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

Jun 23, 2023Jun 23, 2023

W. P. Carey Inc. (WPC Quick QuoteWPC - Free Report) , a leading real estate investment trust (REIT), is set to announce its first-quarter 2023 earnings on Apr 28 before the bell.The company has been on a growth trajectory in recent years due to its diversified portfolio and focus on long-term triple net leases. In this article, we will provide an overview of WPC and discuss the key factors that are likely to impact its first-quarter 2023 results.In the last reported quarter, this New York-based net lease REIT came up with an in-line performance in terms of adjusted funds from operations (FFO) per share. Over the trailing four quarters, W. P. Carey's adjusted FFO per share surpassed estimates on three occasions and met on the other, the average surprise being 3.11%. The graph below depicts the surprise history of the company:

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

One of the key factors that sets W. P. Carey apart from other REITs is its diversified portfolio. The company invests in a wide range of property types and industries, which helps reduce risks and ensures consistent cash flows.Additionally, WPC has a focus on triple net leases, which shift most operating expenses, taxes and insurance costs to the tenant. This structure provides a stable income stream for the company and reduces its exposure to inflation and other economic factors.

W. P. Carey focuses on investing in high-quality, single-tenant, industrial, warehouse and retail properties. These are located mainly in the United States and Northern and Western Europe.This diversified net lease REIT specializes in sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties. WPC 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.W. P. Carey is also focused on capitalizing on accretive investment opportunities. These investments come as part of the company's external growth strategy and diversified approach. Since the beginning of 2023 through Apr 4, the company has completed $650 million in investments, with the majority of these related to industrial properties.However, several key factors are likely to impact WPC's first-quarter 2023 earnings. While the company's portfolio has remained relatively stable, there could be some short-term impacts on occupancy rates and rent collections in certain sectors.Particularly, choppiness in the economy and its impact on economic activity might affect the demand for several real estate, and W. P. Carey's portfolio is not immune to such impacts. Hence, while WPC's first-quarter results are likely to reflect gains from its high-quality diversified portfolio and strategic investments, choppiness in certain real estate categories is likely to have been a concern.Another factor to watch is interest rates. W. P. Carey has a significant amount of debt, and rising interest rates could increase its borrowing costs and impact its profitability.

Amid these, the Zacks Consensus Estimate for the company's first-quarter revenues is pegged at $419.82 million, indicating a 20.5% increase from the prior-year quarter. The consensus estimate for lease revenues for the first quarter is currently pegged at $356.39 million, ahead of the prior-year quarter's figure of $307.73 million.The Zacks Consensus Estimate for revenues from real estate ownership is presently pegged at $419.82 million, up from the $344.09 reported in the year-ago quarter.W. P. Carey's activities during the quarter under review were adequate to secure analysts’ confidence. The consensus estimate for the quarterly adjusted FFO per share has moved north by two cents in a month to $1.32. However, it suggests a decline of 2.22% year over year.

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 an FFO beat. However, that's not the case here.W. P. Carey currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of +1.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.However, our model shows that VICI Properties Inc. (VICI Quick QuoteVICI - Free Report) and Americold Realty Trust, Inc. (COLD Quick QuoteCOLD - Free Report) have the right combination of elements to report a surprise this quarter.VICI Properties is slated to report quarterly numbers on May 1. VICI has an Earnings ESP of +10.38% and carries a Zacks Rank of 1 presently.Americold Realty Trust, scheduled to report quarterly numbers on May 4, has an Earnings ESP of +17.72% and carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

W. P. Carey has been a strong performer in the REIT sector in recent years due to its diversified portfolio and focus on long-term triple net leases. While there are some short-term risks related to choppiness in the economy and rising interest rates, WPC's strong fundamentals and proactive debt management offer investors reasons to be optimistic about its future growth prospects. Investors should pay close attention to the company's first-quarter 2023 earnings report, which could provide valuable insight into W. P. Carey's trajectory in the coming quarters.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.

W. P. Carey Inc. VICI Properties Inc. Americold Realty Trust, Inc. the complete list of today's Zacks #1 Rank stocks here