The majority of the real estate investment trusts ("REITs") have already reported their earnings for the Jan-Mar quarter. From the results so far, it has been observed that though the growth pace of some of the REITs has not been adequate, they have still managed to post positive surprises. This is largely attributable to the downward estimates revisions that some companies have witnessed over the past three months.
However, the low interest rate environment, which is supposed to support REITs, was not reflected in the results of many of these companies. Though positive surprises were recorded by many REITs, important companies like Taubman Centers, Inc. TCO and Vornado Realty Trust VNO missed estimates.
Per the Zacks Industry classification, REITs falls under the broader Finance sector. Below, we briefly discuss the earnings trend of the broader sector in the Jan-Mar quarter.
Per our latest Earnings Preview report, as of Apr 29, around 77.3% of finance stocks in the S&P 500 index reported results for the Jan-Mar quarter. These finance companies recorded a year-over-year decline of 5.5% in earnings and a 2.4% dip in revenues. In 61.8% cases, finance sector stocks posted earnings beat, while a revenue beat was reported in 54.4% cases.
Let's see how things are shaping up for the three REIT stocks that are scheduled to release results on May 6.
Brookfield Property Partners L.P.BPY has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). Our proven model does not conclusively show that Brookfield Property Partners is likely to beat earnings this quarter. This is because the company lacks the right combination of two key ingredients - a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a favorable Zacks Rank.
Care Capital Properties, Inc.CCP has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). We caution against Sell-rated (Zacks Rank #4 or #5) stocks going into the earnings announcement. So, Care Capital Properties does not fulfill the criteria required for an earnings surprise call.
National Health Investors Inc.NHI has an Earnings ESP of -1.72% and a Zacks Rank #2 (Buy). The combination of National Health Investors' Zacks Rank #2 and negative ESP makes surprise prediction difficult.