Yahoo Finance Ventas (VTR) Up 6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Ventas (VTR). Shares have added about 6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ventas due for a pullback? 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.
Ventas’ Q1 FFO Beats Estimates on Higher Same-Store NOI
Ventas reported first-quarter 2024 normalized FFO per share of 78 cents, beating the Zacks Consensus Estimate of 74 cents. The reported figure increased 5.4% from the prior-year quarter’s tally.
Results reflected better-than-anticipated revenues. Ventas’ same-store cash NOI increased year over year on strong performance across the portfolio, except for triple-net leased properties. It has also raised its 2024 outlook.
Ventas clocked in revenues of $1.20 billion in the first quarter, surpassing the Zacks Consensus Estimate of $1.16 billion. Also, the figure increased 11.4% on a year-over-year basis.
Per Debra A. Cafaro, chairman and CEO of Ventas, “2024 is off to a strong start, led by continued organic growth in our advantaged senior housing operating portfolio (“SHOP”), as we execute against our strategy. Demand-driven accelerating occupancy in SHOP drove our performance in the quarter, as the unprecedented multiyear growth opportunity in senior housing continues to build."
Quarter in Detail
In the reported quarter, same-store cash NOI for the total property portfolio (1,093 assets) increased 6.7% to $441.4 million from the prior-year quarter.
Segment-wise, the same-store cash NOI for the SHOP portfolio (477 assets) climbed 15.2% year over year to $183.4 million, led by the U.S. communities. Revenues per occupied room (RevPOR) growth of 4.7% resulted in a margin expansion of 170 basis points (bps), aiding the rise in the segment’s same-store cash NOI.
The same-store average occupancy expanded 240 bps year over year to 84.6% in the first quarter for the SHOP portfolio.
For the outpatient medical and research portfolio (341 assets), same-store cash NOI improved 4.9% year over year to $129.3 million. The uptick was backed by continued strong performance in the outpatient medical portfolio that witnessed same-store cash NOI growth of more than 4%.
The triple-net leased portfolio’s (275 assets) same-store cash NOI fell 2% year over year to $128.6 million.
Balance Sheet Position
Ventas exited the first quarter of 2024 with cash and cash equivalents of $632.4 million, up from $508.8 million as of Dec 31, 2023.
Moreover, it ended the quarter with $3.36 billion of liquidity and a net debt to further adjusted EBITDA ratio of 6.7.
2024 Outlook
Ventas raised its guidance for 2024.
It now expects 2024 normalized FFO per share in the range of $3.10-$3.18, revised from $3.07-$3.18 stated earlier.
The total same-store cash NOI growth is now estimated between 6% and 8%, up from 5.0-7.5% projected earlier. The SHOP segment's same-store cash NOI is now anticipated to be between 12% and 16%, higher than 10-15% from the prior guidance.
The Outpatient Medical and Research Portfolio segment's same-store cash NOI is now expected in the range of 2.50-3.25% from 2.25-3.25%, while the estimation for triple-net leased same-store cash NOI was changed to 1.25-2.00% from 1-2%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Ventas has an average Growth Score of C, though it is lagging a lot 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ventas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ventas belongs to the Zacks REIT and Equity Trust - Other industry. Another stock from the same industry, Welltower (WELL), has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Welltower reported revenues of $1.86 billion in the last reported quarter, representing a year-over-year change of +19.2%. EPS of $0.22 for the same period compares with $0.85 a year ago.
For the current quarter, Welltower is expected to post earnings of $1 per share, indicating a change of +11.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.9% over the last 30 days.
Welltower has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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