With a $3.90 billion market cap, EPR Properties (EPR) is a leading experiential net lease real estate investment trust (REIT) specializing in select enduring experiential properties in the real estate industry. The company focuses on real estate venues, which create value by facilitating out-of-home leisure and recreation experiences. It has approximately $6.7 billion in total investments across 44 states.
Amid these uncertain market conditions, the key factor one should consider about EPR is its 6.34% dividend yield. Given its solid fundamentals, the company should be able to reward shareholders by paying impressive dividends. That’s because REITs are required to distribute at least 90% of their taxable income to shareholders annually in the form of dividends.
EPR reported impressive fiscal 2022 first-quarter results and affirmed solid growth ahead. The company raised earnings guidance and confirmed investment spending guidance for fiscal 2022. It expects FFOAA per common share for full-year 2022 from $4.39 to $4.55, compared to prior guidance ranging from $4.30 to $4.50. In addition, EPR confirmed investment spending guidance between $500 million and $700 million.
The EPR investment spending totaled $90.50 million during the first quarter, comprising experiential acquisitions, development, and redevelopment projects. Also, the company continues to execute and accelerate its significant investment pipeline with capital deployment for the remaining year.
Moreover, On June 2, EPR announced a $142 million acquisition of the Village Vacances Valcartier resort and hotel in Quebec City, Quebec, and the Calypso Waterpark in Ottawa, Ontario. With the acquisition, the company is simultaneously leasing these properties to Premier Parks under a long-term triple net lease.
“We are delighted to announce the acquisition of two top-performing attractions in Canada. Consistent with our stated strategy, we are ramping up our investment spending as our pipeline of experiential real estate opportunities continues to grow,” said Gregory Silvers, EPR’s Chairman, and CEO.
EPR has gained 15.9% over the past six months and 7.5% year-to-date to close the last trading session at $52.04. The stock is currently trading near its 52-week high of $56.38, which it hit on April 22, 2022.
Here is what could influence the EPR’s performance in the upcoming months:
Robust Financials
EPR's revenue increased 40.9% year-over-year to $157.47 million in the fiscal 2022 first quarter ended March 31, 2022. The company's adjusted EBITDAre amounted to $124.16 million, up 51% year-over-year.
Its FFOAA available to common shareholders of EPR grew 144.6% year-over-year to $87.09 million, while its FFOAA per share rose 129.2% from the year-ago value to $1.10.
Furthermore, the company's AFFO available to common shareholders of EPR and AFFO per share came in at $91.72 million and $1.16, registering increases of 135.6% and 123.1% from the prior-year period, respectively.
Its cash on hand at quarter-end totaled $323.80 million, with no borrowings on its $1 billion unsecured revolving credit facility. The company remains focused on maintaining strong liquidity and financial flexibility.
Favorable Analyst Estimates
Analysts expect EPR's revenue for the fiscal 2022 second quarter (ended June 2022) to come in at $145.92 million, representing a rise of 32.5% from the prior-year period. The $0.54 consensus EPS estimate for the to-be-reported quarter indicates a 217.7% year-over-year increase.
In addition, the company’s revenue and EPS for the current year (ending December 2022) are expected to increase 10% and 119% year-over-year, respectively. Also, Street expects the company's EPS to grow 7% per annum over the next five years.
High Profitability
EPR's trailing-12-month EBIT margin of 48.39% is 110.3% higher than the 23.01% industry average. Its trailing-12-month EBITDA margin of 76.91% is 40.9% higher than the 54.57% industry average. Likewise, the company's trailing-12-month net income of 24.03% is 27.1% higher than the industry average of 18.91%.
Furthermore, EPR's trailing-12-month ROTC of 2.97% is higher than the industry average of 1.95%.
POWR Ratings Show Promise
EPR has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
EPR has a B grade for Growth, consistent with its revenue and earnings growth estimates. In addition, the stock has a B grade for Quality, which is in sync with its higher-than-industry profitability.
EPR is ranked #5 out of 33 stocks in the REITs - Retail industry.
Beyond what I have stated above, we have also given EPR grades for Sentiment, Momentum, Value, and Stability. Get access to all the EPR Ratings here.
Bottom Line
EPR reported solid fiscal 2022 first-quarter results, supported by healthy tenant performance. The company also raised its earnings outlook. This, along with a more than 6% dividend yield, makes EPR a good choice for every investor amid these uncertain market conditions.
How Does EPR Properties (EPR) Stack Up Against its Peers?
EPR has an overall POWR Rating of B. One could also check out these other stocks within the REITs - Retail industry with a B (Buy) rating: SmartCentres Real Estate Investment Trust (CWYUF), Saul Centers, Inc. (BFS), and Urstadt Biddle Properties Inc. (UBA).
EPR shares were trading at $51.54 per share on Thursday afternoon, down $0.50 (-0.96%). Year-to-date, EPR has gained 12.09%, versus a -15.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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