It has been about a month since the last earnings report for Ventas (VTR). Shares have added about 6.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ventas 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.
Ventas Beats Q2 FFO & Revenue Estimates, Raises View
Ventas reported second-quarter 2019 normalized FFO per share of 97 cents, beating the Zacks Consensus Estimate of 96 cents. However, the figure came in lower than the year-ago tally of $1.08.
The company witnessed growth in same-store cash NOI aided results. Results reflect higher rental income from its office and triple net leased portfolio.
Ventas posted revenues of $950.7 million, which surpassed the Zacks Consensus Estimate of $936.6 million. The top line also compared favorably with the year-ago number of $942.3 million.
Quarter in Detail
For the second quarter, same-store cash NOI growth for the total property portfolio (1,104 assets) inched up 0.3% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 1.5%, the office portfolio rose 2.9%, while seniors-housing operating portfolio registered a decline of 2.9%.
During the quarter, Ventas announced a definitive deal to invest in a portfolio of 31 purpose-built seniors housing communities and four in-progress developments in the growing Quebec market. The transaction is valued at $1.8 billion. For this transaction, the company has entered into an 85%/15% equity partnership with Le Groupe Maurice (“LGM”).
Ventas exited second-quarter 2019 with cash and cash equivalents of around $81.9 million, slightly down from the $82.5 million recorded as of the prior-quarter end.
Ventas raised its 2019 normalized FFO per share outlook to $3.80-3.86 from the $3.75-$3.85 provided earlier. The 2019 Nareit FFO per share is now projected at $3.90-$3.97, up from the prior estimate of $3.70-$3.82.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
At this time, Ventas has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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, Ventas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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