Yahoo Finance Welltower (WELL) Down 0.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Welltower (WELL). Shares have lost about 0.7% 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 catalysts.
Welltower Q4 FFO Beat Estimates, SHO Occupancy Rises
Welltower’s fourth-quarter 2023 normalized FFO per share of 96 cents surpassed the Zacks Consensus Estimate of 94 cents. The reported figure improved 15.7% year over year.
Results reflect better-than-anticipated revenues. The total SSNOI increased year over year, driven by SSNOI growth in the SHO portfolio. The company issued its guidance for 2024.
Welltower recorded revenues of $1.75 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.71 billion. Moreover, the top line increased 15.2% year over year.
For 2023, the company reported a normalized FFO per share of $3.64, up from the prior year’s $3.35. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $3.61. Total revenues of $6.64 billion improved 13.3% year over year and beat the consensus mark of $6.60 billion.
Quarter in Detail
The SHO portfolio’s same-store revenues increased 9.7% year over year, backed by a 330-basis point uptick in average occupancy.
In the fourth quarter, property operating expenses flared up 10.4% to $1.04 billion year over year.
The company’s total portfolio of SSNOI grew 12.5% year over year, supported by SSNOI growth in its SHO portfolio of 23.7%.
Welltower’s pro-rata gross investments in the fourth quarter totaled $3 billion. This included $2.8 billion in acquisitions and loan funding and $277 million in development funding. It opened 11 development projects for a pro-rata investment amount of $335 million. Welltower also completed pro-rata property dispositions and loan payoffs of $43 million in the quarter.
During the fourth quarter, Welltower acquired properties totaling $968 million (at company’s share) across seniors housing, wellness housing, outpatient medical and long-term/post-acute sectors largely across granular, privately negotiated off-market transactions.
It also acquired a portfolio of ten senior housing communities for $469 million from Kayne Anderson Real Estate. The portfolio, with an average age of 11 years, was acquired at a material discount to replacement cost.
Balance Sheet Position
As of Dec 31, 2023, Welltower had $6.1 billion of available liquidity, comprising $2.1 billion of available cash and restricted cash, and full capacity under its $4 billion line of credit.
2024 Guidance
The company projects normalized FFO per share of $3.94-$4.10.
Welltower’s guidance assumes the average blended SSNOI growth of 8.25-11.50%, comprising 15-21% growth in Seniors Housing Operating, 2.5-4.0% in Seniors Housing Triple-net, 2-3% in Outpatient Medical and 2-3% in Long-Term/Post-Acute Care.
Welltower expects to fund an additional $819 million of development in 2024 relating to projects underway as of Dec 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Welltower has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.
Outlook
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.
Performance of an Industry Player
Welltower is part of the Zacks REIT and Equity Trust - Other industry. Over the past month, Highwoods Properties (HIW), a stock from the same industry, has gained 9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Highwoods Properties reported revenues of $206.86 million in the last reported quarter, representing a year-over-year change of -2.3%. EPS of $0.36 for the same period compares with $0.96 a year ago.
For the current quarter, Highwoods Properties is expected to post earnings of $0.90 per share, indicating a change of -8.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Highwoods Properties 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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