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Why Is Welltower Inc. (WELL) Down -1.84% Since its Last Earnings Report?

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It has been about a month since the last earnings report for Welltower Inc. WELL. Shares have lost about 1.8% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is WELL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Welltower Q4 FFO Misses Estimate, Revenues Up Y/Y

Welltower reported normalized FFO per share of $1.02 for fourth-quarter 2017, missing the Zacks Consensus Estimate of $1.04. Further, on a year-over-year basis, the figure declined 7.3% from $1.10.

Results reflect an increase of 10.7% in property operating expenses.

The company recorded revenues of $1.10 billion, which beat the Zacks Consensus Estimate of $1.08 billion. Also, revenues inched up 1.9% from the year-ago tally.

For full-year 2017, normalized FFO per share came in at $4.21, 7.5% lower than the year-ago figure of $4.55. However, revenues for the full-year came in at $4.32 billion, up nearly 1% from $4.28 billion reported in 2016.

Quarter in Detail

Total portfolio same-store net operating income (SSNOI) grew 2.1% year over year, driven by growth in all the segments.

Welltower accomplished $334 million of pro rata gross investments in the fourth quarter. This included $223 million in acquisitions/joint ventures, $108 million in development funding as well as $3 million in loans. Notably, the company completed 80% of these investments with present relationships.

On the other hand, the company accomplished total dispositions of $142 million in the quarter. This comprised loan payoffs of $28 million and property sales of $114 million.

The company exited fourth-quarter 2017 with $243.8 million of cash and cash equivalents, down from $419.5 million recorded at the end of the prior-year quarter. In addition, as of Dec 31, 2017, the company had $2.3 billion of available borrowing capacity under its primary unsecured credit facility. Furthermore, it extinguished secured debt of $137 million during the reported quarter.

During the fourth-quarter, Welltower generated proceeds of about $89 million with an average price of $67.06 under the ATM and DRIP programs.

2018 Outlook

Welltower has provided guidance for 2018. The company expects normalized FFO per share in the range of $3.95–$4.05. Also, the company anticipates its same-store NOI growth to remain in the range of 1-2%.

Further, in sync with the strategic repositioning of its premier healthcare portfolio, the company expects 2018 disposition to be around $1.3 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter.

Welltower Inc. Price and Consensus

 

Welltower Inc. Price and Consensus | Welltower Inc. Quote

VGM Scores

At this time, WELL has a subpar Growth Score of D, a grade with the same score on the momentum front. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise WELL has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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