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Ventas (VTR) to Report Q1 Earnings: What's in the Offing?

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·4 min read
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Ventas, Inc. VTR is scheduled to report first-quarter 2022 earnings on May 5 after market close. Ventas’ quarterly results are expected to reflect growth in revenues and funds from operations (FFO) per share year over year.

In the previous quarter, this Chicago, IL-based healthcare real estate investment trust (REIT) delivered a surprise of 2.82% in terms of normalized FFO per share. The quarterly results reflected an occupancy improvement in the seniors housing operating portfolio (SHOP) segment.

Ventas’ normalized FFO per share surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met the same in the remaining quarter, the average beat being 1.77%. The graph below depicts this surprise history:

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. Price and EPS Surprise
Ventas, Inc. Price and EPS Surprise

Ventas, Inc. price-eps-surprise | Ventas, Inc. Quote

Let’s see how things have shaped up before this announcement.

Factors to Consider

Ventas is well-poised to benefit from its high-quality diversified healthcare real estate portfolio. With strength in its Medical Office Building (MOB) and growing Life Science and Research & Innovation businesses, coupled with investment accretion, VTR is expected to have experienced growth in the first quarter.

For the first quarter, Ventas earlier provided guidance for the normalized FFO per share in the range of 76-80 cents and for NAREIT FFO per share in the band of 74-78 cents. Ventas projected same-store cash net operating income (NOI) growth of 6% to 9% year over year.

At the midpoint of the guidance, Ventas projected first-quarter 2022 same-store SHOP revenues to increase around 10% year over year supported by record high leads. SHOP NOI is expected to increase in the range of 6-15% in the quarter, excluding net Department of Health and Human Services Grants in all periods.

Ventas projected the average occupancy in the same-store year-over-year SHOP business of 321 assets to increase approximately 410 basis points at the midpoint of its expectations. At the guidance midpoint, Ventas projected the operating costs to remain elevated through the first quarter even with moderations in COVID-19 clinical conditions.

Due to occupancy growth in MOB and strong expense controls, VTR projected the Office business year-over-year same-store cash NOI to increase around 4.5% year over year at the midpoint of the company’s expectations.

The Zacks Consensus Estimate for first-quarter resident fees and services is pegged at $603 million, indicating a fall from the $647 million reported in the prior quarter but up from $529 million in the year-ago period.

The consensus mark for the first-quarter rental income from its office buildings stands at $199 million, up from the prior quarter’s reading of $195 million and $197 million in the year-ago period. Rental income from its triple-net leased portfolio is pegged at $155 million, up from the $153 million reported in the prior quarter.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $1.04 billion, suggesting a 14.3% increase from the prior-year quarter’s reported figure.

Ventas’ activities during the soon-to-be-reported quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the first-quarter FFO per share has been revised a cent upward to 77 cents in the past week. It also suggests 6.9% growth year over year.

Here Is What Our Quantitative Model Predicts:

Our proven model predicts a surprise in terms of FFO per share for Ventas 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 an FFO beat, which is the case here.

Ventas currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are two other stocks from the REIT sector — Simon Property Group SPG and Welltower Inc. WELL — that you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.

Simon Property Group, slated to release first-quarter earnings on May 9, has an Earnings ESP of +0.14% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Welltower, scheduled to report quarterly numbers on May 10, has an Earnings ESP of +0.61% and carries a Zacks Rank of 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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