Shares of Equity Residential ( EQR ) touched a new 52-week high, reaching $70.46 toward the end of trading session on Nov 10. The stock closed the session at the same price, reflecting a solid year-to-date return of 38.9%. The trading volume for the session was nearly 2.29 million shares.
Despite scaling this high, we believe this Zacks Rank #2 (Buy) stock has the potential to move higher, given the improving fundamentals of the apartment sector and superior performance of its properties. Further, the long-term expected growth rate for this residential real estate investment trust (REIT) is presently 8.9%.
Growth Drivers
Strong third-quarter results, including improved performance of its same store properties, and a healthy liquidity position drove the company's stock price to the new high.
On Oct 28, 2014, Equity Residential came out with third-quarter 2014 funds from operations (FFO) per share of 81 cents, exceeding the Zacks Consensus Estimate by a penny. The bottom line also rose above the prior-year quarter figure by 10 cents. Quarterly results were primarily driven by higher same store net operating income (NOI) and NOI from non-same store properties presently in lease up, as well as lower total interest expense. Also, the company upped its 2014 normalized FFO per share guidance.
Going forward, we believe that the improving economy, job growth, rising consumer confidence and favorable demographics along its markets would help the company ride on the growth trajectory.
Echoing similar sentiments, the Zacks Consensus Estimate over the last 30 days climbed 0.6% to $3.12 per share for 2014, while that for 2015 advanced 0.9% to $3.35 per share.
Other REITs Scaling Highs
Other REITs that have scaled 52-week highs on Nov 10 include Public Storage ( PSA ), DDR Corp. ( DDR ) and Duke Realty Corporation ( DRE ).
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
