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Tickers in this Article: HCP
HCP (NYSE:HCP) announced its results for the second quarter on July 31, 2012. HCP is a real estate investment trust that acquires, develops, leases, manages healthcare real estate and offers financing to healthcare providers.

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: How To Decode A Company's Earnings Reports

The Numbers: HCP posted revenues in line with analyst predictions, though the company's EPS came up short of expectations. The company reported 48 cents per share versus the 68 cents per share estimate and revenues of $464.4 million versus the $462.7 million estimate. Revenue fell 4.9% from the same period last year while EPS is down 12.7%. HCP's net income for the second quarter fell 11.7% from last year's figures to $202 million.

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

Looking Ahead: The outlook for the company's results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 69 cents per share, down from 70 cents 90 days ago. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. At $2.75 per share, the average estimate for the fiscal year has risen from $2.74 60 days ago.

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