the stock was allocated 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.

Zacks' style scores indicate that the company's stock is suitable for momentum investors.

Outlook

Estimates have been 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 expecting an inline return from the stock in the next few months.


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