A month has gone by since the last earnings report for Welltower Inc. (WELL - Free Report) . Shares have added about 12.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is WELL due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Welltower Q1 FFO Misses, Announces Quality Care Deal
Welltower reported normalized FFO per share of 99 cents for first-quarter 2018, missing the Zacks Consensus Estimate by a penny. Further, on a year-over-year basis, the figure declined 5.7% from $1.05. Results highlight a choppy seniors housing market.
However, the company posted revenues of nearly $1.1 billion, which beat the Zacks Consensus Estimate of $1.07 billion. It also compared favorably with the year-ago number of $1.06 billion.
Importantly, it was announced that Welltower and ProMedica Health System would acquire QCP real estate in newly-formed joint venture (80/20), for $20.75 per share.
Quarter in Detail
Total portfolio same-store net operating income (SSNOI) inched up 1.8% year over year, mainly driven by growth in seniors housing triple-net, outpatient medical and long-term/post-acute care segments.
Welltower accomplished $578 million of pro-rata gross investments in the first quarter. This included $476 million in acquisitions/joint ventures, $59 million in development funding, as well as $43 million in loans. Notably, the company completed 67% of these investments with present relationships. On the other hand, the company accomplished total dispositions of $987 million in the quarter. This comprised loan payoffs of $92 million and property sales of $895 million.
The company exited first-quarter 2018 with $202.8 million of cash and cash equivalents, down from $380.4 million recorded at the end of the prior-year quarter. In addition, as of Mar 31, 2018, the company had $2.1 billion of available borrowing capacity under its primary unsecured credit facility. Furthermore, it extinguished secured debt of $183 million during the reported quarter.
Welltower announced a cash dividend of 87 cents per share for the first quarter. The dividend will be paid on May 23 to stockholders of record on May 8, 2018. This marks the company’s 188th consecutive quarterly cash dividend payout to stockholders.
Due to timing variability associated with the completion of the ProMedica joint venture and acquisition of QCP, the company has not included enhanced acquisition-activity guidance in its current earnings outlook. As such, Welltower affirmed its normalized FFO per share outlook of $3.95-$4.05 for 2018. The Zacks Consensus Estimate for the same is currently pegged at $4.03.
Also, the company anticipates its 2018 average blended SSNOI growth of around 1-2%. In addition, the company increased its 2018 disposition proceeds projection to $1.9 billion from the $1.3 billion guided earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.
Welltower Inc. Price and Consensus
At this time, WELL has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WELL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.