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Key Factors to Impact Medical Properties' (MPW) Q2 Earnings

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Medical Properties Trust, Inc. MPW — also known as MPT — is scheduled to report second-quarter 2021 results on Jul 29, before the market opens. The company’s quarterly performance will likely display year-over-year growth in funds from operations (FFO) per share and revenues.

In the last reported quarter, this real estate investment trust (REIT), which acquires and develops net-leased hospital facilities, posted normalized funds from operations per share of 42 cents, in line with the Zacks Consensus Estimate.

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 1.28%.This is depicted in the graph below:

Medical Properties Trust, Inc. Price and EPS Surprise

Medical Properties Trust, Inc. Price and EPS Surprise
Medical Properties Trust, Inc. Price and EPS Surprise

Medical Properties Trust, Inc. price-eps-surprise | Medical Properties Trust, Inc. Quote

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

In the second quarter, MPT is anticipated to have benefited from its premium acute care portfolio, aided by strong operator relationships. Improving fundamentals of the company’s tenants is likely to have aided its performance.

This REIT has been banking on its large scale to fund transactions globally. Further, easily-available and attractive cost of capital is likely to have enabled the company to enjoy decent net investment yields and register growth.

MPT also entered into definitive agreements to acquire five general acute hospitals in South Florida for approximately $900 million. The company’s investments since the beginning of the year through Jun 23 exceeded $3.4 billion.

The Zacks Consensus Estimate for rent billed is pegged at $213 million for second-quarter 2021, suggesting an improvement of 22.4% year on year, while straight-line rent is estimated to be $55 million, calling for significant year-over-year growth from $21.15 million. The consensus estimate for income from direct financing leases is pinned at $50 million, slightly down from the $52 million reported in the year-ago quarter.

The Zacks Consensus Estimate for quarterly revenues is pegged at $369.2 million. This suggests a 26.5% year-over-year jump from the year-earlier quarter’s reported tally.

Lastly, prior to the second-quarter earnings release, the Zacks Consensus Estimate of FFO per share for the quarter under review has remained unchanged at 43 cents over the past month. Nonetheless, it represents year-over-year growth of 13.2%.

Here is what our quantitative model predicts:

Our proven model predicts a surprise in terms of FFO per share for MPT this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of a FFO beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MPT currently carries a Zacks Rank of 3 and has an Earnings ESP of +2.67%.

Other Stocks That Warrant a Look

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

American Tower Corporation AMT, slated to release second-quarter earnings on Jul 29, has an Earnings ESP of +1.67% and carries a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank 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, has an Earnings ESP of +0.89% and carries a Zacks Rank of 3, currently.

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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