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What's in Store for EPR Properties (EPR) in Q1 Earnings?

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EPR Properties (EPR - Free Report) is scheduled to report first-quarter 2018 results on May 8, after the closing bell. The company’s funds from operations (FFO) per share and revenues are anticipated to increase year over year.

In the last reported quarter, this real estate investment trust (REIT) delivered a negative surprise of 10.42% in terms of FFO per share.

Over the trailing four quarters, the company surpassed estimates in one occasion and missed in three others. This resulted in an average negative surprise of 3.21%. The graph below depicts the surprise history of the company:

EPR Properties Price and EPS Surprise

 

Factors to Consider

EPR Properties is a specialty REIT that focuses on investments in properties across three primary market segments — Entertainment, Recreation and Education. Strategic investment in each of its segments, a diversified tenant base amid an improving economy and upbeat consumer confidence are likely to drive the company’s performance in the to-be-reported quarter.

Particularly, growth in the millennial generation is likely to aid its Entertainment segment as millennials constitute the major part of frequent movie-goers. This group has grown considerably over time. Further, renovation works, along with new food and beverage concepts introduced in megaplex theatres, are aimed at improving the consumer experience. This will likely improve attendance and drive revenues in the quarter under review. Moreover, during the fourth-quarter 2017 earnings release, the company announced that 2018 witnessed a strong start with a few movies, recording phenomenal revenues at the box-office. The company expects 2018 box-office revenues to return to positive growth.

Further, with solid demand for properties amid an economic recovery backed by job growth, the Recreation segment too promises a decent performance. Notably, during the second quarter of 2017, the company substantially expanded its portfolio of ski properties and attractions with the casino lifestyle properties transaction.

Furthermore, investments in the Education segment are anticipated to boost its performance. The company is expected to experience growth in enrolment as there is a healthy demand for quality education and associated facilities amid modest supply.

Amid these, the Zacks Consensus Estimate for first-quarter revenues is pegged at $126.7 million, marking an expected increase of 18.4% year over year.

Moreover, in a month’s time, the company’s Zacks Consensus Estimate of FFO per share for the first quarter remained unchanged at $1.24. This denotes a projected increase of 7.8% from the prior-year period.

However, the company has a substantial development pipeline, which increases its operational risks. Further, increase in interest rate can add to its woes.

Earnings Whispers

Our proven model does not conclusively show that EPR Properties will likely beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for EPR Properties is 0.00%. This is because the Most Accurate estimate of $1.24 matches the Zacks Consensus Estimate.

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

Zacks Rank: EPR Properties’ Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive surprise.

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

In the real estate space, we are now looking forward to the earnings releases of Jones Lang LaSalle Inc. (JLL - Free Report) , Realty Income Corp. (O - Free Report) and RLJ Lodging Trust (RLJ - Free Report) . Jones Lang LaSalle and Realty Income are scheduled to report their numbers on May 8 while RLJ Lodging is expected to report results on May 9.

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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