There are some choppy waters out there for the market as a whole, but that doesn’t mean every stock has to suffer. One such stock is real estate investment trust Omega Healthcare Advisors (OHI), suggests John Freund, editor of BullMarket Report.

Omega recently announced strong earnings – nothing mind-blowing – but enough to propel the stock forward amidst otherwise gloomy market conditions.

2Q19 revenue was $225 million, which is a 3% YoY gain. FFO — a key measure of profitability for a REIT — came in at $0.77. That beat 2Q18’s FFO by two cents, and market expectations by a penny.

Unfortunately, not all was rosy, as net income slipped from $82 million last year to $76 million this year, for a 7% drop. Management said there was a one-time $15 million reduction in gains due to a sale of assets, coupled with $10 million of impairments financing leases and real estate properties, as well as $4 million of costs related to the recent MedEquities purchase.

So based on this, everything appears to be in order with this great firm. Meanwhile, the $600 million MedEquities acquisition adds 34 new properties to the portfolio, and management has stressed the growth opportunities that lies ahead with certain of these properties.

This is also one of the best management teams in the REIT universe, having steered this company through thick and thin (The Great Recession, the REIT-apocalypse which wiped out a huge chunk of the industry back in the early 2000s, and the latest restructuring).

So when CEO Taylor Pickett gets excited about an acquisition, we get excited. He also noted during the earnings call that Omega signed a Purchase Agreement to acquire $735 million of skilled nursing and assisted living facilities, as well as the completion of a $25 million acquisition in July.

The restructuring is officially complete, and management has turned its focus to growth via M&A and reinvestments into its properties. 2Q19 saw $55 million of capital renovation and construction, a 30% increase from the prior quarter.

One hiccup is that management lowered its full-year 2019 adjusted FFO guidance. Consensus estimates are at $3.08 for the year, and management announced a $3.03-$3.07 range.

The company is planning a sale of 10 Diversicare properties, and also plans to continue issuing equity in order to de-lever, both of which are great for the company’s long-term strategy, however each may negatively impact FFO in the near-term.

Omega has long been a conservatively-run REIT, so the de-levering and asset sales don’t come as a shock. It’s management’s conservative nature that enabled the company to secure favorable lending terms which helped it emerge from the restructuring much faster than anticipated. So we like seeing more of the same.

The stock is up 10% YTD, and it still offers a healthy 7% annual yield. Omega has one of the best management teams in the business, and is bouncing back from a sharp turnaround, so we expect continued strength and an upward trajectory for the stock.

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