It has been about a month since the last earnings report for Welltower (WELL). Shares have lost about 0.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Welltower 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 drivers.
Welltower Misses Q4 FFO Estimates, Reaffirms '19 View
Welltower reported normalized FFO per share of $1.01 for fourth-quarter 2018, which missed the Zacks Consensus Estimate of $1.03. Moreover, the figure compares unfavorably with the year-ago tally of $1.02.
Results reflect healthy SSNOI performance of its seniors housing triple-net, outpatient medical and long-term/post-acute care segments. The company has also reaffirmed its normalized FFO per share outlook for the current year.
Moreover, the company posted revenues of nearly $1.2 billion that met the Zacks Consensus Estimate. The revenue figure also compares favorably with the year-ago tally of $1.1 billion.
For full-year 2018, normalized FFO per share came in at $4.03, missing the Zacks Consensus Estimate of $4.05. The figure also declined 4.3% year over year. Revenues for full-year 2018 improved 9.3% year over year to $4.7 billion. Also, the reported figure outpaced the Zacks Consensus Estimate of $4.67 billion.
Quarter in Detail
Total portfolio SSNOI inched up 1.6% year over year, driven by growth across all its segments.
Welltower accomplished $722 million of pro-rata gross investments in the fourth quarter. This included $559 million in acquisitions, $92 million in development funding and $70 million in land acquisitions.
In the meantime, the company also accomplished total dispositions of $394 million in the reported quarter. This comprised property sales of $110 million, sale of $239 million of non-yielding properties acquired in the QCP buyout, and loan payoffs of $46 million.
The company exited the Dec-end quarter with $215 million of cash and cash equivalents, down from $243.8 million recorded at the end of the prior-year quarter. In addition, as of Dec 31, 2018, it had $1.9 billion of available borrowing capacity under its new primary unsecured credit facility.
Welltower reiterated its 2019 normalized FFO per share outlook of $4.10-$4.25.
In addition, the company anticipates its 2019 average blended SSNOI to be up around 1.25-2.25%. Further, full-year disposition proceeds are projected to be around $1.4 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Welltower has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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