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Tickers in this Article: AVB
Avalonbay Communities (NYSE:AVB) is expected to report increased earnings when it releases its third quarter results on Wednesday, October 24, 2012. The consensus estimate is anticipating a profit of $1.40 a share, an increase from last year's $1.17 per share.

Earnings are perhaps the single most studied number in a company's financial statements because they show a company's profitability. SEE: How To Decode A Company's Earnings Reports

What to Expect: Analysts are expecting Avalonbay to report earnings of $1.40 per share, up 19.7% from a year ago, when the company reported earnings of $1.17 per share.

For the fiscal year, analysts are projecting earnings of $5.46 per share.

Avalonbay is expected to report revenue of $264.6 million for the quarter, down by 1% from last year's figure of $267.4 million. Revenue for the fiscal year is expected to come in at $1.04 billion.

Company Performance: These last four quarters have marked revenue growth. It rose 5.9% in the second quarter, 6.6% in the first quarter, 4.5% in the fourth quarter of the last fiscal year and 17.7% in the third quarter of the last fiscal year.

The P/E ratio for AVB is 21.8, above the industry average of 18.09. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

Since July 23, 2012, the stock price has fallen 7.4% to $136.16 from $146.97. The stock saw one of its worst stretches when its price fell $5.05 per share between September 20, 2012 and October 17, 2012.

The Competition: AvalonBay Communities develops, acquires, and operates multifamily communities in barrier-to-entry markets in the United States. The company's closest competitor in the real estate operations industry, Equity Residential (EQR), will report earnings on October 24, 2012. Analysts are expecting earnings of 76 cents per share for Equity Residential, up 22.6% from last year's earnings of 62 cents per share. Analysts are more optimistic about Avalonbay than about Equity Residential. Only five out of 17 analysts rate the latter a buy compared to eight of 16 for the former.

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