SL Green (SLG) to Report Q4 Earnings: What's in the Cards?
SL Green Realty Corp. SLG is slated to report fourth quarter and 2016 results on Wednesday, Jan 25, after the market closes. Last quarter, this real estate investment trust (“REIT”) had delivered a positive surprise of 8%.
In fact, SL Green beat estimates in all of the four trailing quarters, with a positive average earnings surprise of 7%. The Zacks Consensus Estimate for fourth-quarter funds from operations (“FFO”) per share is currently pegged at $1.44.
Let’s see how things are shaping up for this announcement.
Factors to Consider
SL Green is the leading commercial property owner in New York City. The company has been actively pursuing portfolio enhancement initiatives through investments in opportunistic assets and debt and preferred equities. In October, the REIT and BlackRock Real Assets formed a joint venture for the ownership of 400 East 57th Street, in Manhattan.
SL Green garners revenues from its high-quality office properties positioned in proximity to midtown Manhattan’s key commuter stations. Moreover, the company has executed 32 retail leases since the beginning of the year through Dec 5, 2016, aggregating 310,534 square feet of space. This has helped it make over $70 million in rental revenues.
However, a large chunk of SL Green’s revenues is derived from its office portfolio, demand for which is highly correlated with job growth. Apart from this, intense competition from owners, developers and operators of other office properties and commercial real estate limits its ability to retain tenants. Moreover, rise in interest rate would negatively impact the REIT’s financials.
SL Green Realty Corp. Price and EPS Surprise
SL Green Realty Corp. Price and EPS Surprise | SL Green Realty Corp. Quote
Earnings Whispers
Our proven model does not conclusively show that SL Green will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, 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.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.42 and $1.44, respectively, which translates into an Earnings ESP of -1.39%.
Zacks Rank: SL Green currently has a Zacks Rank #3. Though this increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are three REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Camden Property Trust CPT, slated to release earnings results on Feb 7, has an Earnings ESP of +0.88% and a Zacks Rank #3.
CubeSmart CUBE, slated to release earnings results on Feb 16, has an Earnings ESP of +2.70% and a Zacks Rank #3.
Ashford Hospitality Prime, Inc. AHP, slated to release earnings results on Feb 22, has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. 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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Camden Property Trust (CPT): Free Stock Analysis Report
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