Home Properties, Inc.
) delivered stellar second quarter 2012 results with a 29.1%
year-over-year increase in FFO (fund from operations). The
apartment REIT (real estate investment trust) also offers an
impressive dividend yield of 4.2%. Earnings for this Zacks #2 Rank
(Buy) are presently expected to grow 13.6% in 2012 and 6.6% in
Strong Second Quarter
Home Properties reported strong second quarter results on August 2,
with a 15.4% year-over-year growth in total revenues to $162.4
million. Same-store net operating income increased 8.0% year over
year. This was the highest second quarter increase recorded in the
past six years, driven by same-store total revenue growth of 4.8%
and a 0.3% decrease in operating expenses.
Second quarter 2012 FFO of 96 cents per share compared favorably
with the year-ago FFO of 87 cents and was in line with the Zacks
Consensus Estimate. Average physical occupancy for same-store
properties remained solid at 96.2%, while average monthly rental
rates surged 4.5% year over year to $1,218.
Based on better-than-expected second quarter results, management
raised its FFO guidance for 2012 to between $3.96 and $4.04 per
share from the earlier range of $3.87 - $3.99. For the third
quarter of 2012, FFO is expected at $1.03 to $1.07 per share.
Analysts have revised their earnings estimates upward for both 2012
and 2013, driving the stock to attain a Zacks #2 Rank (Buy). Over
the past 30 days, the Zacks Consensus Estimate for 2012 increased
1.0% to $4.02, which is at the higher end of the company's guidance
at an implied year-over-year growth of 13.6%. For 2013, the Zacks
Consensus Estimate has increased by 4 cents or 0.9% to $4.29,
representing growth of 6.6%.
Home Properties paid a dividend of 66 cents per share in the second
quarter of 2012, marking a 6.5% increase over the year-ago quarter.
The company has historically paid an uninterrupted dividend since
1995, even during the recession. The current dividend payment
affirms a yield of 4.2%.
Home Properties' valuation metrics are at a discount on a
price-to-earnings (P/E) and price-to-sales (P/S) basis. Shares of
Home Properties are currently trading at a forward P/E of 15.73x
versus the peer group average of 18.87x. On a P/S basis, Home
Properties is currently trading at 4.96x versus 7.62x for the peer
group average. Its PEG ratio is 1.94 based on a 5-year FFO growth
rate of 8.1%.
Since April 16, 2012, Home Properties shares have fared better than
the simple moving average for 200 days or SMA (200). The
year-to-date return for the stock is fairly decent at 13.9%
compared to an S&P 500 tally of 10.7%.
With a favorable supply/demand relationship, rising earnings
estimates, robust growth projections, and a healthy dividend yield,
Home Properties offers an enticing upside potential going forward.
In addition, a continued focus on stable markets in major
metropolitan areas bode well for its long-term growth.
Based in Rochester, New York, Home Properties owns and operates
apartment communities primarily along the East Coast of the U.S.
The company provides quality housing alternatives at affordable
prices to a broad range of middle-income residents. Presently, its
portfolio includes 127 apartment communities containing 44,232
apartment units. The company currently has a market cap of $3.1
HOME PPTYS INC (HME): Free Stock Analysis
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