), a real estate investment trust (REIT), reported second quarter
2012 FFO (funds from operations) of $293.6 million or 69 cents per
share compared with $317.9 million or 78 cents per share in the
We cover below the results of the recent earnings announcement,
as well as the subsequent analysts' estimate revisions and the
Zacks ratings for the short and long-term outlook on the stock.
Second Quarter Review
Recurring FFO for the reported quarter was $293.6 million or 69
cents per share, compared with $312.2 million or 77 cents per share
in the year-ago quarter. Recurring FFO per share in the
quarter beat the Zacks Consensus Estimate by a $0.01.
HCP reported total revenue of $464.4 million during the quarter
compared with $488.1 million in the year-ago period. Total revenue
in the reported quarter missed the Zacks Consensus Estimate of
Read our full coverage on this earnings report:
HCP reports Mixed 2Q
Earnings Estimate Revisions - Overview
Fiscal earnings estimates have moved in an upward direction
since the earnings release, suggesting that analysts are positive
about the long-term performance of the company. We take a
look at the earnings estimate details.
Agreement of Estimate Revisions
In the last seven days, for fiscal 2012 earnings estimates were
increased by three out of the 12 analysts covering the stock, while
none decreased. For 2013, four out of 14 analysts
covering the stock had increased estimates upward, while none moved
downward over the same period. This indicates a positive bias for
the fiscal year earnings.
Magnitude of Estimate
Earnings estimates for 2012 increased by a penny
over the last seven days to $2.76 per share. For 2013,
earnings estimates have increased from $2.89 to $2.92 during the
same time period, which indicates that analysts are optimistic
about the future performance of the company.
The long-term earnings estimate picture for HCP is Neutral. HCP
is the leading medical REIT in the U.S. with one of the largest and
most diversified portfolios in the healthcare sector and 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, to provide a competitive advantage
over its peers.
Healthcare is also relatively immune to the economic problems
faced by office, retail and apartment companies. Consumers tend to
continue to spend on healthcare while cutting out on discretionary
purchases. The healthcare industry is the single largest industry
in the U.S., based on Gross Domestic Product (GDP), and offers
stability in a volatile market.
However, one of the biggest risks to healthcare focused REITs is
government reimbursement rates, which are proposed to be reduced in
the coming years. Deep cuts in Medicare have been proposed over the
next five years by reducing or freezing payments to skilled nursing
facilities, hospitals, and other healthcare providers.
With a large portion of HCP revenues being determined by
government payout rates, forces beyond its direct control could
negatively affect revenue and operator coverage ratios.
HCP currently retains a Zacks #2 Rank, which translates into a
short-term Buy rating. We are also maintaining our long-term
Neutral recommendation on the stock. One of its competitors,
Health Care REIT, Inc (
) holds a Zacks #3 Rank which translates into a short-term Hold
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
Note: 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.
HEALTH CR REIT (HCN): Free Stock Analysis
HCP INC (HCP): Free Stock Analysis Report
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