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Key Factors to Impact Colony Capital (CLNY) in Q1 Earnings
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Colony Capital, Inc. is slated to report first-quarter 2020 earnings on May 8, before market open. The company’s quarterly results are expected to reflect year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this global investment real estate investment trust (REIT), which focuses on digital real estate investments, delivered a negative surprise of 10% in terms of core FFO per share. In December 2019, the company concluded the sale of its light industrial portfolio and related operating platform for $5.7 billion.
Over the trailing four quarters, it surpassed the Zacks Consensus Estimate on one occasion and missed in the other three, the average negative surprise being 11.34%. The graph below depicts the surprise history:
Let’s see how things have shaped up for this announcement.
Factors to Consider
In 2019, Colony Capital made significant efforts to simplify its non-digital businesses, and focus on digital real estate and infrastructure. With this, the company is well-positioned to have leveraged significant global opportunities in the digital ecosystem in the first quarter of 2020.
In fact, its digital ecosystem, including data centers, cell towers, fiber networks and small cell assets, is less impacted by the pandemic and is expected to have aided the company’s performance in the quarter under review.
Assessing the impacts of the COVID-19 pandemic, on Mar 20, the company suspended its dividend payout through the remainder of the year and withdrew 2020 outlook.
Further, it announced that digital assets under management (“AUM”) represented around 40% of the total AUM as of Mar 20. This indicates an increase from 29% of the company’s total AUM as of Dec 31, 2019.
However, the virus outbreak has hit the lodging sector severely. Meetings and conferences have been called off, while travel restrictions have been imposed in places reeling under this health crisis, leading to massive business tour and vacation cancellations. This is expected to weigh on the company’s hospitality segment that consists essentially of extended stay and select service hotels located mainly in major metropolitan and high-demand suburban markets in the United States, with the majority affiliated with top hotel brands such as Marriott and Hilton.
Further, the company’s healthcare segment is expected to have been impacted by the virus outbreak. Specifically, it owns a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings and hospitals. The segment is expected to have witnessed a decline in occupancy and move-ins, and higher operating expenses.
Amid these, the Zacks Consensus Estimate of $31.4 million for revenues suggests a year-over-year decline of 32.1%. Also, prior to the first-quarter earnings release, the Zacks Consensus Estimate for the company’s first-quarter FFO per share has been unchanged at 6 cents over the past month. Further, it suggests a year-over-year decline of 33.3%.
Earnings Whispers
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Colony Capital 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. That is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Colony Capital’s Earnings ESP is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
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:
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI - Free Report) , scheduled to release earnings on May 7, has an Earnings ESP of +5.52% and a Zacks Rank of 3 at present.
VEREIT, Inc. , set to report quarterly numbers on May 20, currently has an Earnings ESP of +5.15% and a Zacks Rank of 3.
Americold Realty Trust (COLD - Free Report) , expected to release earnings results on May 7, currently has an Earnings ESP of +9.74% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Key Factors to Impact Colony Capital (CLNY) in Q1 Earnings
Colony Capital, Inc. is slated to report first-quarter 2020 earnings on May 8, before market open. The company’s quarterly results are expected to reflect year-over-year declines in revenues and funds from operations (FFO) per share.
In the last reported quarter, this global investment real estate investment trust (REIT), which focuses on digital real estate investments, delivered a negative surprise of 10% in terms of core FFO per share. In December 2019, the company concluded the sale of its light industrial portfolio and related operating platform for $5.7 billion.
Over the trailing four quarters, it surpassed the Zacks Consensus Estimate on one occasion and missed in the other three, the average negative surprise being 11.34%. The graph below depicts the surprise history:
COLONY CAPITAL, INC. Price and EPS Surprise
COLONY CAPITAL, INC. price-eps-surprise | COLONY CAPITAL, INC. Quote
Let’s see how things have shaped up for this announcement.
Factors to Consider
In 2019, Colony Capital made significant efforts to simplify its non-digital businesses, and focus on digital real estate and infrastructure. With this, the company is well-positioned to have leveraged significant global opportunities in the digital ecosystem in the first quarter of 2020.
In fact, its digital ecosystem, including data centers, cell towers, fiber networks and small cell assets, is less impacted by the pandemic and is expected to have aided the company’s performance in the quarter under review.
Assessing the impacts of the COVID-19 pandemic, on Mar 20, the company suspended its dividend payout through the remainder of the year and withdrew 2020 outlook.
Further, it announced that digital assets under management (“AUM”) represented around 40% of the total AUM as of Mar 20. This indicates an increase from 29% of the company’s total AUM as of Dec 31, 2019.
However, the virus outbreak has hit the lodging sector severely. Meetings and conferences have been called off, while travel restrictions have been imposed in places reeling under this health crisis, leading to massive business tour and vacation cancellations. This is expected to weigh on the company’s hospitality segment that consists essentially of extended stay and select service hotels located mainly in major metropolitan and high-demand suburban markets in the United States, with the majority affiliated with top hotel brands such as Marriott and Hilton.
Further, the company’s healthcare segment is expected to have been impacted by the virus outbreak. Specifically, it owns a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings and hospitals. The segment is expected to have witnessed a decline in occupancy and move-ins, and higher operating expenses.
Amid these, the Zacks Consensus Estimate of $31.4 million for revenues suggests a year-over-year decline of 32.1%. Also, prior to the first-quarter earnings release, the Zacks Consensus Estimate for the company’s first-quarter FFO per share has been unchanged at 6 cents over the past month. Further, it suggests a year-over-year decline of 33.3%.
Earnings Whispers
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Colony Capital 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. That is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Colony Capital’s Earnings ESP is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
You can see the complete list of today’s Zacks #1 Rank stocks here
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:
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI - Free Report) , scheduled to release earnings on May 7, has an Earnings ESP of +5.52% and a Zacks Rank of 3 at present.
VEREIT, Inc. , set to report quarterly numbers on May 20, currently has an Earnings ESP of +5.15% and a Zacks Rank of 3.
Americold Realty Trust (COLD - Free Report) , expected to release earnings results on May 7, currently has an Earnings ESP of +9.74% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>