What's in Store for Equity Residential Stock in Q3 Earnings?

Equity Residential EQR is slated to report third-quarter 2024 results after the closing bell on Oct. 30. The company’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the last reported quarter, this Chicago, IL-based residential real estate investment trust (REIT) came up with a positive surprise of 1.04% in terms of normalized FFO per share. Results reflected decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency.Over the trailing four quarters, Equity Residential surpassed the Zacks Consensus Estimate on two occasions, met once and missed in the other period, the average positive surprise being 0.55%. 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 third-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 Q3Per RealPage data, the U.S. apartment demand remained impressive in the third quarter of 2024 despite a record number of new deliveries entering the market. As a result, rent growth stayed relatively subdued across the nation, continuing the trend observed over the past several months.Between July and September 2024, the U.S. apartment market absorbed 192,649 market-rate units, while 162,595 new units were delivered during the same period. Annual supply hit 557,842 units, the highest since 1974, while demand trailed slightly at 488,773 units.In the third quarter, nationwide, occupancy in market-rate apartments stood at 94.4%, a slight decline of just 10 basis points compared to last year. Rents rose 0.2% year over year in September, and the monthly effective rent change was down 0.5%. The average effective rent was $1,838.Projections for EQRAmid this surge in demand, Equity Residential's quarterly performance is likely to have gained from its strategy of diversifying its portfolio across urban and suburban markets. The company's focus on more affluent residents, who enjoy lower unemployment rates and favorable prospects, is a key factor. With a robust balance sheet, Equity Residential leverages technology, scale and organizational strength to fuel growth. Its strong financial position is expected to support its development initiatives in the upcoming quarter. However, the growing supply of properties may have posed a challenge.In September 2024, this residential REIT reported that it witnessed healthy demand and pricing for its apartment units during the primary leasing season. The company reiterated its earlier guidance of blended rate growth between 2% and 3% for the third quarter of 2024 and a physical occupancy level of 96.2% for full-year 2024. It added that its same-store revenue growth would be able to meet its previous guided range, per its second-quarter earnings release.Currently, the Zacks Consensus Estimate for the company’s quarterly revenues stands at $742.89 million, which indicates a 2.6% increase year over year. We expect second-quarter same-store revenues to increase 3.1% year over year, while same-store net operating income (NOI) is estimated to grow 2.7%. Physical occupancy is expected at 96.2%. For the third quarter of 2024, Equity Residential projected normalized FFO per share in the band of 96 cents-$1.00. However, before the third-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 98 cents. Nevertheless, it suggests year-over-year growth of 2.08%.Here is What Our Quantitative Model Predicts for EQR:Our proven model does not conclusively predict 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 not the case here. Equity Residential currently carries a Zacks Rank of 2 and has an Earnings ESP of -1.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Stocks That Warrant a LookHere are two stocks from the residential REIT sector — AvalonBay Communities, Inc. AVB and Independence Realty Trust, Inc. IRT — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.AvalonBay Communities, scheduled to report quarterly numbers on Nov. 4, has an Earnings ESP of +0.72% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.Independence Realty Trust is slated to report quarterly numbers on Oct. 30. IRT has an Earnings ESP of +1.94% 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.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 AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report Equity Residential (EQR): Free Stock Analysis Report Independence Realty Trust, Inc. (IRT): 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