Novice investors often wonder, “What makes certain stocks rise while others don’t rise at all?” While there are several answers, one of the main reasons stocks rise is when good earnings reports come out.
Investors want to own stocks that have grown earnings over the past year and exceeded analyst consensus estimates. Analyst opinions often influence stock movements, so when a company beats analyst estimates, it sends a message to investors that its stock is undervalued. Consequently, the stock often rises significantly after a profit margin.
Take a look at two real estate investment trusts (REITs) that just beat estimates on first-quarter earnings, revenue and guidance.
Pebblebrook Hotel Trust (NYSE:PEB) is a Bethesda, Maryland-based hotel REIT that invests in luxury hotel and resort properties in or near 13 urban markets in major U.S. gateway cities. Most of the 46 properties are in California and Florida.
Do not miss it:
Pebblebrook Hotel has been in trouble since November, when it was trading around $11. The total return before the first quarter earnings report was 31.77%. That was thanks in large part to a strong fourth-quarter 2023 earnings report in February, which easily beat Street estimates and year-over-year results for funds from operations (FFO) and revenue.
Not surprisingly, the company repeated this feat on April 24 with its first-quarter operating results. Adjusted operating funds (AFFO) of $0.21 per share exceeded the consensus estimate of $0.15 per share by 40% and eliminated FFO of $0.11 from Q1 2023. Revenue of $314.069 million exceeded the consensus estimate of $303.776 million and also surpassed its revenue of $305.719 million as of the first quarter of 2023.
In addition, Pebblebrook announced that it expects AFFO of $0.59-$0.63 per share for the second quarter of 2024. Analysts had expected $0.56 per share.
Pebblebrook rose about 1% in early morning trading after the earnings release.
Popular
Accord Realty Corp. (NYSE:ADC) is a Bloomfield Hills, Michigan-based triple-net-lease REIT with a focus on retail real estate. The portfolio includes 2,161 properties and properties totaling 45 million square feet across 49 states. Sixty-nine percent of tenants are investment grade, including household names like Walmart Inc. (NYSE:WMT), Best Buy Co. Inc. (NYSE:BBY) Dollar General Corp. (NYSE:DG) and Kroger Co. (NYSE:KR).
Despite an excellent long-term track record since its IPO in 1994, Agree Realty underperformed in 2024. Before the earnings release, it had a year-to-date total return of negative 8.2%. Over the past 52 weeks, the total return was negative: 9.27%.
But that has not dampened management’s optimism and enthusiasm. Agree Realty has seen significant insider buying over the past twelve months as share prices have fallen. This chart shows the large number of shares bought by insiders over the last three and twelve months, as opposed to shares sold:
|
Insider trading |
3 months |
12 months |
|
Number of shares purchased |
177,547 |
383,335 |
|
Number of shares sold |
31,825 |
48,189 |
|
Total shares traded |
209,372 |
431,524 |
|
Net activity |
145,722 |
335,146 |
Additionally, on April 8, Agree Realty announced an increase in its monthly common dividend from $0.247 to $0.25, for an annual increase of 2.9%. The dividend will be paid on May 14 to shareholders of record at the close of business on April 30, with the ex-dividend date on April 29. A dividend increase just before an earnings announcement is often a positive sign that upcoming earnings will deliver. or exceed expectations.
So it’s perhaps not surprising that Agree Realty reported first-quarter earnings on April 24 and the results were excellent. The FFO of $1.03 per share exceeded analyst expectations of $1.01 per share. The FFO also exceeded Agree’s first-quarter 2023 FFO of $0.98 per share. Revenue of $149.453 million surpassed the consensus estimate of $146.462 million and was up 18.03% from first quarter 2023 revenue of $126.618 million.
For the full year 2024, AFFO says the price will be between $4.10 and $4.13 per share. The Street’s estimate was $4.07. Investors were impressed, with shares trading more than 2% higher in early morning trading following the report’s release.
Read next:
“SECRET WEAPON OF ACTIVE INVESTORS” Boost your stock market game with the #1 trading tool for “news & everything else”: Benzinga Pro – Click here to start your 14-day trial now!
Want the latest stock analysis from Benzinga?
This article Two REITs That Just Crushed Earnings Estimates and Guidance originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
