Liberty Property Trust
) is slated to report its second-quarter 2014 results on Jul 22.
Last quarter, it posted a negative surprise of 1.69%. Also, this
real estate investment trust (REIT) has an average earnings
surprise of -4.13% over the past four quarters. Let's see what is
in store for us this season.
Factors to Consider
Liberty Property is aggressively enhancing its portfolio mix
through continued portfolio restructuring activity to capitalize on
the growing U.S. industrial sector fundamentals. Although this is
encouraging for long-term growth, the continuous acquisition and
development spree involves significant upfront operating expenses
and drags on the margin, thereby leading to a dilutive effect on
the near-term earnings.
In addition, Liberty Property generates a significant amount of
revenues from its office portfolio. Demand for office properties is
highly correlated to job growth. Currently, persistent office space
efficiency trends are continuing to limit any robust recovery in
the office sector fundamentals. This could affect its top-line
Liberty Property's first-quarter 2014 funds from operations (FFO)
of 58 cents per share fell a penny short of the Zacks Consensus
Estimate and came 7 cents below the prior-year quarter figure. The
company made consecutive dispositions of its suburban office and
flex properties during December and January.
Our proven model does not conclusively show that Liberty Property
is likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP and a Zacks Rank #1, 2
or 3 for this to happen. That is not the case here as you will see
Negative Zacks ESP:
The company's Earnings ESP, which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, stands at -3.28%.
Liberty Property's Zacks Rank #4 (Sell) further reduces the
predictive power of ESP.
Other Stocks to Consider
You could consider other REIT stocks that have both a positive
Earnings ESP and a favorable Zacks Rank:
SL Green Realty Corp.
) has an Earnings ESP of +0.70% with a Zacks Rank #2 (Buy). The
company will report its second-quarter 2014 results on Jul 23.
Avalonbay Communities Inc.
) has an Earnings ESP of +0.60% with a Zacks Rank #2. The company
will report its second-quarter 2014 results on July 23.
American Capital Agency Corp.
) has an Earnings ESP of +6.06% with a Zacks Rank #2. The company
will report its second-quarter 2014 results on Jul 28.
Note: FFO, 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.
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