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Ventas (VTR) Down 3.8% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
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It has been about a month since the last earnings report for Ventas (VTR). Shares have lost about 3.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ventas due for a breakout? 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 catalysts.

Ventas' Q4 FFO & Revenues Top Estimates, NOI Up Y/Y

Ventas reported fourth-quarter 2018 normalized FFO per share of 96 cents, beating the Zacks Consensus Estimate of 95 cents. However, the figure came in lower than the year-ago tally of $1.03.

The company witnessed higher rental income from its office portfolio. However, lower rental income from triple net leased portfolio impacted top-line growth.

Ventas posted revenues of $923.3 million, which surpassed the Zacks Consensus Estimate of $915.4 million. Further, the revenue figure compares favorably with the year-ago number of $895.3 million.

Quarter in Detail

For the fourth quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,064 assets) inched up 0.2% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 2.1%, the office portfolio rose 1.9%, while seniors-housing operating portfolio witnessed a decline of 3.5%.

During the reported quarter, Ventas completed the acquisition of a senior housing community in Manhattan — Brookdale Battery Park — for $194 million.

In addition, the company combined and extended its leases with Brookdale till 2026. Consequently, the company’s triple-net senior housing portfolio has a weighted average lease term of more than eight years.

Liquidity

Ventas exited fourth-quarter 2018 with cash and cash equivalents of around $72.3 million, down from $86.1 million as of the prior-quarter end.

Outlook

Ventas provided 2019 normalized FFO per share outlook of $3.75-$3.85. The 2019 NAREIT FFO is expected in the range of $3.70-$3.82.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Ventas has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. 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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