KKR Real Estate Finance (KREF) experienced a significant 5.7% surge in its stock price during the last trading session, closing at $12.24. This surge was fueled by heavy trading volume, exceeding typical levels. This recent move follows a 8.4% increase in KREF’s share price over the past four weeks.
The upward trend in KREF’s stock price aligns with the Federal Reserve’s announcement of interest rate cuts beginning this month. This news has led to a decline in long-term bond yields and consequently, mortgage rates. Lower mortgage rates are anticipated to ease housing affordability challenges and subsequently boost demand in the real estate sector.
Moreover, rate cuts are projected to increase net interest spreads, potentially alleviating earnings pressure for real estate companies currently struggling with high funding costs. This optimistic outlook has attracted investors to real estate sector stocks, driving up KREF’s share price.
However, it’s important to consider the company’s upcoming earnings report, which forecasts a year-over-year decrease of 34% in earnings per share and an 11.4% decline in revenue. Despite these projections, the consensus EPS estimate for the quarter has remained unchanged over the past 30 days. While earnings and revenue growth expectations provide valuable insight, research indicates that trends in earnings estimate revisions hold a strong correlation with short-term stock price movements.
Therefore, it’s crucial to closely monitor KREF’s performance going forward to determine if the recent surge can translate into sustained growth. Currently, KREF holds a Zacks Rank #1 (Strong Buy) rating.
Ladder Capital (LADR), another company in the Zacks REIT and Equity Trust industry, closed the last trading session at $12, down 0.3%. LADR has shown a 4% return in the past month. The consensus EPS estimate for LADR’s upcoming report remains unchanged at $0.26, representing a 16.1% decline compared to the previous year. LADR currently holds a Zacks Rank of #3 (Hold).
