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Key Factors to Impact Arbor Realty's (ABR) Q4 Earnings

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Arbor Realty Trust (ABR - Free Report) is scheduled to report fourth-quarter and full-year 2019 results on Feb 14, before market open. The company’s performance will likely reflect year-over-year increases in interest income and adjusted funds from operations (AFFO) per share.

In the last reported quarter, this New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, seniors housing, healthcare, and other commercial real estate assets, posted AFFO per share of 36 cents, surpassing the Zacks Consensus Estimate by 9.09%.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on all occasions, the average beat being 14.15%. The graph below depicts this surprise history:

Arbor Realty Trust Price and EPS Surprise
 

Arbor Realty Trust Price and EPS Surprise

Arbor Realty Trust price-eps-surprise | Arbor Realty Trust Quote

Solid footprint and proven ability to grow market share in the stable Agency lending segment is likely to have aided Arbor Realty in the quarter under review. The company’s main focus is on small-balance loans in the stable multi-family sector. Notably, multi-family is an attractive asset class, with long-term secular demand, driven by reduced home ownership rates, availability of GSE financing and highly-liquid asset class with stable demand through economic cycles.

Amid these, the company’s Agency business is expected to have closed significant loan originations and generated improved margins on loan sales. Further, growth in loan business is anticipated to have continued on market demand, its proprietary relationships as well as the company’s expertise in structured loans. Moreover, development on the single-family residential platform, providing additional bridge and permanent lending products, is progressing well, offering diversification to the company’s income streams and lending platforms. In the to-be-reported quarter, Arbor Realty is also likely to have benefited from its improved funding sources, increasing capacity and maturities extension of existing facilities.

The Zacks Consensus Estimate for the company’s quarterly interest income is pegged at $80.2 million, suggesting an increase of 9.3% on a year-over-year basis.

However, stiff competition in the lending market might have resulted in aggressive pricing, thereby, denting Arbor Realty’s margins and bottom-line growth.

Hence, there is lack of any solid catalyst prior to the fourth-quarter earnings release. As such, the Zacks Consensus Estimate for the fourth-quarter AFFO moved marginally south to 31 cents per share, over the past month. Nevertheless, the figure reflects a projected increase of 6.9% year over year.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive surprise in terms of AFFO per share for Arbor Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Arbor Realty currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -3.23%.

Stocks That Warrant a Look

Here are a few 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:

Vornado Realty Trust (VNO - Free Report) , scheduled to release earnings on Feb 18, has an Earnings ESP of +5.00% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ventas, Inc. (VTR - Free Report) , slated to report fourth-quarter results on Feb 20, has an Earnings ESP of +0.81% and holds a Zacks Rank of 3.

Public Storage (PSA - Free Report) , set to release quarterly numbers on Feb 25, has an Earnings ESP of +0.25% and carries a Zacks Rank of 2, currently.


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