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5 REIT Stocks to Buy Ahead of Q1 2023 Earnings Results

The first-quarter 2023 earnings season was kicked off last week with results of banking behemoths. The financial sector will dominate in terms of announcing results this week too. Five real estate investment trusts (REIT) are set to beat on first-quarter earnings results.

Early-Stage Q1 Results

Market participants will try to analyze this reporting cycle against the backdrop of a possible recession later this year. Therefore, this season, management guidance and the near-term business outlook will get more importance than actual results. In addition to earnings and revenues, margins will get more attention from financial researchers.

As of Apr 14, 30 companies on the S&P 500 Index have reported their quarterly financial numbers. Total earnings of these companies are up 7% year over year on 10% higher revenues. Moreover, 83.3% of companies have surpassed earnings estimates while 73.3% have beaten revenue estimates.

Better-Than-Expected Start to Q1 Earnings

As of Apr 14, our projection has shown that total earnings of the S&P 500 Index are set to decline 9.4% year over year on 1.9% higher revenues compared with a 10% year-over-year decline in earnings on 1.7% higher revenues, estimated at the beginning of the reporting cycle. This will follow a 5.4% year-over-year decline in earnings of the S&P 500 Index on 5.9% higher revenues in fourth-quarter 2022.

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This earnings season is likely to witness the fifth consecutive quarter of year-over-year decline in net margins of the S&P 500 Index. The aggregate net margin is likely to decline 1.47% in the first quarter. If this happens, it will mark the biggest quarterly decline since the 1.38% year-over-year net margin decline in fourth quarter 2022.

REIT Industry in Q1 2023

The real estate market remained challenging in the first quarter, given the inflationary pressure, higher interest rates and economic slowdown. Though inflation is moderating, it is still a concern as it is leading to the adoption of a more cautious spending attitude by consumers.

Also, a slowdown in the job market and slow wage growth aggravated the woes, making buyers more dependent on their savings and credit for purchases. Amid the economic uncertainty, the depletion of savings, the rising borrowing costs and the labor market pessimism, demand for real estate assets is likely to dwindle.

Our Top Picks

We have narrowed our search to five U.S. REITs that are set to report first-quarter 2023 earnings results. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our five picks in the last quarter.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Rexford Industrial Realty Inc. REXR is a real estate investment trust focused on owning and operating industrial properties in Southern California infill markets. Zacks Rank #2 REXR has an Earnings ESP of +0.64%.

REXR has an expected earnings growth rate of 11.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last seven days. Rexford Industrial recorded earnings surprises in the last four reported quarters, with an average beat of 3.8%. REXR is set to release earnings results on Apr 19, after the closing bell.

AGNC Investment Corp. AGNC adheres to an active portfolio-management policy, which includes re-evaluation and adjustment of its portfolio, and hedges amid a varying interest rate and mortgage market environment.

In a bid to navigate the current monetary policy transition, AGNC has defensively positioned itself with prudent asset-selection efforts and timely portfolio adjustment. Going forward, investments in agency mortgage-backed securities will drive attractive returns for AGNC.

Zacks Rank #1 AGNC Investment has an Earnings ESP of +3.70%. The Zacks Consensus Estimate for current-year earnings improved 4.1% over the last 30 days. AGNC recorded earnings surprises in the last four reported quarters, with an average beat of 21.3%. AGNC Investment is set to release earnings results on Apr 24, after the closing bell.

EastGroup Properties Inc. EGP is a self-administered REIT focused on ownership, acquisition and selective development of industrial properties. EGP pursues a three-pronged investment strategy that includes: the acquisition of industrial properties at favorable initial yields with opportunities to improve cash flow performance through management, selective development of industrial properties in markets where they already has a presence and where market conditions justify such investments, and the acquisition of existing public & private companies.

Zacks Rank #2 EGP has an Earnings ESP of +0.08%. It has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last seven days.
EastGroup Properties recorded earnings surprises in the last four reported quarters, with an average beat of 2.2%. EGP is set to release earnings results on Apr 25, after the closing bell.

VICI Properties Inc. VICI is primarily engaged in the business of owning, acquiring and developing gaming, hospitality and entertainment destinations. VICI’s operating segment consists of real property business and golf course business.

Zacks Rank #2 VICI has an Earnings ESP of +3.34%. It has an expected earnings growth rate of 9.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1% over the last 60 days. VICI Properties is set to release earnings results on May 1, after the closing bell.

Equinix Inc.’s EQIX global data-center portfolio is well-poised to benefit from the high demand for inter-connected data-center space, given the rise in enterprise cloud adoption and customers’ digital demand.

Amid this, in 2023, we estimate total revenues of EQIX to rise 12.7% year-over-year and adjusted funds from operations to grow 7.4%. Moreover, EQIX’s focus on acquisitions and developments to expand its data-center capacity in key markets bodes well.

Zacks Rank #2 Equinix has an Earnings ESP of +0.94%. It has an expected earnings growth rate of 6.2% for the current year. EQIX recorded earnings surprises in three out of the last four reported quarters, with an average beat of 3.7%. Equinix is set to release earnings results on May 3, after the closing bell.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Equinix, Inc. (EQIX) : Free Stock Analysis Report

AGNC Investment Corp. (AGNC) : Free Stock Analysis Report

EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report

Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report

VICI Properties Inc. (VICI) : Free Stock Analysis Report

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