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Will Host Hotels (HST) Pull Off A Surprise in Q2 Earnings?

Host Hotels & Resorts, Inc. HST is anticipated to beat expectations when it reports second-quarter 2017 results on Jul 26, after the market closes.

Last quarter, this Bethesda, MD-based lodging real estate investment trust (“REIT”) delivered a better-than-expected performance, generating a positive surprise of 12.8%. Results reflected growth in comparable hotel revenues and improvement in margin.

Moreover, Host Hotels has a decent surprise history. Over the past four trailing quarters, the company posted surprises in three occasions, with an average beat of 5.87%. This is depicted in the graph below:

Currently, the Zacks Consensus Estimate for second-quarter funds from operations (“FFO”) per share is pegged at 46 cents.

Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Host Hotels is likely to beat on estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to beat estimates, and Host Hotels has the right mix.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate estimate of 49 cents and the Zacks Consensus Estimate of 46 cents, is currently pegged at +6.52%. This is a meaningful and leading indicator of a likely positive surprise.

Zacks Rank: Host Hotels’ Zacks Rank #3, when combined with a positive ESP, makes us reasonably confident of a positive surprise this season.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

What's Driving the Better-than-Expected Earnings?

Host Hotels boasts a portfolio of upscale hotels across lucrative markets in the U.S. Also, the company is making concerted efforts to enhance its portfolio quality through strategic capital-recycling program. The company is making opportunistic acquisitions, as well as making strategic redevelopments to fortify its position in global vibrant markets. In addition, Host Hotels has a decent balance sheet and ample liquidity.

Amid these, the company’s second-quarter results are likely to display growth in comparable hotel revenues and improvement in productivity at many of the company’s hotels. As such, its margin is anticipated to get better in the to-be-reported quarter backed by productivity improvements.

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 they have the right combination of elements to report a positive surprise this quarter:

Liberty Property Trust LPT, slated to release second-quarter results on Jul 25, has an Earnings ESP of +1.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CyrusOne Inc. CONE, scheduled to release earnings on Aug 2, has a Zacks Rank #2 and an Earnings ESP of +2.70%.

Piedmont Office Realty Trust, Inc. PDM, slated to release earnings on Aug 2, has an Earnings ESP of +2.27% and a Zacks Rank #3.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Will You Make a Fortune on the Shift to Electric Cars?

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

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Host Hotels & Resorts, Inc. (HST): Free Stock Analysis Report
 
Piedmont Office Realty Trust, Inc. (PDM): Free Stock Analysis Report
 
CyrusOne Inc (CONE): Free Stock Analysis Report
 
Liberty Property Trust (LPT): Free Stock Analysis Report
 
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