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Ventas (VTR) to Report Q4 Earnings: What's in the Offing?

·4 min read

Ventas, Inc. VTR is scheduled to report fourth-quarter and 2021 earnings on Feb 17, after market close. While VTR’s quarterly results are expected to reflect growth in revenues from the year-ago quarter’s reported figure, the same might display a decline in the funds from operations (FFO) per share.

In the previous quarter, this Chicago, IL-based healthcare real estate investment trust (REIT) reported normalized FFO per share, in line with the Zacks Consensus Estimate. The quarterly results reflected a decent performance of the triple-net leased portfolio and an occupancy improvement in the senior living operations portfolio segment.

Ventas’ bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters and was in line with the same in the remaining quarter, the average beat being 4.49%. 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 prior to this announcement.

Factors to Consider

Ventas is well-poised to benefit from its high-quality diversified healthcare real estate portfolio. With effective vaccine roll-outs, VTR is likely to have witnessed positive senior-housing operation trends in the United States.

Per the NIC-MAP’s senior housing data, amid improving demand, seniors housing occupancy increased to 81% in the fourth quarter from the third quarter’s 80%. During the fourth quarter, annual rent growth expanded 80 basis points (bps) sequentially to 2.3% and annual absorption advanced 280 bps to 3%.

According to VTR’s January business update, the SHOP portfolio-estimated average occupancy for the fourth quarter was up 110 bps, sequentially.

Such an occupancy gain is expected to have supported revenues from resident fees and services. The Zacks Consensus Estimate for fourth-quarter resident fees and services is pegged at $566 million, indicating a sequential rise of 1.4%.

The consensus mark for fourth-quarter rental income from its office buildings is pinned at $202 million, in line with the prior quarter’s reading.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $956.5 million, suggesting a 3.8% increase from the prior-year quarter’s reported figure.

In October 2021, Ventas announced its plan to transition the operations of 90 senior living communities to eight experienced operators. These communities have been adversely impacted by the COVID-19 pandemic. VTR will likely bear certain one-time transition costs and expenses in connection with the transitions.

Ventas projected fourth-quarter 2021 normalized FFO per share in the range of 67-71 cents.

Prior to the fourth-quarter earnings release, there seems no solid catalyst to buoy investor optimism on the stock’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share has been unrevised at 70 cents over the past month, suggesting a 15.7% decline from the year-earlier quarter’s reported figure.

For the full year, the Zacks Consensus Estimate for FFO per share has been steady at $2.87 over the past month, indicating a decline of 13.6% from the prior-year quarter’s reported figure. The consensus estimate for revenues which stands at $3.76 billion displays a marginal year over year decline.

Here is what our quantitative model predicts:

Ventas does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ventas currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

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

Stocks That Warrant a Look

A few other stocks worth considering from the REIT sector are Pebblebrook Hotel Trust PEB, Life Storage LSI and National Storage Affiliates Trust NSA. Our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:

Pebblebrook Hotel, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +14.29% and a Zacks Rank #3 at present.

Life Storage, scheduled to report quarterly figures on Feb 24, has an Earnings ESP of +0.66% and a Zacks Rank of 3, currently.

National Storage Affiliates, slated to release fourth-quarter earnings on Feb 22, has an Earnings ESP of +1.06% and a Zacks Rank #2 (Buy) at present.

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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Ventas, Inc. (VTR) : Free Stock Analysis Report

Life Storage, Inc. (LSI) : Free Stock Analysis Report

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National Storage Affiliates Trust (NSA) : Free Stock Analysis Report

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