Realty Income Corp. (O) Q4 FFO and revenue exceed estimates

Realty Income Corp. (O) exited with quarterly funds from operations (FFO) of $0.94 per share, beating Zacks consensus estimate of $0.93 per share. That compares to an FFO of $0.84 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a surprise FFO of 1.08%. A quarter ago, this real estate investment trust was expected to post an FFO of $0.92 per share when it actually produced an FFO of $0.91, delivering a surprise of -1, 09%.

In the past four quarters, the company has exceeded consensus FFO estimates twice.

Realty Income Corp., which is part of the Zacks REIT and Equity Trust – Retail segment, posted revenue of $685.02 million for the quarter ended December 2021, beating Zacks’ consensus estimate by 15.65%. That compares to revenues of $418.08 million a year ago. The company has exceeded consensus revenue estimates four times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future FFO expectations will primarily depend on management’s comments on the earnings call.

Shares of Realty Income Corp. have lost around 6.9% since the start of the year compared to the -8.8% decline in the S&P 500.

What’s next for Realty Income Corp.

While Realty Income Corp. has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable metric that can help investors solve this problem is the company’s FFO outlook. This includes not only current FFO consensus expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in estimate revisions. Investors can track these revisions on their own or rely on a proven rating tool like Zacks Rank, which has an impressive track record of harnessing the power of estimate revisions.

Prior to this earnings release, the trend in estimate revisions for Realty Income Corp. Mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 3 (hold) ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current FFO consensus estimate is $0.97 on $493.31 million in revenue for the upcoming quarter and $3.93 on $2.85 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, REIT and Equity Trust – Retail are currently among 34% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Saul Centers (BFS), another stock in the same sector, has yet to report results for the quarter ending December 2021.

This real estate investment trust involved primarily in shopping centers is expected to post quarterly earnings of $0.76 per share in its next report, representing a year-over-year change of +7%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Saul Centers revenue is expected to be $60.85 million, up 4.4% from the prior year quarter.

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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.

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