Factors to Impact Innovative Industrial's (IIPR) Q2 Earnings
Innovative Industrial Properties IIPR, a leading real estate investment trust (REIT) specializing in the acquisition, ownership and management of industrial properties leased to experienced, state-licensed medical cannabis operators, is set to announce its second-quarter 2023 earnings on Aug 2 after market close.
The company has been a favorite among investors as it combines the high growth potential of the cannabis industry with the stability of the real estate market. In this article, we'll delve into IIPR's performance in the recent quarters and analyze the factors that may have contributed to its second-quarter 2023 results.
In the last reported quarter, Innovative Industrial delivered a surprise of 10.29% in terms of adjusted FFO per share. Results reflected better-than-expected revenues.
Over the last four quarters, IIPR’s adjusted FFO per share surpassed the consensus mark on all occasions, with the average beat being 6.96%. The graph below depicts the surprise history of the company:
Innovative Industrial Properties, Inc. Price and EPS Surprise
Innovative Industrial Properties, Inc. price-eps-surprise | Innovative Industrial Properties, Inc. Quote
Factors at Play
In recent years, there has been a significant expansion in the cannabis industry as an increasing number of states have legalized medical cannabis and some have even allowed recreational use. This favorable development has resulted in a surge in the demand for cultivation facilities, leading to advantages for Innovative Industrial. Consequently, regulatory shifts in the cannabis sector and the growing acceptance of cannabis for both medical and recreational purposes are anticipated to have a positive impact on IIPR's performance in the second quarter of 2023.
Innovative Industrial Properties has been on an aggressive expansion spree in recent years, acquiring new properties across multiple states. As a result of this aggressive approach, the company's asset base has experienced substantial growth. The increase in property acquisitions directly correlates to a rise in rental revenues, which has positively impacted IIPR's financial performance.
Innovative Industrial's strong focus on working with experienced, state-licensed operators has not only ensured a stable tenant base but also reduced the risks associated with the still-maturing cannabis industry. The company's stringent tenant selection process, combined with long-term lease agreements, provides a reliable income stream, which is expected to have contributed positively to IIPR's second-quarter 2023 earnings.
The acquisition and leasing of new properties, additional building infrastructure allowances provided to tenants at certain properties that resulted in increases in the base rent, tenant reimbursements and contractual rental escalations at certain properties are likely to have benefited Innovative Industrial. However, inflation and supply-chain issues are likely to have affected expenses in the quarter under consideration.
Projections for Q2 2023
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $72.1 million. The figure suggests a rise of 2.25% year over year.
Innovative Industrial Properties’ activities during the quarter in discussion were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the second-quarter FFO per share has remained unrevised at $2.11 in the past month. It suggests a 1.40% decrease year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Innovative Industrial Properties this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. However, that’s not the case here.
Innovative Industrial Properties currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Our model shows that Ventas VTR and Americold Realty Trust COLD have the right combination of elements to report a surprise this quarter.
Ventas is slated to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and carries a Zacks Rank of 2 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Americold Realty Trust, scheduled to report quarterly numbers on Aug 3, has an Earnings ESP of +1.96% and carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents 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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Americold Realty Trust Inc. (COLD) : Free Stock Analysis Report
