Welltower Stock To Report Q3 Earnings: What's In The Cards?

Welltower, Inc. WELL WELL is slated to report third-quarter 2024 results on Oct. 28, 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, OH-based healthcare real estate investment trust (REIT) witnessed a normalized FFO per share of $1.05, beating the Zacks Consensus Estimate by 5%. Results reflected a rise in revenues on a year-over-year basis. The total portfolio same-store net operating income (SSNOI) increased year over year, driven by SSNOI growth in the senior housing operating SHO portfolio.

Over the preceding four quarters, Welltower's FFO per share beat the Zacks Consensus Estimate on each occasion, the average beat being 4.49%. The graph below depicts this surprise history:

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 third quarter, the company's 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 is 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 third-quarter resident fees and services is pegged at $1.44 billion, indicating an increase from the year-ago quarter's $1.2 billion. The consensus mark for quarterly rental income stands at $411.4 million, implying a rise from $384.5 million in the year-ago period.

The Zacks Consensus Estimate for quarterly total revenues is pegged at $1.95 billion, suggesting a rise of 17.3% from the prior-year period's reported number.

We expect WELL to have continued with its 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.

WELL's activities during the quarter were inadequate to garner analysts' confidence. The Zacks Consensus Estimate for third-quarter FFO per share has remained unrevised at $1.04 over the past month. However, the figure suggests an increase of 13% from the year-ago reported number.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict a likely beat 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 not the case here.

Welltower currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Other Stocks That Warrant A Look

Here are two other stocks from the broader REIT sector — Extra Space Storage EXR and Ventas VTR — you may want to consider as our model shows that these, too, have the right combination of elements to report a surprise this quarter.

Extra Space Storage, scheduled to report quarterly numbers on Oct. 29, has an Earnings ESP of +0.67% and carries a Zacks Rank of 3.

Ventas, slated to release quarterly numbers on Oct. 30, has an Earnings ESP of +0.97% and carries a Zacks Rank of 2 at present.

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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