Yahoo Finance Vornado (VNO) to Report Q1 Earnings: What's in the Cards?
Vornado Realty Trust VNO is scheduled to report first-quarter 2024 results on May 6, after market close. While the quarterly results are likely to reflect a year-over-year increase in revenues, funds from operations (FFO) per share may exhibit a decline.
In the last reported quarter, this New York-based real estate investment trust’s (REIT) FFO plus assumed conversions as adjusted per share of 63 cents outpaced the Zacks Consensus Estimate by 6.8%. Results displayed lower-than-anticipated top-line growth.
Over the trailing four quarters, Vornado’s FFO plus assumed conversions as adjusted per share surpassed the Zacks Consensus Estimate on two occasions, met on another and missed on the remaining occasion, the average beat being 4.01%. This is depicted in the graph below:
Vornado Realty Trust Price and EPS Surprise
Vornado Realty Trust price-eps-surprise | Vornado Realty Trust Quote
U.S. Office Market
Per a Cushman & Wakefield CWK report, the high interest rate environment, hybrid and remote work strategies and slower office-using employment growth compared to the U.S. job market continued to keep occupiers cautious about office leasing decisions in the first quarter.
The first quarter of 2024 marked the ninth straight quarter for office demand being negative. Net absorption for the quarter was a negative 31 million square feet (msf), bringing the four-quarter rolling total to a negative 78 msf.
The first-quarter national vacancy rate reached 20.2%, increasing 70 basis points (bps) sequentially and 210 bps year over year. The national asking rent came in at $37.77 in the quarter.
Nonetheless, the Cushman & Wakefield report highlights that despite the weaker trends at the national level, demand for office spaces outperformed in some markets, with 26 of the 90 U.S. markets tracked by the company reporting positive net absorption in the first quarter.
Across a fifth of U.S. markets, vacancy fell and it remained below 15% in 34 of the markets. Class A vacancy declined quarter over quarter in 32 of the 93 U.S. markets that were followed by Cushman & Wakefield.
Projections
Vornado’s portfolio of premium office assets with class-apart amenities, strategically situated in sought-after markets like New York, Chicago and San Francisco, is likely to have witnessed healthy demand during the quarter, aiding leasing activity.
A diversified tenant base, which includes several industry bellwethers, is expected to have led to stable cash flow generation during the quarter.
The Zacks Consensus Estimate for quarterly revenues is pegged at $451.7 million, suggesting an increase of 1.2% from the year-ago quarter’s reported figure.
However, the consensus mark for Vornado’s New York revenues stands at $360 million, indicating a decline from $363.8 million in the prior-year quarter. The consensus estimate for occupancy in the New York office portfolio is pegged at 90.80%, down from 91.80% reported a year ago.
Further, higher interest expenses are expected to have been a spoilsport.
The company’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised a cent upward to 58 cents over the past month. However, the figure suggests a 3.3% decline from the prior-year period’s reported number.
Q1 Activity
In February 2024, Vornado announced that The Avra Group will open Avra Estiatorio, a 20,000-square-foot Mediterranean restaurant, in THE PENN DISTRICT above Penn Station. The restaurant will include a 150-seat outdoor café and be part of the THE PENN DISTRICT’s food and beverage offerings.
This marks The Avra Group’s fourth restaurant in New York City, which is set to open in Spring 2025. It will feature 14,000 square feet of indoor dining, 6,000 square feet of outdoor dining and multiple private dining rooms.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of FFO per share for Vornado 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.
Vornado has an Earnings ESP of -0.67% and currently carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Peakstone Realty Trust PKST and Medical Properties Trust MPW — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Peakstone, scheduled to report quarterly numbers on May 7, has an Earnings ESP of +8.28% and carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medical Properties, slated to release quarterly numbers on May 9, has an Earnings ESP of +3.22% and carries a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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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Vornado Realty Trust (VNO) : Free Stock Analysis Report
Medical Properties Trust, Inc. (MPW) : Free Stock Analysis Report
Cushman & Wakefield PLC (CWK) : Free Stock Analysis Report
Peakstone Realty Trust (PKST) : Free Stock Analysis Report
