Should VICI Stock Be in Your Portfolio Pre-Q2 Earnings?

Over the preceding four quarters, the company’s AFFO per share met the Zacks Consensus Estimate on one occasion and surpassed it in the remaining three quarters, the average surprise being 0.42%. This is depicted in the graph below:

Factors at Play & Projections for VICI

In the second quarter, VICI's long-term triple-net leases with its established operators are likely to have contributed to stable revenue generation, supporting its top-line growth.

VICI Properties’ lease agreements feature a rent roll with CPI-linked escalations. This structure is expected to have ensured the company’s cash flow growth alongside inflation.

VICI Properties has diversified its portfolio beyond gaming, which includes investments in other non-gaming experiential assets like Chelsea Piers and Lucky Strike Entertainment. Its ability to execute growth strategies effectively is likely to have demonstrated strong management and positioned the company for sustained success, yielding revenue growth.

The Zacks Consensus Estimate for quarterly revenues is pegged at $1.04 billion, which suggests growth of 4.1% from the prior-year quarter’s reported figure.

The company’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly AFFO per share increased a cent to 62 cents over the past three months. The figure indicates growth of 3.3% from the year-ago quarter’s reported figure.

However, VICI Properties’ high debt and interest expenses are expected to have cast a pall on the company’s performance to some extent.

What Our Quantitative Model Predicts for VICI

Our proven model does not conclusively predict a surprise in terms of AFFO per share for VICI Properties this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here.

VICI Properties currently has an Earnings ESP of -0.35% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT industry — Extra Space Storage EXR and Host Hotels & Resorts HST — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

EXR, which is scheduled to report quarterly results on July 28, has an Earnings ESP of +0.39% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Host Hotels is slated to report quarterly numbers on Aug. 5. HST has an Earnings ESP of +1.73% and carries a Zacks Rank of 2 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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