Yahoo Finance What's in the Offing for Arbor Realty (ABR) in Q2 Earnings?
Arbor Realty Trust ABR is scheduled to report second-quarter 2021 results on Jul 28, before market open. The company is expected to have witnessed year-over-year growth in net interest income, whereas its earnings are anticipated to have declined.
In the last reported quarter, the New York-headquartered real estate investment trust (REIT), which primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets, posted distributable EPS of 62 cents, surpassing the Zacks Consensus Estimate of 44 cents. Its Agency business generated a fee income of $69.8 million.
Over the trailing four quarters, Arbor Realty surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 28.5%. The graph below depicts this surprise history:
Arbor Realty Trust Price and EPS Surprise
Arbor Realty Trust price-eps-surprise | Arbor Realty Trust Quote
Factors at Play
The mREIT sector was under pressure in the second quarter due to high volatility in the fixed-income markets and the widening of the spread between the 30-year Agency MBS and 10-year treasury rate. This is expected to have affected the book values of the industry players.
New agency loan originations in the second quarter are expected to have expanded the company’s fee-based servicing portfolio, thereby, driving servicing revenues. The consensus mark for second-quarter 2023 net servicing revenues is pegged at $29.3 million, indicating a marginal sequential decline.
Arbor Realty’s diversified investment focus on commercial real estate debt investments, mortgage servicing, and commercial mortgage-backed securities is likely to have enabled it to generate stable income in the second quarter despite the challenging economic environment.
In the to-be-reported quarter, mortgage rates continued to rise, with the rate on a 30-year fixed mortgage reaching 6.71% in June, up from the 6.32% reported in the prior quarter. Thus, mortgage originations and refinancing continued to decline in the quarter.
Lower levels of refinancing are anticipated to have reduced prepayment speed and driven asset yields. This is anticipated to have boosted net interest income in the quarter. The Zacks Consensus Estimate for the company’s quarterly net interest income is pegged at $315.3 million, suggesting an improvement of 56.6% on a year-over-year basis.
In the second quarter, the Federal Reserve increased policy rates by another 25 basis points, with the rates reaching a 15-year high of 5-5.25%. This is likely to have increased funding costs for ABR in the second quarter.
Also, the consensus estimate for second-quarter revenues from mortgage servicing rights is pinned at $15.9 million, suggesting a 13.6% sequential decline.
Lastly, there was a lack of any solid catalyst that could instill optimism prior to the second-quarter earnings release. The Zacks Consensus Estimate for quarterly earnings has been unchanged at 47 cents over the past month. It suggests a year-over-year decline of 9.6%.
Here is what our quantitative model predicts:
Arbor Realty does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Arbor Realty is 0.00%.
Zacks Rank: Arbor Realty currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks Worth a Look
Two stocks from the broader REIT sector, which you may want to consider as our model shows that these have the right combination of elements to report a surprise this time around, are Acadia Realty Trust AKR and Simon Property Group SPG.
Acadia Realty is slated to report its quarterly numbers on Aug 1. AKR has an Earnings ESP of +2.11% and a Zacks Rank of 3 presently.
Simon Property is slated to report its quarterly numbers on Aug 2. SPG has an Earnings ESP of +1.42% and a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
Acadia Realty Trust (AKR) : Free Stock Analysis Report
Arbor Realty Trust (ABR) : Free Stock Analysis Report
