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What's in Store for W. P. Carey (WPC) This Earnings Season?

While W. P. Carey's (WPC) Q3 results will reflect gains from its high-quality diversified portfolio and strategic investments, choppiness in certain real estate categories is a concern.

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This story originally appeared on Zacks

W. P. Carey Inc. WPC is set to report third-quarter 2021 results on Oct 29, before the market opens. Both its quarterly revenues and funds from operations (FFO) per share are likely to display year-over-year growth.



In the last reported quarter, this New York-based net-lease REIT delivered a surprise of 2.42% with respect to the FFO per share.  



The company has a decent surprise history. It surpassed estimates in each of the preceding four quarters, the average surprise being 1.46%. The graph below depicts the surprise history of the company:

- Zacks

W.P. Carey Inc. Price and EPS Surprise

W.P. Carey Inc. Price and EPS Surprise

W.P. Carey Inc. price-eps-surprise | W.P. Carey Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

This diversified net lease REIT, which specializes on sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, is poised to benefit from its portfolio of operationally-critical commercial real estate, which it leases back to creditworthy tenants on a long-term basis with built-in rent escalators.



The company focuses on investing in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties. These properties are located mainly in the United States, and Northern and Western Europe.



The company is likely to have benefited from continued strength in its rent collections as well as certain COVID-related rent recoveries during the third quarter.



Moreover, the company is focused on capitalizing on accretive investment opportunities. In September, the company announced investments worth $200 million. This primarily included Class-A warehouse facilities on long-term net leases. The investments were in line with the company’s externally-driven growth strategy, which is focused on high-quality industrial and warehouse assets. Since the beginning of the year through Sep 13, the company has completed $1.2 billion of investments, out of which 70% comprises investments in the industrial and warehouse assets.



Amid these, the company’s third-quarter revenues are pinned at $327.9 million, indicating an 8.4% increase from the prior-year quarter.



W. P. Carey’s activities during the quarter under review were adequate to secure analyst confidence. Consequently, the consensus estimate for quarterly FFO per share has moved a cent north to $1.26 in a month’s time. It also suggests a 9.6% increase year on year.



However, the prevailing uncertainty surrounding the pandemic and its impact on economic activity might affect the demand for a number of real estates and W. P. Carey’s portfolio is also not immune to such impacts.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for W. P. Carey this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.



W. P. Carey currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter:



Public Storage PSA, scheduled to report third-quarter earnings on Nov 1, currently has an Earnings ESP of +0.69% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.



Life Storage, Inc. LSI, slated to release quarterly numbers on Nov 2, has an Earnings ESP of +0.21% and carries a Zacks Rank of 2, at present.



Ventas Inc. VTR, scheduled to report quarterly numbers on Nov 5, currently has an Earnings ESP of +1.28% and carries a Zacks Rank of 3.



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.



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