Vornado Realty Trust
), a leading real estate investment trust (REIT), reported fiscal
2011 fourth quarter funds from operations (FFO) of $1.46 per share,
which well surpassed the Zacks Consensus Estimate of $1.22. Funds
from operations, a widely used metric to gauge the performance of
REIT, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.
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
After adjusting items for comparability, FFO during the fourth
quarter of 2011 was $220.1 million or $1.15 per share, compared
with $218.3 million or $1.15 in the prior-year quarter.
For full year 2011, Vornado reported FFO of $1.23 billion or
$6.42 per share, versus $1.25 billion or $6.59 in the previous
year. Reported FFO per share for fiscal 2011 exceeded the Zacks
Consensus Estimate by 28 cents. Adjusted FFO during the reported
fiscal was $1.01 billion or $5.27 per share, compared with $1.00
billion or $5.27 in 2010.
Total revenues during the reported quarter were $741.8 million
compared with $702.8 million in the year-ago period. Total revenues
during the quarter were well ahead of the Zacks Consensus Estimate
of $664 million. For full year 2011, total revenues were $2.9
billion compared with $2.7 billion in the prior year.
(Read our full coverage on this earnings report:
VNO's Reported FFO Beats Estimates
Earnings Estimate Revisions - Overview
Fiscal 2012 earnings estimates have moved down for Vornado
Realty since the earnings release, meaning that analysts are
bearish about the current fiscal performance of the company. Let's
dig into the earnings estimate details.
Agreement of Estimate Revisions
In the last 7 days, fiscal 2012 earnings estimates were lowered
by 7 analysts out of 11 covering the stock, while none had
increased the same. For fiscal 2013, only 1 out of 9 analysts
covering the stock had revised their estimates upward in the last 7
days, while 2 had lowered it during the same time period. This
indicates a clear negative directional movement for the earnings
estimates, signifying that the analysts are pessimistic about the
fiscal year earnings.
Magnitude of Estimate Revisions
Earnings estimates for fiscal 2012 have dipped by 9 cents in the
last 7 days to $5.33. For fiscal 2013, earnings estimates have
decreased by 4 cents to $5.42 in the last 7 days, which signifies
that although the market fundamentals are gradually improving, they
are yet to reach their optimum range to gain sufficient investor
confidence over the long-term period.
The long-term earnings estimate picture for Vornado Realty is
neutral. Vornado Realty has office properties in two of the best
long-term office markets in the country, New York City and
Washington DC. These high-barrier markets have held up
comparatively well and have enabled the company to continue
The company also has a strong balance sheet with manageable
near-term debt maturities and adequate liquidity to take advantage
of distressed selling as asset values of office and retail
properties drop in the aftermath of recession.
However, the company's retail properties and Toy 'R' Us
investment has suffered in the recent past due to recession, which
in turn has negatively affected earnings. Vornado Realty owns about
32.7% of Toys 'R' Us - the leading global retailer of dedicated
toys and baby products. This undermines the long-term growth
potential of the company.
We maintain our Neutral rating on Vornado Realty, which
currently has a Zacks #3 Rank that translates into a short-term
Hold rating. We also have a Neutral recommendation and a Zacks #3
Brookfield Properties Corporation
), one of the competitors of Vornado Realty.
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
BROOKFLD OFFICE (
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VORNADO RLTY TR (
): Free Stock Analysis Report
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