AvalonBay Communities Inc.
) is riding on the growth trajectory. The company, currently a
Zacks Rank #2 (Buy) holder, has Class A assets located in some of
the premium markets of the country which enable the company to
generate steady rental revenues.
In July, AvalonBay reported encouraging second-quarter 2014
results. Aided by growth in rental rates, AvalonBay's
second-quarter funds from operations (FFO) came 3% ahead of the
Zacks Consensus Estimate and climbed 10.3% from the prior-year
quarter figure. Total revenue increased 6.1% year over year to
$413.8 million and surpassed the Zacks Consensus Estimate of $405
Enhanced performance of its newly developed and acquired
communities has helped this residential real estate investment
trust (REIT) put up solid performance for the quarter.
Going forward, improving economy, job growth, rising consumer
confidence and favorable demographics along its markets keep us
optimistic about the company's growth prospects. Particularly, the
West Coast is witnessing improved fundamentals and healthier
Nevertheless, though these positives bode well for the company's
future, yet, completion of a number of projects in the Metro DC
area and modest job growth keeps the fundamentals of this market
Moreover, considering the current economic environment, though
interest rate may remain low in the very near term, it is expected
to rise in the medium term. This may in turn, hurt the
rate-sensitive business of the company in the long run.
Echoing similar sentiments, the Zacks Consensus Estimate over the
last 30 days climbed 6.6% to $7.22 per share for 2014, while that
for 2015 advanced 0.7% to $7.40 per share.
To gain a deeper insight into AvalonBay, you can refer to our
updated research report issued on Aug 14, 2014.
Stocks That Warrant a Look
Investors interested in the residential REIT industry may also
consider stocks like American Campus Communities, Inc. (
), Equity LifeStyle Properties, Inc. (
) and Essex Property Trust Inc. (
). All these stocks hold a Zacks Rank #2 (Buy).
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.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AVALONBAY CMMTY (AVB): Free Stock Analysis
EQUITY LIFESTYL (ELS): Free Stock Analysis
ESSEX PPTY TR (ESS): Free Stock Analysis Report
AMER CAMPUS CTY (ACC): Free Stock Analysis
To read this article on Zacks.com click here.