) crafted a new 52-week high, touching $62.57 during the trading
session on May 13, 2014, as it gained momentum following decent
first-quarter 2014 results. The closing price of this apartment
real estate investment trust (REIT) on May 13 was $61.71, which
reflects a solid year-to-date return of 19.7%. The trading volume
for the session was nearly 1.7 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold)
stock has plenty of upside left, given the improving market
fundamentals, portfolio revamping activity and expected long-term
earnings growth of 8.90%.
On Apr 30, Equity Residential reported normalized funds from
operations (FFO) per share for first-quarter 2014 of 71 cents, in
line with the Zacks Consensus Estimate and 7 cents above the
prior-year quarter figure. Quarterly results were primarily driven
by higher same store net operating income (NOI) and NOI from
non-same store properties currently in lease up as well as reduced
total interest expense. Total revenue during the reported quarter
increased 25.5% year over year to $633.4 million.
We believe Equity Residential is well positioned to deliver better
results in the quarters ahead too, given its concerted efforts
toward repositioning its portfolio from low
barrier-to-entry/non-core markets to high barrier-to-entry/core
Its current focus is to acquire and develop assets primarily in 6
core coastal metropolitan areas - Boston, New York, Washington
D.C., Southern California, San Francisco and Seattle. Last year,
the company completed the Archstone acquisition that added
properties across these diverse geographic locations.
Moreover, the echo boomers population continues to raise the demand
for apartments. According to a study by the commercial real estate
CBRE Group, Inc.
) published in April, the national apartment demand is currently
growing at a stronger pace (over 220,000 units or 1.6% on an annual
basis) than what the market has observed historically, thereby
making us confident of better growth prospects for Equity
As a matter of fact, the company has recorded an average earnings
surprise of 1.32% in the past four quarters. Furthermore, over the
last 30 days, the Zacks Consensus Estimate for both 2014 and 2015
FFO per share moved north by 0.3% to $3.10 and $3.30, respectively.
Other Stocks Reaching 52 Wk Highs
In addition to Equity Residential, two other REITs also scaled
52-week highs on May 13. The stocks are
General Growth Properties, Inc.
Essex Property Trust Inc.
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.
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