Yahoo Finance Is a Beat in the Cards for Welltower (WELL) in Q1 Earnings?
Welltower, Inc. WELL is slated to report first-quarter 2023 earnings on May 2, after market close. While the quarterly results are likely to reflect year-over-year revenue growth, funds from operations (FFO) per share are expected to have been on par with the prior-year quarter’s reported figure.
In the last reported quarter, this Toledo, OH-based healthcare real estate investment trust (REIT) witnessed normalized FFO per share of 83 cents, beating the Zacks Consensus Estimate by a whisker. The results reflected better-than-anticipated revenues. The total same-store net operating income (NOI) increased year over year, driven by same-store NOI growth in the seniors housing operating (SHO) portfolio.
Over the preceding four quarters, Welltower’s FFO per share beat the Zacks Consensus Estimate on two occasions and met the same in the other two, the average surprise being 0.60%. The graph below depicts this surprise history:
Welltower Inc. Price and EPS Surprise
Welltower Inc. price-eps-surprise | Welltower Inc. Quote
Factors at Play
With Welltower’s communities continuing to accept new residents, its SHO portfolio is likely to have experienced healthy move-in activity during the first quarter. Also, a decline in construction starts and slower net inventory growth are expected to have boosted occupancy levels.
Moreover, SHO portfolio’s revenue per occupied room is anticipated to have benefited from robust pricing power, as evidenced by strong realized renewal rate growth and improving street rates.
Per WELL’s February business update, improvement in full-time employee hiring trends and lower agency usage are likely to have reduced overall compensation expense growth.
Consequently, positive revenue and expense trends are expected to have driven the company’s SHO portfolio net operating income growth.
The above-mentioned factors, coupled with the increased healthcare expenditure by the rapidly growing senior citizen population, are anticipated to have aided WELL’s SHO portfolio performance during the first quarter.
The Zacks Consensus Estimate for first-quarter resident fees and services is pegged at $1.12 billion, indicating an increase of nearly 2% from the previous quarter’s reported number of $1.10 billion and 12.9% from the year-ago quarter’s $994.3 million. The consensus estimate for quarterly rental income stands at $369.6 million, implying a 3.7% rise from the prior-year quarter’s $356.4 million.
Total revenues for the quarter are pegged at $1.55 billion, suggesting a rise of 10.9% from the prior-year period’s reported number.
Welltower’s focus on strategic portfolio optimization and synergistic collaborations with health systems to invest in the next-generation assets of health and wellness care delivery bode well.
Also, the company’s portfolio restructuring initiatives are likely to have paid off well.
In January 2023, Welltower sold 15% interest in 31 skilled nursing assets to Integra Health for nearly $74 million, representing the second tranche of the earlier announced 85/15 joint venture (JV) between the entities as part of the transition of the 147-property skilled nursing portfolio. This portfolio was previously owned by Welltower and ProMedica in an 85/15 JV.
Furthermore, WELL’s capital-recycling efforts are likely to have helped maintain its solid balance sheet position during the quarter, supporting its near-term investment and development activities.
Nonetheless, higher interest rates and a stronger U.S. dollar are likely to have cast a pall on the company’s quarterly performance.
The Zacks Consensus Estimate for first-quarter FFO per share has been unchanged at 82 cents over the past month. Moreover, the figure is likely to have remained on par with the prior-year quarter’s reported figure.
Earning Whispers
Our proven model predicts a surprise in terms of FFO per share for Welltower this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. That’s the case here.
Earnings ESP: Welltower has an Earnings ESP of +0.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: WELL currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Here are some other stocks from the REIT sector, which according to our model, have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties VICI is slated to report quarterly numbers on May 1. VICI has an Earnings ESP of +2.36% and carries a Zacks Rank #2 (Buy) presently.
Equinix EQIX is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.44% and a Zacks Rank #2 currently.
Host Hotels & Resorts HST is scheduled to report first-quarter earnings on May 3. HST has an Earnings ESP of +0.12% and a Zacks Rank #3 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
Equinix, Inc. (EQIX) : Free Stock Analysis Report
Welltower Inc. (WELL) : Free Stock Analysis Report
VICI Properties Inc. (VICI) : Free Stock Analysis Report
