Omega Healthcare (OHI) to Post Q1 Earning: What's in Store?

Omega Healthcare Investors, Inc. OHI is slated to report first-quarter 2019 results on May 7, after the market closes. The company’s performance will likely reflect a year-over-year decline in funds from operations (FFO) per share, though its top line is anticipated to display marginal growth.

In the last reported quarter, this real estate investment trust, which invests in the long-term healthcare industry, delivered a negative surprise of 3.95%, in terms of adjusted FFO per share. Results reflected year-over-year decline in operating revenues for the October-December 2018 quarter.

The company beat the Zacks consensus Estimate in three of the trailing four quarters, with an average positive surprise of 0.68%. This is depicted in the graph below.

Omega Healthcare Investors, Inc. Price and EPS Surprise

Omega Healthcare Investors, Inc. Price and EPS Surprise | Omega Healthcare Investors, Inc. Quote

Let’s see how things are shaping up, prior to this announcement.

Factors to Consider

Omega Healthcare, which invests in the long-term healthcare industry, mainly in skilled nursing (SNF) and assisted living facilities, has emerged as a leading SNF-focused REIT, and achieved diversification in terms of geography and operator in the United States and the U.K. The company’s properties are operated by a diverse group of healthcare companies, mainly in a triple-net lease structure. This diversification is expected to have helped the company’s top line in the to-be-reported quarter.

Further, Omega is targeting accretive buyouts in 2019, after completing its strategic asset repositioning and portfolio restructurings in 2018. Such strategic disposition program offers solid scope for capital redeployment in its growth endeavors.

However, revenue reduction related to its prior-year asset sales and a 2019 six month forbearance period where the company would receive reduced rental payments from Daybreak are likely to keep top-line growth in check.

The Zacks Consensus Estimate for first-quarter revenues of nearly $222 million underscores only a marginal rise of nearly 0.8% year over year.

Moreover, the company projects its G&A expenses for first-quarter 2019 to be consistent with its fourth-quarter 2018 tally. This is due to continued legal expenses associated with operator workouts and restructurings.

Omega Healthcare’s activities during the quarter failed to gain analyst confidence. Consequently, the Zacks Consensus Estimate for first-quarter 2019 FFO per share moved down two cents to 73 cents in two months’ time. It also indicates a 6.4% year-over-year decline.

Here is what our quantitative model predicts:

Omega Healthcare does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Omega Healthcare’s Earnings ESP is 0.00%.

Zacks Rank: Omega Healthcare has a Zacks Rank of 4 (Sell).

This combination of Zacks Rank and Earnings ESP makes us apprehensive about a positive surprise in the quarter.

Stocks That Warrant a Look

Here are a few stocks in the real estate sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Investors Real Estate Trust IRET, scheduled to release earnings on May 8, has an Earnings ESP of +3.19% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Global Medical REIT Inc. GMRE, set to report quarterly numbers on May 8, has an Earnings ESP of +1.65% and carries a Zacks Rank of 3, currently.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Omega Healthcare Investors, Inc. (OHI): Free Stock Analysis Report

Investors Real Estate Trust (IRET): Free Stock Analysis Report

Global Medical REIT Inc. (GMRE): Free Stock Analysis Report

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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.