NETSTREIT (NTST) Exceeds First Quarter FFO and Revenue Estimates

NOTETSTREIT (NTST) exited with quarterly funds from operations (FFO) of $0.29 per share, beating Zacks consensus estimate of $0.27 per share. That compares to an FFO of $0.23 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a surprise FFO of 7.41%. A quarter ago, this company was expected to post an FFO of $0.27 per share when it actually produced an FFO of $0.27, unsurprisingly.

In the past four quarters, the company has only exceeded FFO’s consensus estimate once.

NETSTREET, which is part of the Zacks REIT and Equity Trust – Other segment, reported revenue of $21.33 million for the three months ended March 2022, beating Zacks’ consensus estimate of 11.60%. That compares to revenues of $11.93 million a year ago. The company has exceeded consensus revenue estimates four times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future FFO expectations will primarily depend on management’s comments on the earnings call.

NETSTREIT stock has lost around 3% since the start of the year compared to a decline of -12.2% for the S&P 500.

What’s next for NETSTREIT?

As NETSTREIT has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable metric that can help investors solve this problem is the company’s FFO outlook. This includes not only current FFO consensus expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in estimate revisions. Investors can track these revisions on their own or rely on a proven rating tool like Zacks Rank, which has an impressive track record of harnessing the power of estimate revisions.

Prior to this publication of the results, the trend of revisions of estimates for NETSTREIT: unfavourable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 4 (sell) ranking for the stock. Thus, stocks are expected to underperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current FFO consensus estimate is $0.28 on $20.33 million in revenue for the upcoming quarter and $1.12 on $83.48 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, REITs and Equity Trust – Other are currently in the top 37% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in the same sector, Gladstone Land (LAND), has yet to report results for the quarter ending March 2022. Results are expected to be released on May 10.

This farmland real estate investment trust is expected to post quarterly earnings of $0.18 per share in its next report, representing a 12-month change of +5.9%. The consensus EPS estimate for the quarter has been revised up 2% in the last 30 days from the current level.

Gladstone Land revenue is expected to be $20.35 million, up 27% from the prior year quarter.

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