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Key Factors to Impact Alexandria (ARE) This Earnings Season

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Alexandria Real Estate Equities Inc. ARE is scheduled to report second-quarter 2021 results on Jul 26, after market close. The company’s results are anticipated to reflect year-over-year growth in funds from operations (FFO) per share.

In the last reported quarter, this Pasadena, CA-based urban office real estate investment trust (REIT), primarily focused on collaborative life-science and technology campuses, delivered a surprise of 3.24% in terms of FFO per share. The company witnessed continued healthy leasing activity and rental rate growth during the quarter.

Over the trailing four quarters, the company beat the Zacks Consensus Estimate on one occasion and met in the other three, the average beat being 0.81%. The graph below depicts this surprise history:

Alexandria Real Estate Equities, Inc. Price and EPS Surprise

Alexandria Real Estate Equities, Inc. Price and EPS Surprise
Alexandria Real Estate Equities, Inc. Price and EPS Surprise

Alexandria Real Estate Equities, Inc. price-eps-surprise | Alexandria Real Estate Equities, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Alexandria is expected to have witnessed healthy leasing activity, decent rental rate growth and occupancy in the second quarter. Amid the heightening need for effective diagnostics, therapies and vaccines to fight the health crisis, the company’s properties and its tenants have become indispensable.

Alexandria’s lab office assets are anticipated to have seen solid demand on higher investments in pharmaceutical research and development as well as critical monetary support from the government and hirings by its tenants in the quarter to be reported.

Alexandria has Class A properties in AAA locations. With high demand, its ownership of such premium properties in strategic cluster locations is likely to have driven occupancy levels and rent growth during the June-end quarter. Also, with a substantial part of the company’s revenues coming from investment-grade or publicly-traded large-cap tenants, rent collections during the to-be-reported quarter are likely to have been impressive.

These are anticipated to have aided revenue and net operating income growth for the company during the second quarter. Moreover, Alexandria has adequate financial flexibility to cushion and enhance its market position, which is expected to have continued in the quarter under review.

The Zacks Consensus Estimate for the second-quarter FFO per share is currently pinned at $1.89, calling for a 4.42% increase from the prior-year period. However, prior to the second-quarter earnings release, there is lack of any solid catalyst to be optimistic. Therefore, the Zacks Consensus Estimate for the quarterly FFO per share has remained unchanged over the past month.

Here is what our quantitative model predicts:

Alexandria does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO 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 Alexandria is 0.00%.

Zacks Rank: Alexandria currently carries a Zacks Rank of 3 (Hold).

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:

Duke Realty Corp. DRE, slated to release second-quarter earnings on Jul 28, has an Earnings ESP of +0.47% and carries a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Digital Realty Trust, Inc. DLR, scheduled to report quarterly numbers on Jul 29, currently has an Earnings ESP of +0.63% and carries a Zacks Rank of 3.

Public Storage PSA, slated to announce second-quarter results on Aug 3, currently has an Earnings ESP of +0.34% and carries a Zacks Rank of 3.

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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Public Storage (PSA) : Free Stock Analysis Report

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