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Tickers in this Article: AVB
AvalonBay Communities (NYSE:AVB) announced its results for the second quarter on July 25, 2012. AvalonBay Communities develops, acquires, and operates multifamily communities in barrier-to-entry markets in the United States.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Everything Investors Need To Know About Earnings

The Numbers: AvalonBay announced $1.34 per share. Net income for the second quarter was $156.9 million. According to the reported number, this is up 261.8% from last year's figures. Last quarter marked the fourth in a row of rising net income. Profits rose 90.4% in the first quarter, 1095.4% in the fourth quarter of the last fiscal year and 81.8% four quarters ago from the year earlier.

Management Quote: Commenting on the Company's results, Tim Naughton, CEO and President, said, "These results demonstrate the continued strength in apartment fundamentals and the benefit of our development platform. We increased the midpoint of our full year 2012 outlook by six cents per share and now expect per share FFO growth of nearly 20% for the year."

A Look Back: Net income has increased more than fourfold year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 1095.4% from the year-earlier quarter.

Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. Over the past three months, the average estimate for the fiscal year has climbed from $5.43 per to share to $5.47.

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