Welltower, Inc. WELL is slated to report first-quarter 2024 results on Apr 29 after market close. The quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Toledo, Ohio-based healthcare real estate investment trust (REIT) witnessed a normalized FFO per share of 96 cents, beating the Zacks Consensus Estimate by 2.13%. Results reflected better-than-anticipated revenues. The total same-store net operating income (SSNOI) increased year over year, driven by SSNOI growth in the SHO portfolio.

Over the preceding four quarters, Welltower’s FFO per share beat the Zacks Consensus Estimate on each occasion, the average beat being 3.45%. The graph below depicts this surprise history:

Welltower Inc. Price and EPS Surprise Welltower Inc. Price and EPS Surprise

Welltower Inc. price-eps-surprise | Welltower Inc. Quote

Factors at Play

Welltower owns a diversified portfolio in the healthcare real estate industry in the major, high-growth markets of the United States, Canada and the U.K.

During the first quarter, the company’s Seniors Housing Operating (“SHO”) portfolio is likely to have continued to benefit from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is usually on the higher end compared with the general population. In addition, muted new supply and improved affordability are expected to have provided a favorable operating environment for the SHO portfolio.

Further, Welltower’s long-term leases with its healthcare management companies or operators are anticipated to have led to stable revenue generation, boosting its top line.

The Zacks Consensus Estimate for first-quarter resident fees and services is pegged at $1.31 billion, indicating an increase from the year-ago quarter’s $1.13 billion. The consensus mark for quarterly rental income stands at $400.2 million, implying a rise from $384.1 million in the year-ago period.

The Zacks Consensus Estimate for quarterly total revenues is pegged at $1.78 billion, suggesting a rise of 14.04% from the prior-year period’s reported number.

We expect WELL to have continued with its near-term investment and development activities during the quarter, supported by its solid balance sheet position and capital-recycling efforts.

However, high interest expenses are likely to have been a spoilsport for Healthpeak during the to-be-reported quarter. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate.

WELL’s activities during the quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for first-quarter FFO per share has remained unrevised at 94 cents over the past month. However, the figure suggests an increase of 10.59% from the year-ago reported number.



What Our Quantitative Model Predicts

Our proven model predicts a likely surprise in terms of FFO per share for Welltower this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.

Welltower currently has an Earnings ESP of +1.53% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock That Warrants a Look

Here is one stock from the broader REIT sector — Park Hotels & Resorts PK — you may want to consider, as our model shows that it has the right combination of elements to report a surprise this quarter.

Park Hotels, slated to release quarterly numbers on Apr 30, has an Earnings ESP of +3.66% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Performance of Another REIT

Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2024 adjusted funds from operations (AFFO) per share of $2.35, which beat the Zacks Consensus Estimate of $2.31. The reported figure also climbed 7.3% from the year-ago quarter.

Results reflected a rise in revenues, aided by decent leasing activity and rental rate growth. ARE also narrowed its 2024 outlook.

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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