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Post Properties Inc. (PPS) has watched most earnings estimates advance for 2012 and 2013, following a solid third-quarter report that included a raised FFO outlook for the year. Also, this Zacks No. 2 Rank (Buy) REIT currently pays a regular quarterly dividend that yields 2.0% annually.

With a steady dividend yield, an expected long-term earnings growth rate of 13.9%, and a 16.4% gain in the past year, PPS looks like a promising pick for investors seeking both growth and income.

Impressive Third-Quarter Earnings

On Oct. 29, Post Properties reported third-quarter FFO per share of 76 cents, topping the Zacks Consensus Estimate by 22.6% and last year's FFO by 46.2%. The healthy top-line growth was due to a sturdy operating platform that helped deliver robust same-store operating performances.

On a year-over-year basis, total revenues for same-store communities advanced 6.7%, while same-store net operating income (NOI) increased 9.0%. The average monthly rental rate per unit climbed 6.4% year over year. Furthermore, the average economic occupancy for same-store communities spiked 20 basis points to 96.6% from 96.4% in the year-ago quarter.

Based on robust third-quarter results, management raised the FFO guidance for 2012 to between $2.77 and $2.81 per share, compared to the earlier range of $2.50 to $2.60. The increased guidance is based on same-store revenue growth of 6.9% to 7.1%, and a same-store NOI growth between 8.2% and 8.6%.

Earnings Estimates Moving Higher

The Zacks Consensus Estimate for 2012 is up 2.6% to $2.78 in the past 60 days, as 11 of 13 total estimates moved higher. The Zacks Consensus Estimate for 2013 advanced 5.9% to $2.86, based on upward revisions from11 of 14 estimates. The Zacks Consensus Estimate for 2012 reflects year-over-year growth of about 41.8%, while the expected growth rate for 2013 is 2.7%.

Dividend Payment

Post Properties hiked its dividend by nearly 14% to 25 cents per share in the first half of 2012. The current dividend rate affirms an annual yield of 2.0%.

Premium Valuation

Shares of Post Properties currently trade at 17.8 times 12-month forward earnings, a 5.3% premium to the peer group average of 16.9 times. Its price-to-book ratio of 2.4 is at a 20.0% premium to the peer group median of 2.0. Given its strong fundamentals, the premium valuation is justified.

Moreover, the company has a trailing 12-month ROE of 6.6%, compared with the peer group average of 5.9%. This implies that the company reinvests its earnings more efficiently than its peer group.

Post Properties has been continuously outperforming the S&P 500 since mid-October, and has also been outperforming its 200- and 50-day moving averages since the beginning of last month. The return for the stock in 2012 came in at 16.4% compared with the S&P 500's return of 11.7%.

Post Properties is a real estate investment trust that was founded in 1971. The company is a developer and operator of upscale multifamily communities. It has operations in 10 markets across the country and has interests in 22,218 apartment units in 60 communities. The company has a market cap of about $2.7 billion. Another Zacks No. 1 Rank (Strong Buy) stock in the same industry is AG Mortgage Investment Trust, Inc. (MITT).

Read the full Snapshot Report on PPS (email registration required).

Source: Post Properties: Impressive Earnings And A Premium Valuation