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What's in Store for Extra Space Storage (EXR) in Q2 Earnings?
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Extra Space Storage (EXR - Free Report) , a leading self-storage real estate investment trust (REIT) in the United States, is set to release its second-quarter 2024 results on Jul 30 after market close. The company has been steadily expanding its footprint and diversifying its operations. As the market anticipates the earnings announcement, this article provides an in-depth preview of EXR’s expected performance in the second quarter, considering overall industry trends, the company’s growth strategy and acquisitions.
In the last reported quarter, this Salt Lake City, UT-based REIT reported a core FFO per share of $1.96, which beat the Zacks Consensus Estimate of $1.95. The results reflected a rise in occupancy and better-than-anticipated revenues.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate on one occasion and missed in the three other periods, the average negative surprise being -1.05%. The graph below depicts this surprise history:
Extra Space Storage has adopted a multifaceted growth strategy, which includes strategic acquisitions, third-party management services and joint ventures. In recent years, the company has successfully executed numerous acquisitions that have expanded its portfolio, bolstered its market presence and generated additional value for its investors.
In the second quarter, too, Extra Space Storage is likely to have continued to benefit from its solid presence in key cities and measures to boost its geographical footprint through accretive acquisitions and third-party management. In July 2023, EXR concluded the buyout of Life Storage, Inc. in an all-stock transaction. It has eventually emerged as the largest operator of self-storage properties in the United States.
In addition, EXR's ongoing focus on enhancing the customer experience through technology integration and improved operational efficiency is likely to strengthen its competitive advantage. High brand value and technological advantage are expected to have aided Extra Space Storage’s performance in the quarter under consideration. Also, this REIT is likely to have maintained a healthy balance sheet position.
However, the company continues to see new customer price sensitivity and, therefore, is likely to have faced headwinds from lower new customer rates. Moreover, with interest rates remaining higher, a considerable improvement in the housing market has remained elusive, affecting the demand for storage units.
Also, high interest rates add to its woes. We estimate a significant year-over-year increase in interest expenses in the second quarter.
Projections
The Zacks Consensus Estimate of $690.61 million for quarterly property rental revenues suggests an increase from the prior quarter’s $688.04 million and up from the year-ago period’s $440.75 million, reflecting the Life Storage acquisition. The consensus estimate for revenues from tenant insurance of $80.93 million suggests a decrease from $81.35 million in the prior quarter and an increase from $48.43 million in the year-ago period.
Management and franchise fees for the quarter are projected at $29.30 million, calling for a decrease from $30.15 million in the prior quarter but up from $22.21 million in the year-ago period. The Zacks Consensus Estimate of $796.1 million for quarterly revenues suggests a 55.7% increase year over year.
Extra Space Storage’s activities during the quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has remained unrevised over the past month at $2.00. It also calls for a 2.91% year-over-year fall.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Extra Space Storage this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.
Extra Space Storage currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the broader REIT sector — American Tower (AMT - Free Report) and Welltower (WELL - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
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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What's in Store for Extra Space Storage (EXR) in Q2 Earnings?
Extra Space Storage (EXR - Free Report) , a leading self-storage real estate investment trust (REIT) in the United States, is set to release its second-quarter 2024 results on Jul 30 after market close. The company has been steadily expanding its footprint and diversifying its operations. As the market anticipates the earnings announcement, this article provides an in-depth preview of EXR’s expected performance in the second quarter, considering overall industry trends, the company’s growth strategy and acquisitions.
In the last reported quarter, this Salt Lake City, UT-based REIT reported a core FFO per share of $1.96, which beat the Zacks Consensus Estimate of $1.95. The results reflected a rise in occupancy and better-than-anticipated revenues.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate on one occasion and missed in the three other periods, the average negative surprise being -1.05%. 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
Factors to Consider
Extra Space Storage has adopted a multifaceted growth strategy, which includes strategic acquisitions, third-party management services and joint ventures. In recent years, the company has successfully executed numerous acquisitions that have expanded its portfolio, bolstered its market presence and generated additional value for its investors.
In the second quarter, too, Extra Space Storage is likely to have continued to benefit from its solid presence in key cities and measures to boost its geographical footprint through accretive acquisitions and third-party management. In July 2023, EXR concluded the buyout of Life Storage, Inc. in an all-stock transaction. It has eventually emerged as the largest operator of self-storage properties in the United States.
In addition, EXR's ongoing focus on enhancing the customer experience through technology integration and improved operational efficiency is likely to strengthen its competitive advantage. High brand value and technological advantage are expected to have aided Extra Space Storage’s performance in the quarter under consideration. Also, this REIT is likely to have maintained a healthy balance sheet position.
However, the company continues to see new customer price sensitivity and, therefore, is likely to have faced headwinds from lower new customer rates. Moreover, with interest rates remaining higher, a considerable improvement in the housing market has remained elusive, affecting the demand for storage units.
Also, high interest rates add to its woes. We estimate a significant year-over-year increase in interest expenses in the second quarter.
Projections
The Zacks Consensus Estimate of $690.61 million for quarterly property rental revenues suggests an increase from the prior quarter’s $688.04 million and up from the year-ago period’s $440.75 million, reflecting the Life Storage acquisition. The consensus estimate for revenues from tenant insurance of $80.93 million suggests a decrease from $81.35 million in the prior quarter and an increase from $48.43 million in the year-ago period.
Management and franchise fees for the quarter are projected at $29.30 million, calling for a decrease from $30.15 million in the prior quarter but up from $22.21 million in the year-ago period. The Zacks Consensus Estimate of $796.1 million for quarterly revenues suggests a 55.7% increase year over year.
Extra Space Storage’s activities during the quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has remained unrevised over the past month at $2.00. It also calls for a 2.91% year-over-year fall.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts a surprise in terms of FFO per share for Extra Space Storage this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.
Extra Space Storage currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the broader REIT sector — American Tower (AMT - Free Report) and Welltower (WELL - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
American Tower, scheduled to report quarterly numbers on Jul 30, has an Earnings ESP of +0.71% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Welltower, scheduled to report quarterly numbers on Jul 29, has an Earnings ESP of +0.67% and carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.