BRE Properties Inc.
(
BRE
), a real estate investment trust (REIT),reported first quarter
2012 funds from operations (FFO) of $43.6 million or 57 cents per
share compared with $34.8 million or 53 cents per share in
the year-earlier quarter.
Funds 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. FFO per
share in the reported quarter was in line with the Zacks Consensus
Estimate.
We cover below the results of the recent earnings announcement,
as well as the subsequent analyst estimate revisions and the Zacks
ratings for the short-term and long-term outlook for the stock.
Earnings Report Review
Total revenue during the quarter was $96.9 million versus $88.8
million in the year-ago quarter. Adjusted earnings before interest,
tax, depreciation and amortization (EBITDA) were $61.4 million for
the reported quarter compared with $57.2 million in the
year-earlier quarter.
The improved quarterly performance was attributable to
higher same-store property-level operating results,
incremental NOI from newly acquired and completed communities and a
reduction in interest expense, which was offset by higher
level of outstanding shares.
Read our full coverage on this earnings report:
BRE Reports In Line
Earnings Estimate Revisions - Overview
Fiscal earnings estimates for BRE Properties have remained
unchanged since the earnings release, implying that the analysts
are cautious about the long-term performance of the company.
Agreement of Estimate Revisions
Over the last 7 days, there have been no earnings estimates
revisions for fiscal 2012 and fiscal 2013. This indicates that the
analysts hold a cautious outlook regarding the long-term earnings
of the company.
Magnitude of Estimate Revisions
Earnings estimate have remained constant at $2.37 per share and
$2.59 per share in the last 7 days for fiscal 2012 and fiscal 2013,
respectively. BRE Properties expects FFO in the range of 56 cents -
58 cents per share for the second quarter 2012 and maintained its
annual FFO guidance in the range of $2.30 -$2.40 per share. This
indicates the analysts hold a cautious stance regarding the
long-term earnings of the company as market fundamentals are not
very encouraging.
Moving Forward
The long-term earnings estimate picture for BRE Properties is
neutral. BRE Properties develops, acquires and manages multi-family
apartment communities primarily in the Western U.S., where it
currently operates in three states: California, Washington and
Arizona.
Despite challenging macroeconomic environment, home values in
most of the BRE Properties' markets are still among the highest in
the country, and the rent-to-own gap remains high. BRE Properties
generally has assets in supply-constrained premium markets of the
country that have fared comparatively better than its competitors.
Consequently, the company has a strong upside potential.
BRE Properties has established quite a track record of
conservative capital management and cash returns to shareholders in
the form of steady dividend and share repurchases. Since its
inception in 1970, the company has paid uninterrupted quarterly
dividends to shareholders.
However, BRE Properties competes with other housing alternatives
such as rental apartments, condominiums and single-family homes
that are available for rent, and new and existing condominiums and
single family homes available for sale. Consequently, the company
is under severe stress to maintain profitability.
BRE Properties 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,
Equity Residential
(
EQR
) also holds a Zacks #3 Rank.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
http://www.zacks.com/education
BRE PROPERTIES (BRE): Free Stock Analysis
Report
EQUITY RESIDENT (EQR): Free Stock Analysis
Report
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