Is a Beat in Store for Equity Residential Stock in Q1 Earnings?

Equity Residential EQR is slated to report first-quarter 2025 results after the closing bell on April 29. While the company’s quarterly results are likely to reflect growth in revenues, funds from operations (FFO) per share are expected to remain flat.In the last reported quarter, this Chicago, IL-based residential real estate investment trust (REIT) came up with an in-line performance in terms of normalized FFO per share. Results reflected healthy same-store revenue performance and high occupancy.Over the trailing four quarters, Equity Residential surpassed the Zacks Consensus Estimate on two occasions for as many in-line performances, the average positive surprise being 0.81%. The graph below depicts this surprise history:Equity Residential Price and EPS Surprise Equity Residential price-eps-surprise | Equity Residential QuoteAs we approach the release of Equity Residential's first-quarter 2025 earnings report, it is important to examine how this residential REIT is likely to have performed amid the current market conditions.US Apartment Market in Q1The first quarter of 2025 brought a wave of strong apartment demand, offering a lift to occupancy and rent growth as the supply surge begins to wane. Per RealPage data, from January through March 2025, more than 138,000 market-rate apartment units were absorbed nationally. This marks the highest first-quarter demand on record in the RealPage data set covering more than three decades. Combined with the robust demand seen over the last three quarters of 2024, annual absorption reached nearly 708,000 units — essentially matching the absorption from the early 2022 demand boom.Demand in the year-ending first quarter of 2025 exceeded concurrent supply. Though nearly 577,000 units were delivered in the said period — just shy of last quarter’s record high of about 589,000 units — annual supply volume is forecasted to decline in the coming months, indicating that the construction cycle may have peaked.Occupancy rose modestly to 95.2% in March, the highest reading since October 2022. While still within long-term norms, the uptick provides confidence that the rental market is not materially oversupplied. Rent growth has also regained traction. Effective rents rose 0.75% in March and 1.1% in the year-ending March 2025 — the highest 12-month reading since June 2023. All of the nation’s 50 largest apartment markets recorded rent increases on a monthly basis, signaling broad-based strength. The average effective rent was $1,848.However, the recovery is regionally uneven. The Midwest and Rust Belt regions led annual rent gains, with cities like Kansas City, MO, Chicago, IL, and Pittsburgh, PA, outperforming. In contrast, high-supply Sun Belt metros, such as Austin and Phoenix, continued to experience rent cuts. However, these markets saw monthly rent growth in March, suggesting momentum is returning ahead of the prime leasing season.Projections for EQRAmid the robust demand, Equity Residential’s quarterly results are likely to receive a boost from its strategic portfolio diversification across urban and suburban markets. Its focus on higher-income renters — a segment marked by lower unemployment and greater economic stability — has served as a significant strength. With a strong balance sheet, Equity Residential leverages technology, scale and operational efficiency to fuel growth. Its strong financial position is expected to support ongoing development initiatives. However, an elevated supply of rental properties may have presented a headwind.Currently, the Zacks Consensus Estimate for the company’s quarterly revenues stands at $766.82 million, which indicates a 4.93% increase year over year. We expect first-quarter same-store revenues to increase 2% year over year, while same-store net operating income (NOI) is estimated to grow 1.9%. Physical occupancy is expected at 96.1%. For the first quarter of 2025, the company projects normalized FFO per share in the band of 90-94 cents. However, before the first-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly normalized FFO per share has been revised a cent downward in the past month to 93 cents. It suggests no year-over-year growth. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Here is What Our Quantitative Model Predicts for EQR:Our proven model predicts a surprise in terms of FFO per share for Equity Residential 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 the case here.Equity Residential currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.75%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Other Stocks That Warrant a LookHere are two stocks from the broader REIT sector — Welltower Inc. WELL and Camden Property Trust CPT — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.Welltower, scheduled to report quarterly numbers on April 28, has an Earnings ESP of +1.69% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.Camden Property Trust is slated to report quarterly numbers on May 1. CPT has an Earnings ESP of +0.26% and carries a Zacks Rank of 3 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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Equity Residential (EQR): Free Stock Analysis Report Camden Property Trust (CPT): Free Stock Analysis Report Welltower Inc. (WELL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks