It has been about a month since the last earnings report for Vornado (VNO - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Vornado due for a breakout? 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.
Vornado's Q3 FFO Beat Estimates, Revenues Down Y/Y
Vornado reported third-quarter 2019 FFO plus assumed conversions, as adjusted of 89 cents per share, surpassing the Zacks Consensus Estimate of 87 cents. However, the reported figure fell 7.3% year over year.
At the end of the third quarter, the company’s 555 California Street property was fully occupied. Further, total same-store NOI in the New York portfolio and 555 California buoyed the company’s performance.
However, total revenues came in at $465.9 million in the reported quarter, missing the Zacks Consensus Estimate of $467.8 million. Moreover, the revenue figure compared unfavorably with the year-ago tally of $542 million.
Behind the Headline Numbers
In the New York portfolio, 197,000 square feet of office space (171,000 square feet of space at share) and 26,000 square feet of retail space (24,000 square feet of space at share) were leased during the September-end quarter. Also, 45,000 square feet of area was leased in theMart and 50,000 square feet was leased at 555 California Street (35,000 square feet at share).
At the end of the third quarter, occupancy in the New York portfolio came in at 96.8%, shrinking 30 basis points (bps) sequentially, and 50 bps year over year. Occupancy in theMART was 95%, up 20 bps sequentially but down 50 bps year over year. Furthermore, occupancy in 555 California Street was 100%, expanding 50 bps sequentially, and 60 bps year over year.
During the reported quarter, total same-store NOI inched up 0.9% year over year. Same-store NOI in the company’s New York portfolio and 555 California grew 0.5% and 13.9% year over year, respectively. However, the same for theMART declined 2.8% year over year.
As of Sep 30, 2019, Vornado had nearly $1.1 billion of cash and cash equivalents, up from $570.9 million as of the prior-year end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, Vornado has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Vornado has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.