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Key Factors to Impact Plymouth Industrial (PLYM) Q1 Earnings

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Plymouth Industrial REIT, Inc. (PLYM - Free Report) is slated to report first-quarter 2019 earnings on May 9, before the opening bell. The company’s results will likely display year-over-year growth in funds from operations (FFO) per share and revenues.

In the last reported quarter, this industrial real estate investment trust (REIT) delivered an in-line performance in terms of FFO per share. The company witnessed top-line growth in the period.

Over the preceding four quarters, Plymouth’s FFO per share surpassed estimates on three occasions and met in the other, the average beat being 26.9%. This is depicted in the graph below:

PLYMOUTH IND RE Price and EPS Surprise
 

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

Factors at Play

This Boston-based industrial REIT is likely to post an encouraging performance in the to-be-reported quarter. Results are likely to be backed by the strengthening fundamentals of the industrial real estate market amid healthy U.S. economy, job-market gains, thriving e-commerce market, high consumption levels and a solid consumer confidence. As such, demand for warehouses, distribution centers and other industrial properties remains strong.

Per a study by the commercial real estate services firm — CBRE Group (CBRE - Free Report) — availability fell for 35 straight quarters to 7% for the U.S. industrial market in the first quarter, denoting the lowest point since 2000. Net asking rents increased 2.2% in the quarter to $7.51 per square feet — marking the highest level since 1989, per a CBRE report.

Amid these, Plymouth is focused on driving revenues, increasing net operating income (NOI) and cash flows on the back of strategic acquisitions and investments, active asset management, prudent property re-positioning and disciplined capital deployment. The company’s first-quarter results are likely to reflect the benefit of Madison investment, the Jacksonville portfolio acquisition, and other such buyouts concluded in the second half of last year.

The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $16.7 million, indicating a 40.2% surge year over year, which is impressive. Also, the consensus estimate for first-quarter FFO per share is 59 cents, reflecting a substantial year-over-year increase. This figure also reflects an 18% increase over the past two months.

Nevertheless, there has been a steady recovery in the industrial market for long and a whole lot of new buildings are becoming available in the market, leading to higher supply and lesser scope for robust rent and occupancy growth. Additionally, any protectionist trade policies will have an adverse impact on economic growth and the company’s business over the long term.

Here is what our quantitative model predicts:

Plymouth does not have the right combination of the following two key ingredients — a positive Earnings ESP and a 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: Plymouth has an Earnings ESP of 0.00%.

Zacks Rank: Plymouth currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Although a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP in the stock’s combination to be confident about an earnings surprise in terms of FFO per share.

Stocks That Warrant a Look

Here are a few stocks in the broader real estate 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:

Investors Real Estate Trust (IRET - Free Report) , scheduled to release earnings on May 8, has an Earnings ESP of +3.19% and currently carries a Zacks Rank of 3.

Global Medical REIT Inc. (GMRE - Free Report) , set to report quarterly numbers on May 8, has an Earnings ESP of +1.65% and carries a Zacks Rank of 3, currently.

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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