Is a Beat in Store for Camden Property Stock in Q1 Earnings?

Camden Property Trust CPT is slated to report first-quarter 2025 results on May 1, after market close. The company’s quarterly results are likely to display a year-over-year rise in revenues and funds from operations (FFO) per share.

In the last reported quarter, this residential real estate investment trust (REIT) reported FFO per share of $1.73, beating the Zacks Consensus Estimate of $1.68. Results reflected higher same-property revenues and same-property net operating income (NOI). However, a lower effective blended lease rate undermined the results to an extent.

In the preceding four quarters, CPT’s FFO per share outpaced the Zacks Consensus Estimate on all occasions, with the average beat being 1.94%. The graph below depicts this surprise history:

Camden Property Trust Price and EPS Surprise

Camden Property Trust price-eps-surprise | Camden Property Trust Quote

In this article, we will dive deep into the U.S. apartment market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2025 performance.

U.S. Apartment Market in Q1

The first quarter of 2025 brought a wave of strong apartment demand, offering a lift to occupancy and rent growth as the supply surge begins to wane. Per RealPage data, from January through March 2025, more than 138,000 market-rate apartment units were absorbed nationally. This marks the highest first-quarter demand on record in the RealPage data set covering more than three decades. Combined with the robust demand seen over the last three quarters of 2024, annual absorption reached nearly 708,000 units, essentially matching the absorption from the early 2022 demand boom.

Demand in the year-ending first quarter of 2025 exceeded concurrent supply. Though nearly 577,000 units were delivered in the said period — just shy of last quarter’s record high of about 589,000 units — annual supply volume is forecasted to decline in the coming months, indicating that the construction cycle may have peaked.

Occupancy rose modestly to 95.2% in March, the highest reading since October 2022. While still within long-term norms, the uptick provides confidence that the rental market is not materially oversupplied. Rent growth has also regained traction. Effective rents rose 0.75% in March and 1.1% in the year-ending March 2025 — the highest 12-month reading since June 2023. All of the nation’s 50 largest apartment markets recorded rent increases on a monthly basis, signaling broad-based strength. The average effective rent was $1,848.

However, the recovery is regionally uneven. The Midwest and Rust Belt regions led annual rent gains, with cities like Kansas City, MO; Chicago, IL; and Pittsburgh, PA, outperforming. In contrast, high-supply Sun Belt metros, such as Austin and Phoenix, continued to experience rent cuts. However, these markets saw monthly rent growth in March, suggesting momentum is returning ahead of the prime leasing season.

Factors at Play for Camden Property

In the first quarter of 2025, Camden’s performance is likely to have gained from the healthy renter demand for residential properties in the high-growth markets of the United States, aiding occupancy and blended lease rate growth.

Camden’s markets are characterized by growing employment in high-wage sectors of the economy, with in-migration trends. Higher homeownership costs are making the transition from renter to homeowner difficult in its markets, and renting apartment units is a viable option. Moreover, the company’s diversification efforts in urban and suburban markets are likely to have driven stable revenues.

Camden is also leveraging technology, scale and organizational capabilities to drive margin expansion in its portfolio and enhance customer experience. Such efforts are likely to have brought about operational efficiency and reduced costs, aiding NOI growth.

Q1 Projections for CPT

For the first quarter, the Zacks Consensus Estimate for CPT’s revenues currently stands at $388.5 million, implying growth of 1.4% from the year-ago reported number.

For the first quarter, Camden Property expects core FFO per share in the band of $1.66-$1.70. However, before the first-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has remained unchanged in the past two months at $1.68, which lies within the guided range and suggests an improvement of 0.6% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What Our Quantitative Model Predicts for CPT

Our proven model predicts a surprise in terms of FFO per share for CPT 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 FFO beat, which is the case here.

Camden Property currently has an Earnings ESP of +0.26% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are two other stocks from the broader REIT sector — Welltower WELL and Equity Residential EQR— that you may also want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Welltower, slated to release quarterly numbers on April 28, has an Earnings ESP of +1.69% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Equity Residential, scheduled to report quarterly numbers on April 29, has an Earnings ESP of +0.75% and carries a Zacks Rank of 3 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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