A month has gone by since the last earnings report for Public Storage (PSA Quick QuotePSA - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Public Storage due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Public Storage Q3 FFO Beats on Occupancy Gains, Low Costs

Public Storage's third-quarter 2020 core FFO per share of $2.63 surpassed the Zacks Consensus Estimate of $2.60. Quarterly revenues of $730.7 million exceeded the Zacks Consensus Estimate $723 million.

Results reflect an increase in occupancy in the reported quarter. The company also benefited from its expansion efforts through acquisitions, development and extensions. Moreover, it witnessed a decrease in on-site property manager payroll, utility expense, in addition to moderation of growth in property tax and marketing expenses. However, results were adversely impacted by lower realized annual rent per occupied square foot, reduced late charges and administrative fees.

Public Storage’s core FFO per share slipped 3.7% from the prior-year quarter’s $2.73, while revenues inched up 0.2% year one year.

Behind the Headlines

Public Storage’s same-store revenues declined 2.7% year over year to $611.5 million during the third quarter. This downside primarily resulted from a 2.7% decrease in realized annual rent per occupied square foot to $17.26, along with reduced late charges and administrative fees. Nonetheless, weighted-average square foot occupancy of 95.5% expanded 130 basis points year over year.

Same-store cost of operations edged down 0.1% year over year to $175.7 million, mainly reflecting a 5.5% decrease in on-site property manager payroll, a 9.2% fall in utility expense, along with moderation of growth in property tax and marketing expenses. Consequently, the company’s same-store net operating income (NOI) dropped 3.7% to $435.8 million.

Nonetheless, the REIT’s NOI from non-same store facilities increased on the back of the facilities acquired in 2019 and 2020, as well as the fill-up of the recently-developed and expanded facilities.

Portfolio Activity

During the September-end quarter, Public Storage acquired four self-storage facilities, comprising 0.2 million net rentable square feet of area, for $29.1 million. These included two in Minnesota and one in Colorado and Utah. Following Sep 30, the company acquired or was under contract to acquire 54 self-storage facilities, spanning 4.9 million net rentable square feet of space, for $686.9 million.

Finally, as of Sep 30, 2020, Public Storage had several facilities in development (1.2 million net rentable square feet), with an estimated cost of $217 million, as well as expansion projects (2.5 million net rentable square feet) worth $347 million. It expects to incur the remaining $387 million of development costs related to these projects, mainly over the next 18-24 months.

Balance Sheet Position

Public Storage exited third-quarter 2020 with $293.95 of cash and equivalents, down from the $409.7 million recorded at the end of 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Public Storage has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Public Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.