Why Is Welltower (WELL) Down 47.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Welltower (WELL). Shares have lost about 47.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Welltower due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Welltower's Q4 FFO Beats Estimates, Revenues Up Y/Y

Welltower reported normalized FFO per share of $1.05 in fourth-quarter 2019, which surpassed the Zacks Consensus Estimate by a penny. Further, the bottom line compared favorably with the year-ago quarter figure of $1.01.

Results reflect healthy same-store NOI (SSNOI) performance of its seniors housing triple-net, outpatient medical, seniors housing operating and long-term/post-acute care segments.

Moreover, the company generated revenues of nearly $1.26 billion, which surpassed the Zacks Consensus Estimate of $1.25 billion. The top line also compared favorably with the year-earlier quarter’s reported figure of $1.24 billion.

In full-year 2019, normalized FFO per share came in at $4.16, in line with the Zacks Consensus Estimate. The figure also climbed 3.2% year over year. Full-year revenues improved 9% to $5.12 billion. Also, the reported figure marginally outpaced the Zacks Consensus Estimate of $5.1 billion.

Quarter in Detail

Total portfolio SSNOI increased 2.2% year over year, driven by growth across all its segments.

Welltower's pro-rata gross investments in the fourth quarter totaled $1.4 billion. This included $1.1 billion in acquisitions (seven transactions) and $308 million in development funding.

This apart, the company completed property dispositions of $40 billion, while loan payoffs summed $116 million.

The company exited the quarter with $284.9 million of cash and cash equivalents, up from $215.4 million recorded a year ago. In addition, as of Dec 31, 2019, it had $1.4 billion of available borrowing capacity under its unsecured credit facility.

2020 Outlook

Welltower issued 2020 normalized FFO per share guidance of $4.20-$4.30.

In addition, the company expects its 2020 average blended SSNOI to grow between 1.5% and 2.5%. Further, full-year disposition proceeds are projected around $1.7 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Welltower has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.