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UDR (UDR) Down 4.6% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for UDR (UDR - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is UDR 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.

UDR's Q3 FFO & Revenues Beat Estimates, Occupancy Increases

UDR’s third-quarter 2019 funds from operations as adjusted per share of 52 cents surpassed the Zacks Consensus Estimate of 49 cents. The figure also came in 6.1% higher than the prior-year quarter tally.

Moreover, third-quarter 2019 revenues from rental income climbed 9.8% year over year to $289.01 million. Further, the figure surpassed the Zacks Consensus Estimate of nearly $284.4 million.

Results reflected year-over-year growth in same-store NOI and weighted average same-store physical occupancy.

Inside the Headlines

During the third quarter, same-store revenues increased 3.7% year over year. However, same-store expenses flared up 3.1%. Consequently, same-store NOI improved 3.9% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 10 basis points (bps), year over year, but remained flat sequentially at 96.9%. The third-quarter annualized-rate of turnover remained flat, year on year, at 63.8%.

UDR’s wholly-owned acquisition activity for the quarter included the buyout of two communities — The Commons at Windsor Gardens in Norwood, MA and One William, in Englewood, NJ — for an aggregate amount of $353.8 million.
At the end of the reported quarter, the company’s DCP investment, including accrued return, totaled $264.4 million.

As of Sep 30, 2019, UDR’s development pipeline aggregated $129.5 million at its pro-rata ownership interest, out of which, 25% has already been funded.
As of the same date, the company had around $1.1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities. Additionally, its total debt was $3.94 billion as of the same date.

Guidance

The company has issued its projections for fourth-quarter 2019. For the current quarter, UDR projects funds from operations as adjusted per share to be in the 53-55 cents range.

Further, the company marginally raised its forecast for 2019 FFOA per share to $2.07-$2.09, from the previous outlook of $2.06-$2.09. Moreover, it anticipates same-store NOI growth of 4-4.4% for the ongoing year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, UDR has an average Growth Score of C, 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 C. 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, UDR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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