Realty Income Corp. (O) missing Q3 FFO estimates


Realty Income Corp. (O) came out with quarterly operating funds (FFOs) of $ 0.91 per share, missing Zacks’ consensus estimate of $ 0.92 per share. This compares to the FFO of $ 0.81 per share a year ago. These figures are corrected for non-recurring items.

This quarterly report represents a surprise FFO of -1.09%. A quarter ago, this REIT was expected to post an FFO of $ 0.88 per share when it did indeed produce an FFO of $ 0.88, unsurprisingly.

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

Realty Income Corp., which is part of the Zacks REIT and Equity Trust – Retail business, reported revenue of $ 491.88 million for the quarter ended September 2021, beating Zacks’ consensus estimate by 2.67%. This compares to last year’s revenue of $ 404.57 million. 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 FFO’s future expectations will depend primarily on management comments on the profit call.

The shares of Realty Income Corp. are up about 14.9% year-to-date compared to the S&P 500’s 22.6% gain.

What’s next for Realty Income Corp.

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

There are no easy answers to this key question, but one reliable metric that can help investors address this issue is the company’s FFO outlook. This not only includes the current consensus FFO expectations for the upcoming quarter (s), but also how those expectations have changed in recent times.

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 scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of estimate revisions.

Prior to this earnings release, the trend of estimate revisions for Realty Income Corp. was supportive. While the magnitude and direction of estimate revisions may change as a result of the company’s just released earnings report, the current status translates to a Zacks Rank # 2 (Buy) for the stock. Thus, stocks are expected to outperform the market in the near future. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

It will be interesting to see how the estimates for the next quarters and the current year evolve in the days to come. The current consensus FFO estimate is $ 0.93 out of $ 513.92 million in revenue for the coming quarter and $ 3.58 out of $ 1.95 billion in revenue for the current year.

Investors should be aware that the outlook for the sector can also have a significant impact on the performance of the stock. In terms of Zacks’ industry rankings, REIT and Equity Trust – Retail are currently in the top 17% of the more than 250 Zacks 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.

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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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