Shares of Equity Residential (EQR) scaled a new 52-week high, touching $67.31 on Aug 20. The stock closed the session at $67.09, reflecting a solid year-to-date return of 31.2%. The trading volume for the session was nearly 1.1 million shares.
Despite scaling this high, we believe this Zacks Rank #3 (Hold) stock has the potential to move higher given the improving fundamentals of the apartment sector and superior performance of its properties. Further, the long-term expected earnings per share growth rate for this residential real estate investment trust (:REIT) is presently 8.9%.
Strong second-quarter results, including improved performance of its same store properties, and a healthy liquidity position drove the company’s stock price to the new high.
On Jul 29, 2014, Equity Residential came out with normalized funds from operations (:FFO) per share of 78 cents, exceeding the Zacks Consensus Estimate by 1.3%. Also, the reported figure was 9.9% higher than the prior-year quarter figure. Quarterly results were backed by higher same store net operating income (:NOI) and NOI from non-same store properties currently in lease up as well as reduced total interest expense.
Going forward, we believe that the improving economy, job growth, rising consumer confidence and favorable demographics along its markets would help the company ride on the growth trajectory.
Echoing similar sentiments, the Zacks Consensus Estimate over the last 30 days climbed 0.3% to $3.10 per share for 2014, while that for 2015 advanced 0.9% to $3.31 per share.
Other REITs Scaling Highs
Other REITs that have scaled 52 week highs on Aug 20, include Avalonbay Communities Inc. (AVB), UDR, Inc. (UDR) and Boston Properties Inc. (BXP).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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