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UDR (UDR) Up 3.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for UDR (UDR - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is UDR 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.

UDR Q3 FFO Meets Estimates, Revenues Grow Y/Y, View Up

UDR’s third-quarter 2018 FFO as adjusted per share of 49 cents came in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year tally of 47 cents.

Total revenues in the reported quarter climbed 6.0% year over year to $266.1 million. Further, the top line beat the Zacks Consensus Estimate of $258.6 million. This upside primarily stemmed from growth in revenues from operating and lease-up communities. The company has also raised its guidance for 2018.

Inside the Headlines

During the quarter under review, same-store revenues increased 3.8% year over year. However, same-store expenses flared up 3.5%. Consequently, same-store net operating income (NOI) improved 3.9% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 30 basis point (bps) to 96.9%. The third-quarter annualized-rate of turnover advanced 40 bps from the prior-year period to 63.4%.

During the quarter, UDR signed a contract to sell Circle Towers, a 46-year old, 604-home community in Fairfax County, VA, for $160.0 million. The transaction is slated to close during the current quarter.

At the end of the third quarter, UDR’s development pipeline aggregated $808.5 million at its pro-rata ownership interest, out of which, 98% has already been funded.

As of Sep 30, 2018, the company had around $710.1 million available from a combination of cash and undrawn capacity on its credit facilities. Furthermore, its total debt was $3.8 billion as of the same date.

Portfolio Activity

At the end of the reported quarter, the company’s Developer Capital Program investment, including accrued return, totaled $222.7 million.

Guidance

For fourth-quarter 2018, UDR projects FFO as adjusted per share to be in the 49-50 cents range.

The company also updated its estimates for full-year 2018. The FFO as adjusted per share lies in the band of $1.95-$1.96 compared with the previous projection of $1.93-$1.96. Moreover, the company anticipates same-store NOI to increase in the range of 3.25-3.5% for the year compared with the previous estimate of 3.0-3.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, UDR has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UDR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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