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Factors to Impact Extra Space Storage's (EXR) Q4 Earnings
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Extra Space Storage (EXR - Free Report) is slated to report fourth-quarter and full-year 2020 results on Feb 22, after the bell. Both its quarterly revenues and funds from operations (FFO) per share are likely to display year-over-year increases.
In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (REIT) delivered a surprise of 5.65% in terms of FFO per share. Results reflected strong occupancy and increased rental rates to new customers.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 4.15%. The graph below depicts this surprise history:
Let’s see how things have shaped up prior to this announcement.
Factors to Consider
In the fourth quarter, Extra Space Storage is likely to have benefited from its solid presence in key cities and measures to boost the company’s geographical footprint through accretive acquisitions and third-party management.
Moreover, the self-storage asset category is need-based and recession-resilient in nature. This asset class has low capital-expenditure requirements and generates high operating margins. Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and increase in the number of people renting homes have escalated the needs of consumers to rent spaces at storage facilities for parking their possessions. Further, demand for self-storage spaces has increased amid the remote-working trend as well as improving housing market, while move-outs remain low amid the health crisis, resulting in improved year-over-year occupancy trends.
However, the company operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition, curbed its power to raise rents and turned on more discounting during the quarter under consideration. Furthermore, stress on customers’ financial capacity might have affected rent collections.
Management and franchise fees for the quarter are projected at $13.71 million, indicating an improvement from the prior quarter’s $13.31 million. The Zacks Consensus Estimate of $293 million for quarterly property rental revenues suggests an increase from the third quarter’s $290 million and the year-ago period’s $289 million. The Zacks Consensus Estimate of $348.8 million for fourth-quarter revenues suggests a 3.9% increase year on year.
Extra Space Storage’s activities during the quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.5% upward to $1.35 in a month’s time. It also calls for a 6.3% year-over-year rise.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised 3 cents upward to $5.12 over the past month. The figure suggests a 4.9% increase year on year. Revenues are projected to be up 2.6% year over year to $1.34 billion.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Extra Space this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Extra Space currently carries a Zacks Rank #3 and has an Earnings ESP of -2.86%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release earnings figures on Feb 17, has an Earnings ESP of +0.76% and holds a Zacks Rank of 2, currently.
Public Storage (PSA - Free Report) , scheduled to announce fourth-quarter results on Feb 24, has an Earnings ESP of +0.53% and carries a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Factors to Impact Extra Space Storage's (EXR) Q4 Earnings
Extra Space Storage (EXR - Free Report) is slated to report fourth-quarter and full-year 2020 results on Feb 22, after the bell. Both its quarterly revenues and funds from operations (FFO) per share are likely to display year-over-year increases.
In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (REIT) delivered a surprise of 5.65% in terms of FFO per share. Results reflected strong occupancy and increased rental rates to new customers.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 4.15%. The graph below depicts this surprise history:
Extra Space Storage Inc Price and EPS Surprise
Extra Space Storage Inc price-eps-surprise | Extra Space Storage Inc Quote
Let’s see how things have shaped up prior to this announcement.
Factors to Consider
In the fourth quarter, Extra Space Storage is likely to have benefited from its solid presence in key cities and measures to boost the company’s geographical footprint through accretive acquisitions and third-party management.
Moreover, the self-storage asset category is need-based and recession-resilient in nature. This asset class has low capital-expenditure requirements and generates high operating margins. Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and increase in the number of people renting homes have escalated the needs of consumers to rent spaces at storage facilities for parking their possessions. Further, demand for self-storage spaces has increased amid the remote-working trend as well as improving housing market, while move-outs remain low amid the health crisis, resulting in improved year-over-year occupancy trends.
However, the company operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition, curbed its power to raise rents and turned on more discounting during the quarter under consideration. Furthermore, stress on customers’ financial capacity might have affected rent collections.
Management and franchise fees for the quarter are projected at $13.71 million, indicating an improvement from the prior quarter’s $13.31 million. The Zacks Consensus Estimate of $293 million for quarterly property rental revenues suggests an increase from the third quarter’s $290 million and the year-ago period’s $289 million. The Zacks Consensus Estimate of $348.8 million for fourth-quarter revenues suggests a 3.9% increase year on year.
Extra Space Storage’s activities during the quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.5% upward to $1.35 in a month’s time. It also calls for a 6.3% year-over-year rise.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised 3 cents upward to $5.12 over the past month. The figure suggests a 4.9% increase year on year. Revenues are projected to be up 2.6% year over year to $1.34 billion.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Extra Space this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Extra Space currently carries a Zacks Rank #3 and has an Earnings ESP of -2.86%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
American Tower Corporation (AMT - Free Report) , set to report quarterly numbers on Feb 25, currently has an Earnings ESP of +7.49% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release earnings figures on Feb 17, has an Earnings ESP of +0.76% and holds a Zacks Rank of 2, currently.
Public Storage (PSA - Free Report) , scheduled to announce fourth-quarter results on Feb 24, has an Earnings ESP of +0.53% and carries a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>