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Can Americold (COLD) Pull Off a Surprise in Q4 Earnings?

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Americold Realty Trust COLD is slated to report fourth-quarter and full-year 2018 results on Feb 21, after the market closes.

The company is engaged in the ownership and operation of temperature-controlled warehouses. It is well-recognized in its industry and has more than 920 million of refrigerated cubic feet of storage, in the United States, Australia, New Zealand, Canada and Argentina. Last January, the company completed an initial public offering of its common shares.

In the last reported quarter, this industrial REIT delivered a lower-than-expected performance with respect to funds from operations (FFO) per share. However, over the trailing three quarters, the company surpassed estimates in one occasion and missed in the other two. The graph below depicts the surprise history of the company:

Americold Realty Trust Price and EPS Surprise

Americold Realty Trust Price and EPS Surprise | Americold Realty Trust Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Americold enjoys the first mover advantage as the sole publicly-traded REIT focused on temperature-controlled warehouses. In fact, its strategically-located high-quality facilities serve as an indispensable component of food infrastructure from “farm to fork", connecting food producers, processors, distributors and retailers to consumers. In the quarter under review, the company is likely to have witnessed steady demand for its properties, driven by consumption growth and favorable industry trends.

Further, Americold is likely to benefit from the scope and scale of its network, along with long-standing relationships with the company’s tenants in the to-be-reported quarter. Also, the company is likely to have enjoyed significant competitive advantage with its infrastructure being supported by superior IT and operating platforms. It is focused on improvement initiatives and continues to boost productivity, with the trend likely to have continued in the quarter under review as well. Focus on external growth opportunities is also conducive to the company’s long-term growth.

Amid these, the Zacks Consensus Estimate for fourth-quarter revenues is currently pinned at $416.4 million, while the FFO per share estimate is pegged at 28 cents.

However, the company’s activities during the quarter were inadequate to win analysts’ confidence. Consequently, the Zacks Consensus Estimate for FFO per share moved down a cent to 28 cents, over the past seven days. For full-year 2018, the Zacks Consensus Estimate for FFO per share is currently pegged at $1.15.

Here is what our quantitative model predicts:

Americold has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Americold is +12.94%.

Zacks Rank: Americold carries a Zacks Rank #3, currently.

A positive Earnings ESP is a meaningful and leading indicator of a likely beat in terms of FFO per share. This, when combined with a favorable Zacks rank, makes us reasonably confident of a positive surprise.

Other Stocks That Warrant a Look

Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Hersha Hospitality Trust HT, scheduled to release earnings on Feb 25, has an Earnings ESP of +3.81% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CubeSmart (CUBE - Free Report) , slated to release fourth-quarter results on Feb 21, has an Earnings ESP of +1.24% and holds a Zacks Rank of 3.

American Tower Corporation AMT, set to release earnings on Feb 27, has an Earnings ESP of +0.29% and carries a Zacks Rank of 3.

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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