It has been about a month since the last earnings report for Realty Income Corporation O. Shares have lost about 7.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Realty Income Beats Q1 FFO Estimates, Revenues Up Y/Y

Realty Income’s first-quarter 2017 adjusted FFO per share of $0.76 exceeded the Zacks Consensus Estimate by $0.01. The figure is also 8.6% higher than the prior-year quarter tally of $0.70. Results reflect better-than-expected growth in revenue.

Total revenue for the quarter came in at $298.0 million, surpassing the Zacks Consensus estimate of $287.3 million. The revenue figure was also up 11.6% year over year.

Quarter in Detail

During first-quarter 2017, same-store rents on 4,322 properties under lease expanded 1.6% to $250.2 million from the prior-year quarter. Portfolio occupancy of 98.3% as of Mar 31, 2017 remained flat sequentially, but expanded 50 basis points year over year.

Further, the company had 83 properties available for lease, out of a total of 4,980 properties in the portfolio as of Mar 31, 2017, compared with 84 properties as of Dec 31, 2016. Moreover, during the reported quarter, the company re-leased 49 properties to existing and new tenants, recapturing 103.6% of the expiring rent.

Portfolio Activity

During the reported quarter, Realty Income invested $370.7 million in 60 new properties and properties under development or expansion, situated in 18 states. The assets are fully leased, with a weighted average lease term of around 16.4 years and an initial average cash lease yield of 6.1%. Notably, around 68% of the rental revenue reaped from acquisitions during first-quarter 2017 is from investment grade rated tenants.

On the other hand, during the reported quarter, the company sold 14 properties for $31.2 million, with a gain on sales of $10.5 million.

Liquidity

Finally, Realty Income exited first-quarter 2017 with cash and cash equivalents of $27.6 million, up from $9.4 million at the end of the prior year.

However, the company has a $2.25 billion unsecured credit facility, comprising a $2.0 billion revolving credit facility and a $250 million five-year unsecured term loan. The credit facility also had a $1.0 billion expansion feature. Notably, as of Mar 31, 2017, Realty Income had no outstanding balance on its revolving credit facility.

In addition, during the reported quarter, Realty Income raised $791.7 million from the sale of common stock at a weighted average price of $61.77 per share.

Outlook

For 2017, Realty Income projects adjusted FFO per share in the range of $3.00–$3.06, implying year-over-year growth of 4.2–6.3%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter compared to one downward.

Realty Income Corporation Price and Consensus

Realty Income Corporation Price and Consensus | Realty Income Corporation Quote

VGM Scores

At this time, Realty Income's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

The stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock. However, the magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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