EPR Properties (EPR) To Post Q4 Earnings: What's In Store?

EPR Properties (NYSE:EPR) is scheduled to report fourth-quarter 2017 results on Feb 28, after the closing bell. The company’s funds from operations (FFO) per share and revenues are anticipated to increase year over year.

In the prior quarter, this real estate investment trust (REIT) delivered a negative surprise of 3.08% in terms of FFO per share.

Over the trailing four quarters, the company surpassed estimates on two occasions for as many misses. This resulted in an average negative surprise of 0.20%. The graph below depicts the surprise history of the company:

Let’s see how things have shaped up for this announcement.

Factors to Consider

EPR Properties is a specialty REIT that focuses on investments in properties across three primary market segments — Entertainment, Recreation and Education. Strategic investment in each of its segments and a diversified tenant base amid an improving economy, and upbeat consumer confidence are likely to drive the company’s performance in the to-be-reported quarter.

In fact, growth in the millennial generation is likely to aid its Entertainment segment as millennials constitute the major part of frequent moviegoers. This group has grown considerably over time. Further, renovation works, along with new food and beverage concepts introduced in megaplex theatres are aimed at improving consumer experience. This will likely improve attendance and drive revenues in the quarter under review.

Moreover, with solid demand for properties amid an economic recovery backed by job growth, the Recreation segment too promises a decent performance. Notably, during the second quarter, the company substantially expanded its portfolio of ski properties and attractions with casino lifestyle properties transaction.

Furthermore, investments in the Education segment are anticipated to boost its performance. The company is expected to experience growth in enrolment as there is a healthy demand for quality education and associated facilities amid modest supply.

Notably, during the third-quarter earnings release, the company announced that in the fourth quarter, it expects to receive an additional $45.0-$60.0 million of proceeds from property dispositions, mainly resulting from sales of public charter school properties pursuant to tenant purchase options. Additionally, for the quarter to be reported, the company estimates recognition of an additional $11.7-$12.7 million in lease termination fees in FFO as adjusted.

Amid these, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $127.8 million, marking an expected increase of 18.9% year over year.

Moreover, in a month’s time, the Zacks Consensus Estimate of FFO per share for the fourth quarter remained unchanged at $1.44. This denotes a projected increase of 15.2% from the prior-year period.

However, the company has a substantial development pipeline which increases its operational risks. Further, escalating expenses and increase in interest rate can add to its woes.

EPR Properties has lost 4.5% of its value over the past month versus the 6.5% loss incurred by its industry.

Earnings Whispers

Our proven model does not conclusively show that EPR Properties will likely beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for EPR Properties is 0.00%. This is because the Most Accurate estimate of $1.44 matches the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: EPR Properties’ Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.

Stocks That Warrant a Look

Here are a few stocks in the REIT space that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this time around:

Getty Realty Corp. (NYSE:GTY) , slated to report quarterly numbers on Feb 28, has an Earnings ESP of +2.98% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Outfront Media Inc. (NYSE:OUT) , scheduled to release quarterly figures on Feb 27, has an Earnings ESP of +0.90% and a Zacks Rank of 3.

Ares Commercial Real Estate Corporation (NYSE:ACRE) , slated to release fourth-quarter results on Mar 1, has an Earnings ESP of +8.70% and a Zacks Rank of 3.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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