Is a Beat in Store for Equity Residential Stock in Q4 Earnings?

Equity Residential EQR is slated to report fourth-quarter and full-year 2024 results after the closing bell on Feb. 3. While the company’s quarterly results are likely to reflect growth in revenues, funds from operations (FFO) per share are expected to remain flat.See the Zacks Earnings Calendar to stay ahead of market-making news.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 decent same-store performances, backed by healthy demand.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 fourth-quarter 2024 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 Q4Per RealPage data, the U.S. apartment demand surged to its highest level in almost three years in the fourth quarter of 2024, comfortably surpassing the record-high new supply seen that year.Between October and December 2024, the U.S. apartment market absorbed 230,819 market-rate units, while 155,408 new units were delivered during the same period. Annual supply hit 588,883 units, while demand led to 666,699 units.As demand exceeded supply, U.S. apartment occupancy saw a notable annual increase, reaching 94.8% in December. The annual occupancy change was 0.7%. However, rent growth remained stagnant due to the pressure of historically high new supply levels. Rents rose 0.5% in 2024, and the monthly effective rent change was down 0.3%. The average effective rent was $1,823.Projections for EQRAmid this surge in demand, Equity Residential's quarterly performance is likely to have benefited from its strategic portfolio diversification across urban and suburban markets. The company’s emphasis on affluent renters — who experience lower unemployment and stronger economic prospects — has been a key advantage.Backed by a solid balance sheet, Equity Residential utilizes technology, scale and operational efficiency to drive growth. Its strong financial position is expected to support ongoing development initiatives. However, the increasing supply of rental properties may have presented a headwind.Currently, the Zacks Consensus Estimate for the company’s quarterly revenues stands at $757.41 million, which indicates a 4.1% increase year over year.We expect fourth-quarter same-store revenues to increase 2.7% year over year, while same-store net operating income (NOI) is estimated to grow 2.1%. Physical occupancy is expected at 95.9%.For the fourth quarter, Equity Residential expects normalized FFO per share in the band of 98 cents-$1.02. However, before the fourth-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 remained unchanged in the past month at $1.00. It suggests no year-over-year growth.For full-year 2024, Equity Residential expected its normalized FFO per share in the band of $3.87-$3.91. For the full year, the Zacks Consensus Estimate for normalized FFO per share has risen a cent in the past three months to $3.89. The figure indicates a 2.91% increase year over year on revenues of $2.97 billion.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 +0.63%. 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 — Ventas, Inc. VTR and Vornado Realty Trust VNO — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.Ventas, scheduled to report quarterly numbers on Feb. 12, has an Earnings ESP of +0.89% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Vornado is slated to report quarterly numbers on Feb. 10. VNO has an Earnings ESP of +2.25% 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.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 Ventas, Inc. (VTR): Free Stock Analysis Report Vornado Realty Trust (VNO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks