Why Is Vornado (VNO) Down 6.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Vornado (VNO). Shares have lost about 6.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Vornado due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Vornado Q3 FFO Misses, Revenues Surpass Estimates

Vornado’s third-quarter 2021 FFO plus assumed conversions, as adjusted of 71 cents per share, missed the Zacks Consensus Estimate of 72 cents. However, the reported figure camein 16.4% higher than the year-ago quarter’s 61 cents.

Vornado’s results display year-over-year growth in the same-store NOI in the New York portfolio and 555 California Street, partially offset by a decline in the theMART.

Total revenues came in at $409.2 million, surpassing the Zacks Consensus Estimate of $384.5 million. Further, revenues compared favorably with the year-ago number of $364 million.

Behind the Headline Numbers

In the New York portfolio, 757,000 square feet of office space (672,000 square feet at share) and 111,000 square feet of retail space (105,000 square feet at share) were leased during the September quarter. Also, 103,000 square feet of area (all at share) was leased at theMart and 23,000 square feet at 555 California Street (16,000 square feet at share).

At the end of the third quarter, occupancy in the New York portfolio was 90.4%, down from the 94.3% witnessed at the prior-year quarter end. Occupancy in theMART was 89.6%, down from the 89.8% reported as of Sep 30, 2020. Additionally, occupancy in 555 California Street was 98.1%, down from 98.4%.

In the reported quarter, total same-store NOI (at share) improved 4.1% year over year. While the same-store NOI at theMART plummeted 50.8%, the same-store NOI at the New York portfolio increased 7.8%. The same-store NOI in the company’s 555 California Street climbed 3%.

As of Sep 30, 2021, the company had $2.13 billion of cash and cash equivalents, up from the $1.62 billion as of Dec 31, 2020.

Outlook

The company continues to expect cash NOI of more than $135 million for its retail business in 2021. For 2022, cash NOI is expected to be $160 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Vornado has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Vornado has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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