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Welltower (HCN): Will it Post an Earnings Beat this Season?

Welltower Inc.HCN is expected to report fourth-quarter 2016 results before the market opens on Feb 22. Last quarter, the healthcare real estate investment trust ("REIT") had delivered a 0.87% positive earnings surprise.

In the trailing four quarters, the company surpassed estimates on all occasions with an average beat of 0.88%. The Zacks Consensus Estimate for fourth-quarter funds from operations ("FFO") is currently pegged at $1.08.

Let's see how things are shaping up for this announcement.

Welltower Inc. Price and EPS Surprise

Welltower Inc. Price and EPS Surprise | Welltower Inc. Quote

Why a Likely Positive Surprise?

Our proven model shows that Welltower has the right combination of two key ingredients for an earnings beat. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to beat estimates.

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

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate ($1.09) estimate and the Zacks Consensus Estimate ($1.08) stands at +0.93%. This is a meaningful indicator of a likely positive surprise for the company.

Zacks Rank : Welltower carries a Zacks Rank #3. The combination of Welltower's Zacks Rank #3 and positive ESP makes us confident of an earnings beat in the upcoming release

We caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

What's Driving the Better-than-Expected Earnings?

Welltower enjoys a diverse portfolio in the healthcare real estate industry. In Nov 2016, Standard & Poor's upgraded Welltower's rating to BBB+. The company's corporate credit rating has been raised specifically to BBB+ with a stable outlook from BBB with a positive outlook.

This rating upgrade indicates Welltower's success in repositioning its portfolio, strategic deleveraging moves, credit metrics progress, strength in balance sheet and solid performance of its seniors housing operating portfolio, compared to its peers.

Also, its efforts toward growing and improving its healthcare portfolio quality along with lower leverage are expected to serve as growth drivers. Further, its business relationship with experienced healthcare management companies and operators bodes well for it.

Stocks to Consider

Here are some REITs that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Chesapeake Lodging Trust CHSP , expected to release earnings results on Feb 22, has an Earnings ESP of + 2.17% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Hersha Hospitality Trust HT has an Earnings ESP of +2.04% and a Zacks Rank #3. The company is expected to release results on Feb 22.

Public Storage PSA is expected to release results on Feb 22. It has an Earnings ESP of +1.14 % and carries a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. 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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Public Storage (PSA): Free Stock Analysis Report

Welltower Inc. (HCN): Free Stock Analysis Report

Hersha Hospitality Trust (HT): Free Stock Analysis Report

Chesapeake Lodging Trust (CHSP): 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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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