HCP, Inc (
, a real estate investment trust (REIT), is scheduled to report its
first quarter 2012 earnings on May 1, 2012. The current Zacks
Consensus Estimate for the first quarter is pegged at 67 cents per
share, representing a year-over-year growth of about 19.5%.
Fourth Quarter Recap
HCP reported fourth quarter 2011 FFO (fund from operations) of
$150.6 million or 37 cents per share, compared with $202.6 million
or 62 cents per share in the year-earlier quarter. Fund from
operations, 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.
Excluding non-recurring items, FFO for the reported quarter was
$275.6 million or 67 cents per share compared to $206.9 million or
64 cents per share in the year-ago quarter. The fourth quarter 2011
recurring FFO marginally missed the Zacks Consensus Estimate by one
HCP reported total revenue of $461.6 million during the quarter
compared with $341.0 million in the year-ago period. Total revenue
for the reported quarter was ahead of the Zacks Consensus Estimate
of $459.0 million.
Agreement of Analysts
In the last 7 days, none of the analysts revised their earnings
estimatef or the first quarter. For fiscal 2012, one out of
the 17 analysts increased the earnings estimate while none moved in
the opposite direction. This signifies that the analysts are
cautious about both the short- and long-term earnings prospect of
Magnitude of Estimate Revisions
Taking into account the analysts' earnings revision, the Zacks
Consensus Estimate for the first quarter and fiscal 2012 remained
constant over the last 7 days at 67 cents per share and $2.75 per
share, respectively. For full-year 2012, the company expects FFO in
the range of $2.70 - $2.76 per share.
HCP is the leading medical REIT in the US with one of the
largest and most diversified portfolios in the healthcare sector
with exposure to all types of facilities. The product diversity of
the company allows it to capitalize on opportunities in different
markets based on individual market dynamics, and provides a
competitive advantage over its peers.
In addition, healthcare is relatively immune to the economic
problems faced by office, retail and apartment companies. Consumers
will continue to spend on healthcare while cutting out
discretionary purchases. The healthcare industry is the single
largest industry in the US, based on Gross Domestic Product (
), and offers stability to the company amidst the volatility in the
However, a large portion of HCP's revenue originates from a few
tenants, which exposes it to concentration risk. If one of the
company's larger tenants runs into financial difficulty, earnings
could be negatively affected.
HCP currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock. One of its competitors,
Health Care REIT, Inc (
) also holds a Zacks #3 Rank.
HEALTH CR REIT (
): Free Stock Analysis Report
HCP INC (
): Free Stock Analysis Report
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