REITs Lined Up To Release Q3 Earnings On Nov 4: SNH & IVR

Currently, we are in the final stretch of the Q3 earnings season, with most companies having reported their quarterly figures so far. While a lot of activity has already been witnessed so far this week in the real estate investment trust (REIT) space, results are still pouring in from this industry.

Among them are Senior Housing Properties Trust (NASDAQ:SNH) and Invesco Mortgage Capital Inc. (NYSE:IVR) , scheduled to report their quarterly numbers on Nov 4.

So far, the sentiment this week has been mixed. Among the S&P 500 constituents, HCP Inc. (NYSE:HCP) has reported a positive surprise of 1.41%, driven by better-than-expected growth in revenues. On the other hand, General Growth Properties, Inc. (NYSE:GGP) and Host Hotels & Resorts, Inc.’s (NYSE:HST) performances came in line with expectations.

No doubt, the persistent low-rate environment during the quarter continued to benefit the debt-dependent REITs. Also, the Fed’s latest decision to keep the rate steady this month offers an extended period to the REITs to capitalize on it. However, a rate hike in December seems likely, with inflation gaining steam.

Nevertheless, despite broadly benefiting from the low-rate environment, individual market dynamics of the underlying asset category play a crucial role in defining the REITs’ performance.

In addition, not all are equally poised to beat earnings this season. Hence, we relied on the Zacks methodology for predicting a beat this quarter, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

Our proprietary methodology – Earnings ESP – shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are much high for the stocks.

Let’s take a look at what’s in store for these REITs, slated to report their third-quarter earnings on Nov 4.

Senior Housing Properties Trust is a healthcare REIT that invests in senior living communities; office buildings leased to medical providers, medical related businesses, clinics, and biotech laboratory tenants; as well as wellness centers. Though it has a favorable Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the trailing four quarters, the stock exceeded estimates in three occasions and met in the other. This is depicted in the graph below.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Invesco Mortgage Capital Inc. is a real estate investment trust that focuses on financing and managing residential and commercial mortgage-backed securities and mortgage loans.

With an Earnings ESP of -2.44% and a Zacks Rank #4 (Sell), the stock is unlikely to beat estimates this quarter. In fact, we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Nevertheless, the stock has surpassed estimates in three of the prior four quarters and missed in the other occasion. This is shown in the graph below.

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