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Why Is Welltower (WELL) Up 8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Welltower (WELL - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

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

Welltower Q3 FFO and Revenues Beat Estimates, View Up

Welltower reported normalized FFO per share of $1.04 for third-quarter 2018, which surpassed the Zacks Consensus Estimate of $1.02. However, on a year-over-year basis, the figure compares unfavorably with the year-ago tally of $1.08.

Results reflect healthy SSNOI performance of its seniors housing triple-net, outpatient medical and long-term/post-acute care segments. The company also raised its normalized FFO per share outlook for the current year.

Moreover, the company posted revenues of nearly $1.24 billion, which outpaced the Zacks Consensus Estimate of $1.16 billion. It also compares favorably with the year-ago tally of $1.09 billion.

Quarter in Detail

Total portfolio SSNOI inched up 1.6% year over year, mainly driven by growth in seniors housing triple-net, outpatient medical and long-term/post-acute care segments.

Welltower accomplished $2.6 billion of pro-rata gross investments in the third quarter. This included $2.2 billion in acquisitions, $312 million in the takeover of non-yielding properties in association with the QCP buyout, as well as $63 million in development funding. Also, the company delivered $96 million of pro rata development projects, with an expected stabilized yield of 8.5%.

On the other hand, the company accomplished total dispositions of $316 million in the reported quarter. This comprised property sales of $109 million, sale of $147 million of non-yielding properties acquired in the QCP buyout, and loan payoffs of $60 million.

The company exited the Sep-end quarter with $191.2 million of cash and cash equivalents, down from $236.2 million recorded at the end of the prior-year quarter. In addition, as of Sep 30, 2018, it had $1.7 billion of available borrowing capacity under its new primary unsecured credit facility.

2018 Outlook

Welltower raised its 2018 normalized FFO per share outlook to $4.02-$4.07 from the previous guidance of $3.99-$4.06.

In addition, the company anticipates its 2018 average blended same-store net operating income to be up around 1-2%. However, it lowered the full-year disposition proceeds projection to $2.2 billion from $2.4 billion guided earlier.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Welltower has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. 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.

Outlook

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




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