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What to Expect From Clipper Realty (CLPR) in Q2 Earnings?

Zacks Equity Research

Clipper Realty, Inc. CLPR is slated to report second-quarter 2019 results on Aug 1, after the market closes. The company’s results will likely reflect year-over-year growth in revenues, while its funds from operations (FFO) per share are anticipated to remain flat.

In the last reported quarter, this Brooklyn, NY-based real estate investment trust (REIT) delivered a positive surprise of 9.09% in terms of FFO per share. Quarterly results reflected growth in revenues.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on two occasions, met in another and missed in the other, the average positive surprise being 2.62%. This is depicted in the chart below:

Clipper Realty Inc. Price and EPS Surprise
 

Clipper Realty Inc. Price and EPS Surprise

Clipper Realty Inc. price-eps-surprise | Clipper Realty Inc. Quote

Let’s see how things are shaping up, prior to this announcement.

Factors at Play

Clipper Realty, the owner and operator of multifamily residential and commercial properties in the New York metropolitan area with a current portfolio in Manhattan and Brooklyn, has been making concerted efforts to increase scale, strategically develop its properties and selectively reposition the company’s assets.

Moreover, rising employment and improved household income are likely to help consumers gain confidence. Amid these, demand for the company’s residential, retail and other commercial properties might witness decent demand during the June-end quarter.

Also, despite the structural challenges plaguing the retail market, a stable economy and healthy tourism in the region will likely support shopping activity, in turn, aiding the retail real estate market.

Therefore, amid this environment, together with the company’s strategic efforts, rents and occupancy level at its properties are expected to benefit. In fact, the Zacks Consensus Estimate for second-quarter 2019 revenues is pinned at $28.1 million, calling for a year-over-year improvement of 2.8%.

However, because of asset concentration in New York City, any adverse economic and regulatory developments in the region will likely affect the company’s performance.

Furthermore, Clipper Realty’s activities during the to-be-reported quarter were inadequate to gain analysts’ confidence. Consequently, the Zacks Consensus Estimate for the second-quarter FFO per share remained unchanged at 12 cents, over the last 30 days, indicating no change year over year.

Here is what our quantitative model predicts:

Clipper Realty does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Earnings ESP: The Earnings ESP for Clipper Realty is 0.00%.

Zacks Rank: Clipper Realty sports a Zacks Rank of 1 (Strong Buy), which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Federal Realty Investment Trust FRT, scheduled to release earnings on Aug 1, has an Earnings ESP of +0.18% and currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CyrusOne Inc. CONE, slated to report quarterly figures on Jul 31, has an Earnings ESP of +1.37% and carries a Zacks Rank #3, at present.

Healthcare Realty Trust Incorporated HR, set to release June-end quarter results on Jul 30, has an Earnings ESP of +0.72% and currently holds a Zacks Rank #3.

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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