) is seeing analysts continue to push the next quarters' earnings
estimates higher, and that helps make the stock a Zacks #1 Rank
HFF, Inc. provides commercial real estate and capital markets
services to the commercial real estate industry.
Good Earnings Streak
HF is on a three quarter winning streak as far as positive earnings
surprises are concerned. Beats of $0.04, $0.21 and $0.07
respectively, served to bolster investor confidence following two
In the most recent quarter, the company reported earnings of $0.29
per share, topping the Zacks Consensus Earnings Estimate of $0.22
by $0.07. The December 2010 quarter resulted in a negative earnings
surprise, a miss of $0.05. This makes the year ago comparison a
favorable one for the company.
Good news in the most recent quarter includes three deals from
around the country that closed. A $116.5M deal construction loan
closed in Arlington VA, and $90 million for a multi housing high
rise in Chicago IL, hit midway through the quarter. Earlier in the
quarter, the company announced the sale of an office tower in Ft.
Recent Secondary Offering
On August 4, the company announced the pricing of a secondary
offering at $13.50 per share. The stock is trading about $2 lower
since the pricing, providing an attractive entry point. Cash of
$116M as of the end of the third quarter of 2011 is up 90% from the
year ago level of $61 million.
Shares of HF carry some interesting valuation metrics in comparison
to the broader industry. HF trades at a discounted forward PE of
9.7x compared to 14x average for the industry. Its price to book,
however, is at 3.2X compared to 2.1x for the industry. The higher
multiple for the conservative measure of P/B is an indication that
HF has stronger fundamentals than other companies in its industry.
The recent strong pending home sales data does not hold a direct
correlation to the commercial real estate business, but an
improvement in one is likely to be a good sign for the other. This
recent data point is another indication that things are looking up
HF holds a Zacks #1 Rank (Strong Buy), in part, due to consistent
earnings increases from analysts. The price and consensus chart
below shows that expectations continue to rise while the stock has
not budged from its recent range. At some point, the earnings
growth will be recognized by growth investors, many of whom are
willing to pay for steady growth.
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
HFF INC-A (
): Free Stock Analysis Report
To read this article on Zacks.com click here.