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Equinix (EQIX) Down 1.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Equinix 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.
Equinix's Q4 AFFO Beat on Solid Demand, Revenues Rise
Equinix’s fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $7.30 surpassed the Zacks Consensus Estimate of $7.25. The figure improved nearly 3% from the prior-year quarter.
Equinix’s results reflected steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure. During the quarter, Equinix’s total interconnections reached 462,200, rising 3% year over year. The company also issued an outlook for 2024.
Total quarterly revenues came in at $2.11 billion, in line with the Zacks Consensus Estimate. Moreover, the top line increased 12.8% year over year.
In 2023, AFFO per share came in at $32.11, higher than the prior-year tally of $29.55. This was backed by a 12.7% increase in total revenues of $8.19 billion.
Quarter in Detail
Recurring revenues were $1.98 billion, up 11.4% from the year-ago quarter. Our projection was pegged at $2 billion. Non-recurring revenues rose 37.9% to $134.5 million. We estimated the metric to be $101.4 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 6.9%, 24.8% and 7.6% to $931.7 million, $751.2 million and $427.6 million, year over year, respectively.
The adjusted EBITDA came in at $920.5 million, up 9.7% year over year. We projected the metric at $924.2 million. Adjusted EBITDA margin was reported at 44%.
AFFO rose 5% to $690.8 million from the year-ago period.
Equinix spent $105.2 million on recurring capital expenditure in the fourth quarter, up 31.4% on a year-over-year basis. Recurring capital expenditure was 5% of revenues in the reported quarter. Non-recurring capital expenditure was $891 million, up 19.1% year over year.
Balance Sheet
Equinix had $6.5 billion of available liquidity as of Dec 31, 2023. This comprised cash, cash equivalents, its undrawn revolver and $500 million of unsettled at-the-market proceeds. It excluded restricted cash.
Its net leverage ratio was 3.7, and the weighted average maturity was 7.6 years as of Dec 31, 2023.
2024 Guidance
For the first quarter of 2024, Equinix projects revenues between $2.127 billion and $2.147 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $960-$980 million.
For 2024, AFFO per share is estimated between $34.58 and $35.31. This suggests an 8-10% increase from the previous year.
For 2024, Equinix estimates generating total revenues of $8.793-$8.893 billion, indicating growth of 7-9% from 2023 on an as-reported basis. The company expects to incur $25 million of integration costs.
Management predicts an adjusted EBITDA of $4.089-$4.169 billion and an adjusted EBITDA margin of 47%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Equinix has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Equinix is part of the Zacks REIT and Equity Trust - Retail industry. Over the past month, Simon Property (SPG - Free Report) , a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Simon Property reported revenues of $1.53 billion in the last reported quarter, representing a year-over-year change of +9.1%. EPS of $2.29 for the same period compares with $3.15 a year ago.
For the current quarter, Simon Property is expected to post earnings of $2.80 per share, indicating a change of +2.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
Simon Property has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Equinix (EQIX) Down 1.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Equinix 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.
Equinix's Q4 AFFO Beat on Solid Demand, Revenues Rise
Equinix’s fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $7.30 surpassed the Zacks Consensus Estimate of $7.25. The figure improved nearly 3% from the prior-year quarter.
Equinix’s results reflected steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure. During the quarter, Equinix’s total interconnections reached 462,200, rising 3% year over year. The company also issued an outlook for 2024.
Total quarterly revenues came in at $2.11 billion, in line with the Zacks Consensus Estimate. Moreover, the top line increased 12.8% year over year.
In 2023, AFFO per share came in at $32.11, higher than the prior-year tally of $29.55. This was backed by a 12.7% increase in total revenues of $8.19 billion.
Quarter in Detail
Recurring revenues were $1.98 billion, up 11.4% from the year-ago quarter. Our projection was pegged at $2 billion. Non-recurring revenues rose 37.9% to $134.5 million. We estimated the metric to be $101.4 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 6.9%, 24.8% and 7.6% to $931.7 million, $751.2 million and $427.6 million, year over year, respectively.
The adjusted EBITDA came in at $920.5 million, up 9.7% year over year. We projected the metric at $924.2 million. Adjusted EBITDA margin was reported at 44%.
AFFO rose 5% to $690.8 million from the year-ago period.
Equinix spent $105.2 million on recurring capital expenditure in the fourth quarter, up 31.4% on a year-over-year basis. Recurring capital expenditure was 5% of revenues in the reported quarter. Non-recurring capital expenditure was $891 million, up 19.1% year over year.
Balance Sheet
Equinix had $6.5 billion of available liquidity as of Dec 31, 2023. This comprised cash, cash equivalents, its undrawn revolver and $500 million of unsettled at-the-market proceeds. It excluded restricted cash.
Its net leverage ratio was 3.7, and the weighted average maturity was 7.6 years as of Dec 31, 2023.
2024 Guidance
For the first quarter of 2024, Equinix projects revenues between $2.127 billion and $2.147 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $960-$980 million.
For 2024, AFFO per share is estimated between $34.58 and $35.31. This suggests an 8-10% increase from the previous year.
For 2024, Equinix estimates generating total revenues of $8.793-$8.893 billion, indicating growth of 7-9% from 2023 on an as-reported basis. The company expects to incur $25 million of integration costs.
Management predicts an adjusted EBITDA of $4.089-$4.169 billion and an adjusted EBITDA margin of 47%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Equinix has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Equinix is part of the Zacks REIT and Equity Trust - Retail industry. Over the past month, Simon Property (SPG - Free Report) , a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Simon Property reported revenues of $1.53 billion in the last reported quarter, representing a year-over-year change of +9.1%. EPS of $2.29 for the same period compares with $3.15 a year ago.
For the current quarter, Simon Property is expected to post earnings of $2.80 per share, indicating a change of +2.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
Simon Property has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.