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Welltower (WELL) Down 5.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Welltower (WELL - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Welltower due for a breakout? 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 catalysts.

Welltower's Q3 FFO Beats Estimates, Revenues Up Y/Y

Welltower reported normalized FFO per share of $1.05 for third-quarter 2019, which surpassed the Zacks Consensus Estimate by a penny. Further, the reported tally compared favorably with the year-ago quarter figure of $1.04.

Results reflected the healthy same-store net operating income (SSNOI) performance of its seniors housing triple-net, outpatient medical, seniors housing operating, and long-term/post-acute care segments.

The company generated revenues of nearly $1.27 billion, which lagged the Zacks Consensus Estimate of $1.32 billion. The top line, nonetheless, compared favorably with the year-earlier quarter’s reported figure of approximately $1.24 billion.

Quarter in Detail

Total portfolio SSNOI jumped 2.6% year over year, driven by growth across all its segments.

Welltower accomplished $435 million of pro-rata gross investments in the third quarter. This included $294 million in acquisitions (seven transactions) and $141 million in development funding.

This apart, the company completed property dispositions of $2 billion, while loan payoffs summed $62 million.

The company exited the quarter with $266 million of cash and cash equivalents, up from the $191.2 million recorded a year ago. In addition, as of Sep 30, 2019, it had $1.7 billion of available borrowing capacity under its primary unsecured credit facility.

2019 Outlook

Welltower increased the mid-point of its 2019 normalized FFO per share guidance to $4.14-$4.18 from the prior band of $4.10-$4.20.

In addition, the company raised its 2019 average blended SSNOI expectation to 2.25-2.75% from 2-2.5% previously estimated. Further, full-year disposition proceeds are projected at around $3.1 billion. This includes year-to-date dispositions proceeds and loan payoffs of $2.8 billion and expected proceeds of $0.3 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Welltower has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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

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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