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What's in Store for Ashford Hospitality (AHT) Q1 Earnings?

Zacks Equity Research

Ashford Hospitality Trust, Inc. AHT is slated to report first-quarter 2019 results after market close on May 2. The company’s results are anticipated to reflect year-over-year increase in revenues.

In the last reported quarter, this Dallas, TX-based lodging real estate investment trust (REIT) delivered a positive surprise of around 5.88% with respect to FFO per share.

The company posted positive surprises in two of the trailing four quarters, met in another and missed estimates in the other, the average negative surprise being 2.30%. This is depicted in the graph below:

Ashford Hospitality Trust Inc Price and EPS Surprise

Ashford Hospitality Trust Inc Price and EPS Surprise | Ashford Hospitality Trust Inc Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Ashford Hospitality Trust, which invests in the hospitality industry in upper upscale, full-service hotels, is expected to benefit in the to-be-reported quarter from its high-quality, well-diversified portfolio. Its asset-management efforts and accretive transactions will likely drive its top-line growth in the quarter. A decent economy, better job market and healthy corporate profits are likely to prove beneficial for the overall lodging industry.

Additionally, per a report from CBRE Group, hotel demand registered 2.4% growth nationally in the quarter, marginally down from the prior year, while supply grew 2% year over year. National occupancy inched up 0.4% year over year, establishing a new first-quarter occupancy record of 61.8%.

Average Daily Rate (ADR) moved up 1.1% nationally in the first quarter, indicating the slowest year-over-year ADR growth pace since the second quarter of 2010. Also, RevPAR was up 1.5% year over year, which reflected a sluggish pace than the prior year’s 3.5%, as well as the lowest rate since first-quarter 2010.

For Ashford Hospitality, the Zacks Consensus Estimate for first-quarter 2019 revenues is pegged at $353.9 million, indicating an increase of around 3.4% from the year-ago quarter’s reported figure.

Reflecting analysts’ positive sentiment in the stock, the Zacks Consensus Estimate of FFO per share has been revised a cent upward to 28 cents in a month’s time. However, the figure remained flat year over year.

Notably, supply growth is anticipated to be elevated in the March-end quarter, particularly in markets where the company has exposure. This is likely to impact the pricing power of its properties.

Here is what our quantitative model predicts:

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

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

Earnings ESP: The Earnings ESP for Ashford Hospitality is -0.89%.

Zacks Rank: Ashford Hospitality sports a Zacks Rank of 1 (Strong Buy), which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Public Storage PSA, scheduled to release earnings on May 1, has an Earnings ESP of +1.15% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Mid-America Apartment Communities, Inc. MAA, slated to report first-quarter results on May 1, has an Earnings ESP of +0.29% and holds a Zacks Rank of 3.

Regency Centers Corporation REG, set to release quarterly results on May 2, has an Earnings ESP of +0.70% and carries a Zacks Rank of 3.

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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