Duke Realty (DRE) To Post Q3 Earnings: What's In Store?
Zacks Investment Research | Oct 23, 2017 05:58AM ET
Duke Realty Corp. (NYSE:DRE) is scheduled to release third-quarter 2017 results on Oct 25, after the market closes.
Last quarter, this commercial real estate investment trust (REIT) delivered a positive earnings surprise of 6.7%. Results were backed by improved operational performance from increased occupancy and rental-rate growth.
The company exceeded the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being nearly 5.9%. The graph below depicts this surprise history:
Duke Realty Corporation Price and EPS Surprise
industry ’s gain of 4.8%.
Note: All EPS numbers presented here represent funds from operations (FFO) per share.
Let’s see how things have shaped up for this announcement.
Factors That Might Influence Q3 Results
In recent years, Duke Realty has made strategic efforts to enhance its industrial portfolio. This augurs well because the industrial-asset category has been grabbing attention as it is experiencing high demand, with the economy and job market displaying signs of recovery and the manufacturing environment remaining healthy.
Furthermore, higher demand from e-commerce customers, third-party logistic providers and traditional warehousing customers also resulted in high demand for distribution centers. Given Duke Realty’s solid capacity to offer modern, bulk distribution properties, the company remains well poised to capitalize on this trend in the third quarter as well.
Moreover, Duke Realty is making concerted efforts to lower its suburban office assets and turn into a leading domestic pure-play industrial REIT. Subsequently, in the second quarter, the company generated $2.45 billion in proceeds by selling its medical office building (MOB) portfolio for $2.8 billion. This residual transaction is likely to be reflected in the to-be-reported quarter.
While such streamlining efforts are strategic fit for the long term, the near-term dilutive effect cannot be bypassed. In fact, such short-term impact will likely drag the company’s quarterly results.
Over the past two months, the Zacks Consensus Estimate of funds from operations (FFO) per share for the quarter to be reported remained unchanged at 29 cents, reflecting lack of any solid catalyst.
Earnings Whispers
Our proven model does not conclusively show that Duke Realty will likely beat estimates this season. This is because a stock needs to have both a positive Zacks Investment Research
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