HCP Third Quarter Earnings Preview

HCP (NYSE:HCP) is scheduled to announce its third quarter earnings on Tuesday, October 30, 2012.



Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Surprising Earnings Results

What to Expect: The consensus estimate for HCP's earnings is 69 cents per share, up 3% from a year ago when the company reported earnings of 67 cents per share.

The consensus estimate has dropped from 70 cents in the last month to be the same as it was three months ago. Analysts are expecting earnings of $2.76 per share for the fiscal year.

Revenue is expected to exceed last year's figure of $443.9 million by 5.4% and come in at $467.7 million for the quarter. Revenue of $1.85 billion is expected for the fiscal year.



Company Performance: HCP reported a decline in revenue in the second quarter, ending a three-quarter growth streak. After rising 34.3%in the first quarter, 30.3% in the fourth quarter of the last fiscal year and 37.1% in the third quarter of the last fiscal year, it fell 6.2% in the most recent quarter.

The company has been profitable for the last eight quarters; profit has risen year-over-year by an average of more than twofold over the most recent four quarters.

HCP's P/E ratio of 30.3 is above the industry average of 14.57. This could mean that the market is expecting big things over the next few months or years. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio



The stock price has fallen 5% since July 27, 2012, from $47.17 to $44.80. HCP's stock price is on a downward streak. The share price has fallen 63 cents since October 18, 2012.





The Competition: HCP is a real estate investment trust that acquires, develops, leases, manages healthcare real estate and offers financing to healthcare providers. The company's closest competitor in the real estate operations industry, Ventas (VTR), will report earnings on October 26, 2012. Analysts are expecting earnings of 93 cents per share for Ventas, up 5.7% from last year's earnings of 88 cents per share. Analysts are less optimistic about HCP than about Ventas. Four out of 14 analysts rate the latter a buy compared to three of 15 for the former.