What's in Store for EPR Properties (EPR) in Q3 Earnings?

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EPR PropertiesEPR is scheduled to report third-quarter 2018 results on Oct 29, after the closing bell. The company's funds from operations (FFO) per share and revenues are anticipated to display year-over-year growth.

In the last reported quarter, this real estate investment trust (REIT) delivered a positive surprise of 0.54% in terms of FFO per share.

Over the trailing four quarters, the company surpassed estimates in two occasions for as many misses. This resulted in an average negative surprise of 2.84%. The graph below depicts the surprise history of the company:

EPR Properties Price and EPS Surprise

EPR Properties Price and EPS Surprise | EPR Properties Quote

Factors to Consider

Specialty REIT EPR Properties focuses on investments in properties across three primary segments - Entertainment, Recreation and Education. The company has made strategic investments in each segment which are likely to aid its performance in the to-be-reported quarter. Moreover, its diversified tenant base is likely to spur demand for its properties amid improving economy and upbeat consumer confidence.

Specifically, growth in the millennial generation is likely to aid its Entertainment segment as millennials constitute the major part of frequent movie-goers. This group has grown considerably over time and values experience over ownership.

Further, renovation works, along with new food and beverage concepts introduced in megaplex theatres, are aimed at improving consumer experience. This will likely improve attendance and drive revenues in the quarter under review. Also, the company's efforts on offering family entertainment centers are encouraging as these properties will likely witness decent demand amid improving economy.

Further, with solid demand for properties amid economic recovery backed by job growth, the Recreation segment too promises a decent performance. Its golf entertainment properties and resort destinations are likely to have experienced decent demand. Also, increased focus on fitness and wellness are expected to drive demand for such facilities.

In addition, investments in the Education segment are likely to boost the company's performance. In fact, there is a healthy demand for quality education and associated facilities amid modest supply and this is expected to drive growth in enrolment. Also, with a huge number of dual income families, there is a desire for quality education rather than daycare facilities and the company remains committed to capitalize on these favorable trends.

Also, the company focuses on conservative balance-sheet management and aims for preserving financial flexibility and liquidity. It also has a well-laddered debt maturity profile.

Amid these, the Zacks Consensus Estimate for third-quarter revenues is pinned at $139.1 million, marking an expected increase of 13.3% year over year.

In a month's time, the company's Zacks Consensus Estimate of FFO per share for the third quarter moved south marginally to $1.35. Nevertheless, the figure still denotes a projected increase of 7.1% from the prior-year period.

However, the company has a substantial development pipeline. Further, increase in interest rate adds to its woes.

Earnings Whispers

Our proven model does not conclusively show that EPR Properties will likely beat estimates this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen.

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

Earnings ESP: The Earnings ESP is -0.32%.

Zacks Rank: EPR Properties has a Zacks Rank of 2, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.

Stocks That Warrant a Look

Here are a few stocks in the REIT 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:

Regency Centers CorporationREG , scheduled to release earnings on Oct 25, has an Earnings ESP of +0.21% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Welltower Inc.WELL , slated to release third-quarter results on Oct 30, has an Earnings ESP of +1.06% and a Zacks Rank of 3.

Extra Space Storage Inc.EXR , set to report its quarterly numbers on Oct 30, has an Earnings ESP of +0.14% and a Zacks Rank #3.

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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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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