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What's in Store for EPR Properties' (EPR) Q1 Earnings?

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EPR Properties (EPR - Free Report) is scheduled to report first-quarter 2020 earnings on May 6, after market close. The company’s revenues are anticipated to display marginal year-over-year growth.

In the last reported quarter, this real estate investment trust (REIT) reported a negative surprise of 0.79% in terms of FFO per share.

Over the preceding four quarters, the company beat the Zacks Consensus Estimate on three occasions and missed in the other, the average beat being 2.98%. The graph below depicts this surprise history:

EPR Properties Price and EPS Surprise

EPR Properties Price and EPS Surprise

EPR Properties price-eps-surprise | EPR Properties Quote

Let’s see how things have shaped up prior to the first-quarter earnings release.

Factors at Play

The first quarter began on a positive note with a resilient economy and decent job-market strength. Specialty REIT EPR Properties, which focuses on investments in experiential properties, including its entertainment and recreation portfolios, is likely to have benefited from its strategic investments in these properties and diversified tenant base.

Specifically, growth in the millennial generation is likely to have helped its Entertainment properties, as millennials constitute the major part of frequent movie-goers. This group has grown considerably over time and values experience over ownership.

Further, renovation works, along with new food and beverage concepts introduced in megaplex theatres, are aimed at boosting consumer experience. This is likely to have boosted attendance as well as revenues. Also, increased focus on fitness and wellness are anticipated to have spurred demand for such facilities.

However, things got weary in the second half of the March-end period due to the coronavirus pandemic. Social distancing became the need of the hour to curb the spread of the virus, resulting in the temporary closing of the company’s customers’ operations. This has become a pressing concern for rent collection and mortgage payments.

The Zacks Consensus Estimate for first-quarter revenues is pinned at $150.9 million, suggesting a 0.1% increase year over year.

However, prior to the first-quarter earnings release, there is lack of any solid catalyst for becoming optimistic about the company’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share moved 1.7% south to $1.15, over the past month.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive surprise in terms of FFO per share for EPR Properties 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.

EPR Properties currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -8.03%.

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:

Extra Space Storage Inc. (EXR - Free Report) , slated to release first-quarter earnings on May 6, has an Earnings ESP of +0.21% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Americold Realty Trust (COLD - Free Report) , scheduled to announce earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.

VEREIT, Inc. (VER - Free Report) , set to report quarterly numbers on May 20, has an Earnings ESP of +5.15% and carries a Zacks Rank of 3 currently.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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