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UDR (UDR) Up 1.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for UDR (UDR). Shares have added about 1.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is UDR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

UDR Beats Q4 FFO & Revenue Estimates, Provides 2019 View

UDR’s fourth-quarter 2018 FFOA per share of 50 cents surpassed the Zacks Consensus Estimate by a whisker. The figure came in higher than the prior-year tally of 48 cents.

Revenues from rental income in the reported quarter climbed 5.8% year over year to $264.7 million. Further, the top-line figure beat the Zacks Consensus Estimate of $263.3 million.

In addition, total revenues advanced 5.8% year over year. This upside primarily stemmed from growth in revenues from operating and lease-up communities.

Inside the Headlines

During the quarter under review, same-store revenues increased 3.7% year over year. However, same-store expenses flared up 4.4%. Consequently, same-store NOI improved 3.4% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 10 basis points (bps) year over year to 96.8%. The fourth-quarter annualized-rate of turnover shrunk 130 bps from the prior-year period to 40.3%.

During the quarter, UDR closed the previously-announced sale of its 604-home community — Circle Towers — in Fairfax County, VA, for $160 million.

At the end of the fourth quarter, UDR’s development pipeline aggregated $779 million at its pro-rata ownership interest, out of which, 99% has already been funded.

As of Dec 31, 2018, the company had around $1.3 billion available from a combination of cash and undrawn capacity on its credit facilities. Additionally, its total debt was $3.5 billion as of the same date.

Portfolio Activity

At the end of the reported quarter, the company’s Developer Capital Program investment, including accrued return, totaled $248.5 million.

Guidance

The company provided estimates for first-quarter 2019 and full-year 2019. For first-quarter 2019, UDR projects FFOA per share to be in the 48-50 cents range.

The FFOA per share for 2019 is expected in the band of $2.03-$2.07. Moreover, the company anticipates same-store NOI to be up 3.25-4.25% for the current year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, UDR has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, UDR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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