Innovative Industrial Properties (IIPR 0.06%), a real estate investment trust (REIT) focused on the U.S. cannabis industry, is slated to report its first-quarter 2022 results after the market close on Wednesday, May 4. A conference call with analysts is scheduled for the following day at 1 p.m. ET. (Yes, that unusual time is correct.)
Investors will probably be approaching the report itself with optimism, as the marijuana company consistently turns in strong revenue and profitability growth. It beat Wall Street's earnings estimate in three of the four quarters of last year.
Moreover, the stock usually pops following the quarterly earnings releases. In the two-day period following the release of results for the first, second, third, and fourth quarters of 2021, shares rose 6.7%, 6.8%, 5.5%, and 7.3%, respectively.
That said, investors should be prepared for the possibility that the market's reaction could be more grinch-like this time around even if the company easily exceeds analysts' expectations. The market has been struggling since late last year and highly valued growth stocks, such as Innovative Industrial Properties, have generally been hit harder than the broader market.
With this background in mind, here's what to watch in Innovative Industrial Properties' upcoming Q1 report.
Image source: Getty Images.
Innovative Industrial Properties' key numbers
Here are the company's results from the year-ago quarter and Wall Street's estimates to use as benchmarks.
| Metric | Q1 2021 Result | Wall Street's Q1 2022 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|
| Revenue |
$42.9 million |
$63.3 million | 48% |
| Earnings per share (EPS) | $1.05 | $1.36 | 30% |
| Adjusted funds from operations (FFO) | $1.47 | N/A | N/A |
Data sources: Innovative Industrial Properties and Yahoo! Finance. YOY= year over year. Funds from operations (FFO) is a closely watched metric for companies organized as REITs. It adds depreciation expense back to net income and makes a few other adjustments to net income to reflect a REIT's cash flow.
For context, in the fourth quarter of 2021, IIP (as the company is often called) posted revenue of $58.9 million, an increase of 59% year over year. Earnings per share rose 25% to $1.14, and adjusted FFO per share jumped 42% to $1.85. Wall Street had been looking for EPS of $1.24 on revenue of $57.9 million, so the company beat the top-line expectation, but fell short on the bottom line.
The company acquired four new properties in the first quarter
On April 7, IIP announced its operating, investment, and capital markets activity for the first quarter. It acquired four new properties in the quarter, one each in California, Massachusetts, New Jersey, and Pennsylvania. The company already owned properties in all of these states, so it didn't enter any new states in the quarter.
IIP didn't specify the types of properties. Based on the square footage it provided, we can assume that the Pennsylvania property is a dispensary; the California facility is likely one, too. (Dispensaries nearly always have much smaller footprints than cannabis cultivation and processing facilities.)
As of the April 7 release, the company owned 107 properties located in 19 states where marijuana for medical use is legal: Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington. The portfolio had a weighted-average remaining lease term of about 16.4 years.
