A month has gone by since the last earnings report for UDR (UDR). Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UDR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UDR's Q2 FFOA as Expected, Revenues Outpace Estimates, NOI Up
UDR’s second-quarter 2019 funds from operations as adjusted (FFOA) per share of 52 cents came in line with the Zacks Consensus Estimate. The figure comes in higher than the prior-year quarter reported tally of 49 cents.
Total revenues in the quarter climbed approximately 8.4% year over year to $281.3 million. Further, the figure surpassed the Zacks Consensus Estimate of $274.9 million.
Results reflect year-over-year growth in same-store NOI. Nonetheless, weighted average same-store physical occupancy remained flat, year on year.
Inside the Headlines
During the second quarter, same-store revenues increased 3.7% year over year. However, same-store expenses flared up 2.3%. Consequently, same-store NOI improved 4.2% year over year. This residential REIT’s weighted average same-store physical occupancy remained flat, year over year, but expanded 10 basis points (bps) sequentially to 96.9%. The second-quarter annualized-rate of turnover advanced 100 bps from the prior-year period to 54.8%.
During the reported quarter, UDR acquired four apartment communities consisting of 1,251 homes. The company shelled out $327.7 million, for these purchases.
At the end of the quarter, UDR’s development pipeline aggregated $32 million at its pro-rata ownership interest, out of which, 26% has already been funded.
As of Jun 30, 2019, the company had around $750.6 million of liquidity through a combination of cash and undrawn capacity on its credit facilities. This figure is prior to an unsecured debt of $300 million issued in June but settled subsequent to the end of the quarter. Additionally, its total debt was $3.87 billion as of the same date.
At the end of the June-end quarter, the company’s Developer Capital Program (DCP) investment, including accrued return, totaled $243.5 million.
The company has issued estimates for third-quarter 2019. For the current quarter, UDR projects FFOA per share to be in the 51-53 cents range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, UDR has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, UDR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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