VNO Call Options: Riding the Earnings Beat?

Vornado is a fully-integrated REIT primarily focused on owning, managing, developing, and redeveloping properties. Its core business centers around real estate holdings, primarily in New York City, including office spaces, street retail spaces, and residential properties. Key assets include 56 Manhattan operating properties, interests in 'Alexander's, Inc.', 'THE MART' in Chicago, and a controlling interest in '555 California Street' in San Francisco. Vornado also provides cleaning and security services through its wholly-owned subsidiary, 'Building Maintenance Services LLC' ('BMS'). The company's strategy focuses on maximizing shareholder value through strategic investments in select markets, acquiring quality properties with potential for rent increases, and developing properties to increase returns. They also invest in operating companies with a significant real estate component and prioritize environmental sustainability across their portfolio.

Vornado Realty Trust (VNO) is likely to experience upward price movement over the next 1-2 weeks. This outlook is primarily driven by the company's strong Q3 earnings report, released on November 3, 2025. VNO reported adjusted FFO of $0.57 per share, surpassing analyst estimates of $0.54. A separate report indicated FFO of $0.58, also beating the $0.54 estimate. Both reports highlight a significant increase in earnings compared to the same quarter last year. The revenue beat, with sales of $453.7 million exceeding the expected $436.001 million, further reinforces the positive sentiment. These earnings beats are likely to attract investors and drive up the stock price in the short term. The lack of counter-balancing negative news reinforces the likelihood of a positive directional impact. Given the magnitude of the earnings beat across both FFO and revenue, a substantial positive price movement is anticipated.

VNO's technical outlook is bearish. The recent price action shows a sharp decline, culminating in a close at $35.825 on November 4th, which is significantly below both the 50-day SMA (39.84) and the 200-day SMA (38.84), confirming a downtrend. The 21-day EMA at 39.01 also reinforces this bearish sentiment. Momentum indicators are weak; the RSI at 39.71 indicates oversold conditions, but the MACD at -0.575 is significantly below its signal line, suggesting continued downward momentum. The Stochastic Oscillator, while showing a low value (15.60), hasn't yet provided a strong reversal signal. The ROC20 is deeply negative at -8.54, further confirming the bearish trend. Bollinger Bands show the price is testing the lower band, and a break below this level could lead to further declines. The ADX is at 18.15, indicating a strengthening trend. The recent price history reveals a consistent pattern of lower highs and lower lows, reinforcing the downward trend. OBV is also decreasing, confirming selling pressure.

Vornado Realty Trust's MD&A presents a somewhat positive but complex financial picture. For the three months ended September 30, 2025, revenues increased by $10,445,000 to $453,700,000 compared to the prior year. Same store NOI at share increased 7.5%, but same store NOI at share - cash basis decreased by 8.2%. For the nine months ended September 30, 2025, revenues were $1,356,716,000, an increase of $26,820,000 from the prior year. Net cash provided by operating activities was a robust $1,112,112,000, significantly up from $331,543,000 in the prior year, driven by a $935,000,000 prepaid lease payment from NYU. However, NOI at share - cash basis decreased from $819,501,000 to $737,020,000. The company highlights ongoing litigation regarding the PENN 1 ground rent reset determination, creating uncertainty. They 'intend to appeal' the court's decision. The company also notes that 'fluctuations in interest rates and the effects of inflation could adversely impact our cash flow from continuing operations'. Overall, the company's liquidity remains strong with $2.6 billion available, but the decline in cash-basis NOI and the pending litigation introduce elements of caution.

Vornado's Q2 2025 earnings call strikes a moderately bullish tone, driven by strong leasing activity and positive market trends, particularly in Manhattan. CEO Steven Roth expressed enthusiasm, stating 'our business continues to be strong, is getting stronger.' The company beat analyst consensus with comparable FFO of $0.56 per share. New York office occupancy increased to 86.7%, and the company anticipates occupancy increasing into the low 90s over the next year or so. Leasing activity was robust, with 2.7 million square feet leased overall, including the 1.1 million square foot NYU master lease. Excluding NYU, Manhattan office leasing was at $101 per square foot starting rents, with mark-to-markets of plus 11.8% GAAP and plus 8.7% cash. Vornado is also making progress at PENN, with occupancy at PENN 2 now at 62% and multiple deals in the pipeline. Roth highlighted the potential for significant earnings growth from PENN, noting that 'every $10 a foot uptick in rent yields $50 million to the bottom line.' The company also delevered its balance sheet, improving its net debt-to-EBITDA metric by 1.4 turns to 7.2x.

VNO's financial performance presents a mixed to slightly bearish outlook. Revenue has shown a modest uptrend, fluctuating between $436.4M in Q1 2024 and $453.7M in Q3 2025, indicating some growth. However, profitability, as measured by the `grossProfitRatio`, has been highly variable, starting at 1.0 and dropping to 0.467 in the most recent quarter. The `operatingCashFlow` has been inconsistent, with the latest quarter showing a significant outflow of -$1.079B. The company's debt situation remains a concern, with `totalDebt` starting at $8.992B in Q4 2023 and decreasing to $8.526B in Q1 2025, then decreasing further to $7.806B in Q2 2025 before ultimately decreasing to $0 in Q3 2025. This suggests a deleveraging strategy, but the negative operating cash flow in the latest quarter raises questions about the sustainability of this trend. Overall, while revenue has been relatively stable, the negative cash flow and fluctuating profitability, coupled with the deleveraging balance sheet, suggest potential financial strain in the near term.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.