MAA To Report Q1 Earnings: Will It Surprise Investors?

Mid-America Apartment Communities, Inc. (NYSE:MAA) , commonly referred as MAA, is slated to report first-quarter 2017 results on Apr 26, after the market closes.

Last quarter, the Memphis, TN-based residential real estate investment trust (REIT) delivered a positive earnings surprise with respect to funds from operations (FFO) per share of 0.67%.

In the trailing four quarters, the company beat the Zacks Consensus Estimate on three occasions and met estimate in one, with an average beat of around 1.03%. The graph below depicts this surprise history.

Mid-America Apartment Communities, Inc. Price and EPS Surprise

Mid-America Apartment Communities, Inc. Price and EPS Surprise | Mid-America Apartment Communities, Inc. Quote

Shares of the company gained 5.8% in the last three months. The Zacks Consensus Estimate for first-quarter 2017 is currently pegged at $1.44 per share.

Let’s see how things are shaping up for MAA prior to this announcement.

Factors to Consider

MAA enjoys a diverse and balanced portfolio with a presence in around 39 Metropolitan Statistical Areas (MSAs). The portfolio is diversified in terms of markets, submarkets, product types and price points. Also, this apartment REIT resorts to opportunistic investments in order to maintain the right product mix and augment the number of apartment communities in vibrant markets.

However, its operations are primarily concentrated in the Southeast and Southwest regions of the U.S. As of Dec 31, 2016, around 40% of the portfolio of the company was situated in the top five markets of Atlanta, Dallas, Austin, Charlotte, and Tampa. Therefore, the company’s performance has high chances of being adversely affected by the general economic conditions of these regions.

The Zacks Consensus Estimate of FFO per share for the to-be-reported quarter remained unchanged at $1.44 in the last 30 days.

Earnings Whispers

Our proven model does not conclusively show that MAA will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.

Zacks ESP: The Earnings ESP for MAA is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.44. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MAA’s 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.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter.

Piedmont Office Realty Trust, Inc. (NYSE:PDM) , expected to release first-quarter results on May 2, has an Earnings ESP of +2.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HCP Inc. (NYSE:HCP) has an Earnings ESP of +2.08% and a Zacks Rank #3. The company is expected to release earnings on May 2.

EPR Properties (NYSE:EPR) , expected to release earnings on May 2, has an Earnings ESP of +0.84% and a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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