Veris Residential (VRE) has astounded investors with its quarterly funds from operations (FFO) of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.11 per share. This represents a significant leap from its FFO of $0.05 per share a year ago and is adjusted for non-recurring items.
This remarkable performance manifests as an FFO surprise of 9.09%. In the previous quarter, the market predicted that this real estate investment trust would post FFO of $0.12 per share, which indeed came to pass, yielding no surprise.
Over the past year, the company has outperformed consensus FFO estimates three times.
Veris, a member of the Zacks REIT and Equity Trust – Residential industry, recorded revenues of $72.92 million for the quarter ending in December 2023, surpassing the Zacks Consensus Estimate by 0.24%. This stands in contrast to the year-ago revenues of $86.2 million. Notably, the company has exceeded consensus revenue estimates three times in the last four quarters.
The company’s immediate price movement is now dependent on management’s commentary on the earnings call, and Veris shares have experienced a minimal 0.4% decrease since the beginning of the year in comparison to the S&P 500’s gain of 4.3%.
Prospects for Veris in the Future
Despite its underperformance in the current year’s market, investors are left wondering about Veris’ next move. One pivotal measure to consider is the company’s FFO outlook, which not only encompasses current consensus FFO expectations for the upcoming quarter(s) but also reflects recent changes in these expectations.
Empirical research indicates a strong interconnection between short-term stock movements and trends in estimate revisions. Investors can monitor such revisions themselves or rely on a well-established rating tool like the Zacks Rank, which has a proven track record of leveraging the power of estimate revisions.
Prior to this earnings release, the trend in estimate revisions for Veris was favorable. Although the magnitude and direction of these revisions could change following the company’s latest earnings report, the ongoing status translates to a Zacks Rank #2 (Buy) for the stock. Consequently, it is expected that the shares will outperform the market in the near future. You can view the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be intriguing to observe how estimates for the upcoming quarters and the current fiscal year evolve in the coming days. The current consensus FFO estimate stands at $0.13 on $70.32 million in revenues for the upcoming quarter and $0.59 on $289.2 million in revenues for the current fiscal year.
Furthermore, investors need to consider the broader industry outlook as it can significantly impact the stock’s performance. Presently, in terms of the Zacks Industry Rank, REIT and Equity Trust – Residential is placed in the bottom 33% of the 250 plus Zacks industries. Our research has indicated that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Comparison with Competitors
A notable competitor in the same industry, American Homes 4 Rent (AMH), is yet to report results for the quarter ending December 2023, which are anticipated to be released on February 22. The company is projected to post quarterly earnings of $0.42 per share in its upcoming report, signifying a year-over-year change of +5%. Over the last 30 days, the consensus EPS estimate for the quarter has been revised 0.2% higher to the current level.
Additionally, American Homes 4 Rent’s revenues are expected to reach $401.97 million, marking a 5.5% increase from the year-ago quarter.
Investment Opportunity?
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Please note that the views and opinions expressed in this article are the author’s own and do not necessarily reflect those of Nasdaq, Inc.
