Is a Beat in Store for W.P. Carey (WPC) This Earnings Season?
W. P. Carey Inc. WPC is set to report second-quarter 2023 results on Jul 28 before market open. The quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this New York-based net lease real estate investment trust (REIT) delivered a negative surprise of 0.76% in terms of adjusted FFO per share.
Over the trailing four quarters, W. P. Carey’s adjusted FFO per share surpassed the Zacks Consensus Estimate on two occasions, met once and missed in the remaining one, the average beat being 1.56%. The graph below depicts the surprise history of the company:
W.P. Carey Inc. Price and EPS Surprise
W.P. Carey Inc. price-eps-surprise | W.P. Carey Inc. Quote
Factors to Note
During the second quarter, W. P. Carey, which specializes in sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, is expected to have benefited from the continued healthy demand for industrial, warehouse and self-storage properties, aiding occupancy levels at its properties.
Its diverse portfolio of operationally-critical commercial real estate assets is net leased to tenants situated mainly in the United States and Northern and Western Europe on a long-term basis. Given that a high proportion of these leases have built-in rent escalators, the company is likely to have witnessed stable revenue generation during the quarter, boosting its top line.
The Zacks Consensus Estimate for second-quarter 2023 revenues is pegged at $442.4 million, indicating a 28.5% increase from the prior-year quarter’s reported figure.
The consensus estimate for lease revenues for the quarter stands at $369.2 million, indicating a rise of 17.4% from the prior-year quarter’s figure of $314.4 million.
The consensus mark for revenues from real estate ownership is presently pegged at $442.9 million, up 30.3% from the $339.8 million reported in the year-ago quarter.
Further, we expect WPC to have continued with its accretive investment opportunities to bolster its external growth. Its robust balance sheet position is expected to have supported such activities.
In April 2023, the company announced the sale-leaseback of a portfolio of four pharmaceutical R&D and manufacturing campuses with global pharmaceutical company and Canada’s largest generic drug manufacturer — Apotex Pharmaceutical Holdings, Inc. — for $468 million.
The portfolio involves a large portion of Apotex's global operations, comprising 11 properties encompassing 2.3 million square feet of space. It is spread across four campuses located in attractive industrial submarkets within the Greater Toronto Area, making the investment a strategic fit for W. P. Carey.
The company’s activities during the to-be-reported quarter were adequate to secure analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally northward to $1.33 over the past month. Moreover, the figure suggests an increase of 1.5% year over year.
Nonetheless, the choppiness in certain real estate categories, especially the office real estate market, and high interest expenses might have impeded the company’s quarterly performance to some extent.
Earnings Whispers
Our proven model predicts a surprise in terms of FFO per share for W.P. Carey this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. That’s just the case here.
Earnings ESP: WPC has an Earnings ESP of +1.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: WPC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Other Stocks That Warrant a Look
Here are some other stocks that are worth considering from the REIT sector, as our model shows that these, too, have the right combination of elements to deliver a surprise this reporting cycle:
Hudson Pacific Properties HPP is slated to report quarterly numbers on Aug 1. HPP has an Earnings ESP of +2.22% and carries a Zacks Rank #3 presently.
Ventas VTR is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 currently.
Ryman Hospitality Properties RHP is slated to report quarterly numbers on Aug 3. RHP has an Earnings ESP of +3.87% and carries a Zacks Rank #1 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Ventas, Inc. (VTR) : Free Stock Analysis Report
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W.P. Carey Inc. (WPC) : Free Stock Analysis Report
Ryman Hospitality Properties, Inc. (RHP) : Free Stock Analysis Report
