Why Is United Dominion (UDR) Up 4.4% Since the Last Earnings Report?

A month has gone by since the last earnings report for United Dominion Realty Trust, Inc. UDR. Shares have added about 4.4% in that time frame, outperforming the market.

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

UDR Beats on Q4 FFO Estimates; Revenue Up Y/Y

Backed by growth in revenues, UDR came up with a better-than-expected performance for fourth-quarter 2016. The company reported FFO as adjusted per share of $0.46, beating the Zacks Consensus Estimate by a penny. The figure was also higher than the prior-year quarter tally of $0.42.

Total revenue for this residential REIT improved 2% year over year to $243.0 million. The figure also exceeded the Zacks Consensus Estimate of $242 million. Growth in revenue from same-store and stabilized, non-mature communities attributed to this increase. The company also announced a 2017 annualized dividend per share of $1.24. This denotes an increase of 5% over the prior year.

For full-year 2016, UDR came up with FFO as adjusted per share of $1.79; well ahead of the year-ago tally of $1.67. For full-year 2016, the company reported total revenue of $959.9 million, which depicted an increase of 7% year over year.

Inside the Headlines

During the quarter, same-store revenues jumped 5.0% year over year; while same-store expense climbed 4.2%. Consequently, same-store NOI rose 5.3% year over year. The company’s same-store physical occupancy expanded 30 basis points (bps) year over year to 96.8%. The fourth-quarter annualized rate of turnover contracted 110 bps year over year to 42.5%.

At the end of the fourth quarter, UDR’s development pipeline aggregated $1.1 billion. This included $216.7 million completed, non-stabilized projects and $913.2 million of under-construction developments.

As of Dec 31, 2016, the company had $1.156 billion available, through a combination of cash and undrawn capacity on its credit facilities. Further, the company’s total debt was $3.4 billion as of the same date. Subsequent to quarter end, UDR established a $500.0-million unsecured U.S. commercial paper program.

Guidance

For first-quarter 2017, UDR projects FFO as adjusted per share in the $0.44–$0.46 range.

For full-year 2017, the company expects FFO as adjusted per share in the range of $1.83–$1.87. The company anticipates same-store revenue growth of 3.0–4.0%, same-store expenses to increase 2.5–3.5% and same-store NOI growth of 3.25–4.25% for 2017.

Portfolio Activity

Notably, UDR accomplished the disposition of eight communities, having 1,782 homes in Baltimore and Dallas. Also, the company completed the acquisition of MetLife’s 50% stake in Ten20 and Ashton Bellevue, two neighboring communities consisting of 331 homes in Bellevue, WA through 1031 exchanges. In addition, the company acquired Milehouse, which is a 177-home community in Redmond, WA through a 1031 exchange.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

United Dominion Realty Trust, Inc. Price and Consensus

 

United Dominion Realty Trust, Inc. Price and Consensus | United Dominion Realty Trust, Inc. Quote

VGM Scores

At this time, United Dominion's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

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

The company's stock is suitable solely for growth based on our styles scores.

Outlook

The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.

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