Q1 2025 Rmr Group Inc Earnings Call

For the quarter ended December 2024, RMR Group (RMR) reported revenue of $219.48 million, down 16.1% over the same period last year. EPS came in at $0.35, compared to $0.49 in the year-ago quarter.

The reported revenue represents a surprise of -16.71% over the Zacks Consensus Estimate of $263.5 million. With the consensus EPS estimate being $0.35, the company has not delivered EPS surprise.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how RMR Group performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Revenues- Total management, termination, incentive and advisory services revenues- Management services: $46.18 million compared to the $48.63 million average estimate based on two analysts. The reported number represents a change of +2.4% year over year.
• Revenues- Total management, termination, incentive and advisory services revenues: $47.39 million versus the two-analyst average estimate of $50.05 million. The reported number represents a year-over-year change of +1.9%.
• Revenues- Total reimbursable costs- Other reimbursable expenses: $148.56 million versus the two-analyst average estimate of $190.50 million. The reported number represents a year-over-year change of -24.2%.
• Revenues- Total management, termination, incentive and advisory services revenues- Advisory services: $1.14 million versus the two-analyst average estimate of $1.18 million. The reported number represents a year-over-year change of +1.4%.

View all Key Company Metrics for RMR Group here>>>

Shares of RMR Group have returned -2.1% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #5 (Strong Sell), indicating that it could underperform the broader market in the near term.

Zacks Investment Research

RMR Group (RMR) came out with quarterly earnings of $0.35 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.49 per share a year ago. These figures are adjusted for non-recurring items.

A quarter ago, it was expected that this real estate management services provider would post earnings of $0.38 per share when it actually produced earnings of $0.34, delivering a surprise of -10.53%.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

RMR Group, which belongs to the Zacks Real Estate - Operations industry, posted revenues of $219.48 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 16.71%. This compares to year-ago revenues of $261.67 million. The company has not been able to beat consensus revenue estimates over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

RMR Group shares have lost about 8% since the beginning of the year versus the S&P 500's gain of 2.7%.

What's Next for RMR Group?

While RMR Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for RMR Group: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.36 on $221.4 million in revenues for the coming quarter and $1.51 on $920.1 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Real Estate - Operations is currently in the bottom 16% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Anywhere Real Estate (HOUS), has yet to report results for the quarter ended December 2024. The results are expected to be released on February 13.

This real estate brokerage operator is expected to post quarterly loss of $0.36 per share in its upcoming report, which represents a year-over-year change of +33.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Anywhere Real Estate's revenues are expected to be $1.28 billion, up 2.6% from the year-ago quarter.

Zacks Investment Research

The RMR Group Inc. Announces First Quarter Fiscal 2025 Results

NEWTON, Mass.--(BUSINESS WIRE)--February 05, 2025--

The RMR Group Inc. today announced its financial results for the fiscal quarter ended December 31, 2024, which can be found at the Quarterly Results section of RMR's website at https://www.rmrgroup.com/investors-and-media/financial-information/default.aspx.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250205875292/en/

A conference call to discuss RMR's fiscal first quarter results will be held on Thursday, February 6, 2025 at 10:00 a.m. Eastern Time. The conference call may be accessed by dialing (844) 481-2945 or (412) 317-1868 (if calling from outside the U.S. and Canada); a pass code is not required. A replay will be available for one week by dialing (877) 344-7529; the replay pass code is 7377332. A live audio webcast of the conference call will also be available in a listen-only mode on RMR's website, at www.rmrgroup.com. The archived webcast will be available for replay on RMR's website after the call. The transcription, recording and retransmission in any way are strictly prohibited without the prior written consent of RMR.

About The RMR Group:

The RMR Group is a leading U.S. alternative asset management company, unique for its focus on commercial real estate (CRE) and related businesses. RMR's vertical integration is supported by over 1,000 real estate professionals in more than 35 offices nationwide who manage over $40 billion in assets under management and leverage more than 35 years of institutional experience in buying, selling, financing and operating CRE. RMR benefits from a scalable platform, a deep and experienced management team and a diversity of direct real estate strategies across its clients. RMR is headquartered in Newton, MA and was founded in 1986. For more information, please visit www.rmrgroup.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250205875292/en/

CONTACT: Kevin Barry, Senior Director, Investor Relations

(617) 796-8230

RMR Group (RMR) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on February 5. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus Estimate

This real estate management services provider is expected to post quarterly earnings of $0.35 per share in its upcoming report, which represents a year-over-year change of -28.6%.

Revenues are expected to be $263.5 million, up 0.7% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 8.97% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Earnings Whisper

Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for RMR Group?

For RMR Group, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.45%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination makes it difficult to conclusively predict that RMR Group will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that RMR Group would post earnings of $0.38 per share when it actually produced earnings of $0.34, delivering a surprise of -10.53%.

Over the last four quarters, the company has beaten consensus EPS estimates just once.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

RMR Group doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Zacks Investment Research