Yahoo Finance What's in the Offing for Ventas (VTR) This Earnings Season?
Ventas, Inc. VTR is scheduled to report first-quarter 2024 results on May 1, after market close. The quarterly results are likely to display year-over-year growth in both revenues and normalized funds from operations (FFO) per share.
In the last reported quarter, this Chicago-based healthcare real estate investment trust (REIT) delivered a normalized FFO per share of 76 cents, in line with the Zacks Consensus Estimate. The quarterly results reflected better-than-anticipated revenues. Ventas’ same-store cash net operating income (NOI) increased year over year on strong performance across the portfolio.
Ventas’ normalized FFO per share surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met in the remaining period, with the average beat being 2.10%. The graph below depicts this surprise history:
Ventas, Inc. Price and EPS Surprise
Ventas, Inc. price-eps-surprise | Ventas, Inc. Quote
Factors at Play
In the first quarter, Ventas’ senior housing operating portfolio (SHOP) is likely to have benefited from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. With the segment witnessing positive net move-ins, occupancy is expected to have remained high.
Favorable demand-supply fundamentals are likely to have driven NOI growth for this segment during the quarter. We expect first-quarter SHOP’s NOI to increase 15.6% year over year.
Increasing life expectancy of the U.S. population and biopharma drug development growth opportunities are likely to have fueled the demand for life-science assets. Benefiting from this positive trend, Ventas’ research portfolio is anticipated to have fared well during the to-be-reported quarter. We estimate that first-quarter Outpatient Medical and Research Portfolio NOI will grow 7.7% year over year.
A well-diversified tenant base with long-term leases, is expected to have contributed to stable rental revenue generation, boosting the top line.
The Zacks Consensus Estimate for first-quarter triple-net leased rental income is pegged at $156.28 million, suggesting an increase from $155.3 million reported in the prior quarter and $149.74 million in the year-ago period.
The consensus mark for outpatient medical and research portfolio rental income for the first quarter is pegged at $221.52 million, indicating growth from $203 million reported in the year-ago period.
The Zacks Consensus Estimate for first-quarter resident fees and services is pegged at $784.7 million, suggesting an increase from $775.20 million reported in the prior quarter and $704.99 million in the year-ago period.
The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $1.16 billion, implying a 7.85% increase from the prior-year quarter’s reported figure.
Ventas is likely to have continued with its accretive investments in the research portfolio during the quarter, backed by a robust balance sheet position.
Ventas’ activities during the soon-to-be-reported quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for first-quarter FFO per share has been revised a cent upward over the past month to 75 cents. Moreover, the figure implies an increase of 1.35% from the year-ago quarter’s reported number.
However, higher interest expenses are likely to have cast a pall on the company’s performance to some extent. We expect first-quarter interest expenses to rise 15.6% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of FFO per share for Ventas this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Ventas currently has an Earnings ESP of -2.29% and Zacks Rank of 4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Park Hotels & Resorts PK and Public Storage PSA — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Park Hotels, scheduled to report quarterly numbers on Apr 30, has an Earnings ESP of +3.66% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Public Storage is slated to report quarterly numbers on Apr 30. PSA has an Earnings ESP of +0.88% and carries a Zacks Rank of 3 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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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