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REITs to Watch for Q1 Earnings on Apr 29: AMT, CCI & More

Moumita C. Chattopadhyay

The first-quarter earnings season is in full swing and the real estate investment trust (REIT) space is buzzing with activity with a deluge of earnings releases lined up on Apr 29. Among others, American Tower Corporation AMT, Crown Castle International Corp. CCI, Duke Realty Corporation DRE, Annaly Capital Management, Inc. NLY and CyrusOne Inc. CONE will release their quarterly numbers on Wednesday.

Per the Zacks industry classification, the REIT industry is part of the broader Finance sector. The first-quarter earnings picture is bleak for Finance, with the sector’s overall earnings projected to fall 28.4% on 2.5% higher revenues, per the latest Earnings Outlook.

While the March-end quarter began on a positive note with a resilient economy and decent job-market strength, the coronavirus pandemic jeopardized the second half. However, REITs invest in all types of properties, from residential, offices, malls to hospitals, hotels and data centers and several others. And underlying asset categories as well as location of properties play a crucial role in determining REITs’ performance. Therefore, not all REITs suffered a setback during the period under discussion. As such, delving into the asset fundamentals and markets of each REIT becomes all the more important.

Let’s analyze the factors that are expected to have played a key role in the above-mentioned REITs’ quarterly performance.

American Tower Corp. is scheduled to release first-quarter 2020 results before the bell. Our proven model does not conclusively predict a positive surprise in terms of funds from operations (FFO) per share for American Tower 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 a FFO beat. But that’s not the case here as American Tower 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.

Over the trailing four quarters, the company surpassed estimates on three occasions and missed in the other, the average positive surprise being 1.94%.

The Zacks Consensus Estimate for quarterly revenues is pegged at $2 billion, indicating a year-over-year increase of 10.4%. The consensus estimate of $2.04 for its FFO per share suggests an increase of 10.9% year on year.

American Tower has ramped up its investments in macro-tower constructions given the rising deployment of 5G by major mobile network carriers. This has strengthened the company’s core U.S. tower portfolio, and is anticipated to have helped witness decent leasing activity and organic tenant billings growth during the first quarter. It is also likely to have benefited from focus on margin expansion backed by the combination of organic growth and efficiencies throughout the business. However, new business activity is expected to have remained moderated during this period. (Read more: American Tower to Report Q1 Earnings: What's in Store?)

American Tower Corporation (REIT) Price and EPS Surprise
 

American Tower Corporation (REIT) Price and EPS Surprise

American Tower Corporation (REIT) price-eps-surprise | American Tower Corporation (REIT) Quote

Crown Castle International Corp. is set to report quarterly numbers results after the bell. Although Crown Castle carries a Zacks Rank of 3, its Earnings ESP of 0.00% makes surprise prediction difficult.

In the last four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and missed in the other. It delivered an average positive surprise of 0.77% during this period.

The Zacks Consensus Estimate for total revenues is pegged at $1.45 billion, indicating a 1.7% increase year on year. Furthermore, Crown Castle’s FFO per share estimate calls for a 2.8% increase to $1.49 during the same time frame.

Notably, wireless carriers have been expanding and enhancing their networks for the past few quarters amid a rising demand for data volume. As such, Crown Castle, which has an unmatched portfolio of towers, small cells and fiber assets, is likely to have registered top-line growth in the March-end quarter. Nevertheless, the estimate for the first-quarter net revenues from network services and other segment is pinned at $136 million, suggesting a 34.3% year-over-year plunge. In addition, activity levels are likely to have been low during the quarter under review. (Read more: What's in Store for Crown Castle This Earnings Season?)
 

Crown Castle International Corporation Price and EPS Surprise
 

Crown Castle International Corporation Price and EPS Surprise

Crown Castle International Corporation price-eps-surprise | Crown Castle International Corporation Quote

You can see the complete list of today’s Zacks #1 Rank stocks here.

Duke Realty Corp. is slated to release earnings results after market close.

Our proven model does not conclusively predict a positive surprise in terms of FFO per share for this industrial REIT this season, as Duke Realty currently carries a Zacks Rank of 3 and has Earnings ESP of 0.00%.

Over the past four quarters, the company beat the Zacks Consensus Estimate on two occasions and met estimates in the other two, the average beat being 1.5%.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $219.5 million, indicating a year-over-year improvement of 4.6%. The FFO per share estimate of 35 cents suggests a year-over-year increase of 6.1%.

Duke Realty’s solid capacity to bank on the industrial real estate market’s healthy fundamentals is likely to have helped the company witness active leasing and healthy rent levels across a number of properties during the January-March quarter. This domestic pure-play industrial REIT focuses on growing its portfolio through buyouts and development, on a speculative and build-to-suit basis, in markets with stellar growth potential. Nonetheless, this environment of stout growth has, however, attracted many developers, resulting in an increase in construction pipeline and delivery of industrial space. (Read more: What's in the Offing for Duke Realty's Q1 Earnings?)

Duke Realty Corporation Price and EPS Surprise
 

Duke Realty Corporation Price and EPS Surprise

Duke Realty Corporation price-eps-surprise | Duke Realty Corporation Quote

Annaly Capital Management Inc. is scheduled to report first-quarter 2020 results after market close. Although Annaly carries a Zacks Rank of 3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Over the trailing four quarters, the company’s earnings outpaced the Zacks Consensus Estimate on one occasion, missed in the other two and came in line in another. The average negative surprise was 2.9%.

The liquidity-driven market mayhem, triggered by the coronavirus crisis, has resulted in significant dislocations in the mortgage and credit markets. Annaly shrunk its investment portfolio from $128.7 billion as of Dec 31, 2019, to nearly $99 billion as of Mar 31, 2020. Accordingly, the repo balance was reduced from $101.7 billion to $72.6 billion during the same period.

Furthermore, the company expects a decline in its first-quarter book value. Annaly estimates preliminary book value per share of $7.40-$7.60 as of Mar 31, 2020, down from $9.66 as of Dec 31, 2019. Further, the company projects preliminary core earnings (excluding the premium amortization adjustment, or PAA) per share of 20-21 cents for the March-end quarter compared with the prior quarter’s 26 cents. (Read more: What's in the Cards for Annaly Capital in Q1 Earnings?)

Annaly Capital Management Inc Price and EPS Surprise
 

Annaly Capital Management Inc Price and EPS Surprise

Annaly Capital Management Inc price-eps-surprise | Annaly Capital Management Inc Quote

CyrusOne Inc., a global data center REIT, will release quarterly numbers after the bell. Our proven model does not conclusively predict a positive surprise in terms of FFO per share for this REIT this season, as CyrusOne currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of 0.00%.

The company, nevertheless, exceeded estimates in each of the preceding four quarters, the average beat being 6.58%.

The Zacks Consensus Estimate for quarterly revenues is pegged at $250.8 million, indicating growth of 11.5% year on year. Notably, prior to the first-quarter earnings release, there is lack of any solid catalyst for becoming optimistic about the company’s prospects. As such, the Zacks Consensus Estimate for the January-March period’s FFO per share remained unchanged at 96 cents, over the past 30 days. However, it suggests year-over-year growth of 17.1%.

CyrusOne Inc Price and EPS Surprise
 

CyrusOne Inc Price and EPS Surprise

CyrusOne Inc price-eps-surprise | CyrusOne Inc Quote

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American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
 
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