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Equinix (EQIX) Up 1.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equinix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equinix's Q2 AFFO Beat on Solid Demand, Revenues Rise
Equinix’s second-quarter 2024 AFFO per share of $9.22 surpassed the Zacks Consensus Estimate of $8.82. The figure improved nearly 14.7% from the prior-year quarter.
Results displayed 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 472,300, rising 4% year over year. The company also revised its outlook for 2024.
Total quarterly revenues came in at $2.16 billion, in line with the Zacks Consensus Estimate. The top line increased 6.9% year over year.
Quarter in Detail
Recurring revenues were $2.02 billion, up 5.5% from the year-ago quarter. Our projection for the metric was $2.04 billion. Non-recurring revenues rose 33.7% to $135 million. We estimated the metric to be $118.5 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 8.5%, 4.9% and 6.8% to $966 million, $721 million and $472 million, year over year, respectively.
The adjusted EBITDA came in at $1.04 billion, up 15% year over year. We projected the metric at $1.02 billion. Adjusted EBITDA margin was reported at 48%.
AFFO rose 16.3% to $877 million from the year-ago period.
Equinix spent $45 million on recurring capital expenditure in the second quarter, up 12.5% on a year-over-year basis. Recurring capital expenditure was 2.1% of revenues in the reported quarter. Non-recurring capital expenditure was $603 million, marginally up year over year.
Balance Sheet
Equinix had $6.4 billion of available liquidity as of June 30, 2024. This comprised cash, cash equivalents, its undrawn revolver and approximately $500 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.5, and the weighted average maturity was 7.2 years as of June 30, 2024.
2024 Guidance
For the third quarter of 2024, Equinix projects revenues between $2.190 billion and $2.210 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $1.029-$1.049 billion.
For 2024, Equinix now estimates generating total revenues of $8.692-$8.772 billion, indicating year-over-year growth of 6-7%. Earlier, the company had guided total revenues of $8.692-$8.792 billion. Management predicts an adjusted EBITDA of $4.066-$4.126 billion, revised from $4.044-$4.124 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 47%.
For the current year, AFFO per share is estimated between $34.67 and $35.30, revised upward from the prior-guided range of $34.45-$35.29. This suggests an 8-10% increase from the previous year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Equinix has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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, Federal Realty Investment Trust (FRT - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
Federal Realty Investment Trust reported revenues of $296.05 million in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $1.32 for the same period compares with $1.67 a year ago.
Federal Realty Investment Trust is expected to post earnings of $1.72 per share for the current quarter, representing a year-over-year change of +4.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Federal Realty Investment Trust. Also, the stock has a VGM Score of D.
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Equinix (EQIX) Up 1.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equinix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equinix's Q2 AFFO Beat on Solid Demand, Revenues Rise
Equinix’s second-quarter 2024 AFFO per share of $9.22 surpassed the Zacks Consensus Estimate of $8.82. The figure improved nearly 14.7% from the prior-year quarter.
Results displayed 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 472,300, rising 4% year over year. The company also revised its outlook for 2024.
Total quarterly revenues came in at $2.16 billion, in line with the Zacks Consensus Estimate. The top line increased 6.9% year over year.
Quarter in Detail
Recurring revenues were $2.02 billion, up 5.5% from the year-ago quarter. Our projection for the metric was $2.04 billion. Non-recurring revenues rose 33.7% to $135 million. We estimated the metric to be $118.5 million.
Revenues from the Americas, EMEA and the Asia Pacific rose 8.5%, 4.9% and 6.8% to $966 million, $721 million and $472 million, year over year, respectively.
The adjusted EBITDA came in at $1.04 billion, up 15% year over year. We projected the metric at $1.02 billion. Adjusted EBITDA margin was reported at 48%.
AFFO rose 16.3% to $877 million from the year-ago period.
Equinix spent $45 million on recurring capital expenditure in the second quarter, up 12.5% on a year-over-year basis. Recurring capital expenditure was 2.1% of revenues in the reported quarter. Non-recurring capital expenditure was $603 million, marginally up year over year.
Balance Sheet
Equinix had $6.4 billion of available liquidity as of June 30, 2024. This comprised cash, cash equivalents, its undrawn revolver and approximately $500 million of unsettled at-the-market proceeds. It excludes restricted cash.
Its net leverage ratio was 3.5, and the weighted average maturity was 7.2 years as of June 30, 2024.
2024 Guidance
For the third quarter of 2024, Equinix projects revenues between $2.190 billion and $2.210 billion, implying a 1-2% increase over the prior quarter. The adjusted EBITDA is expected to be in the range of $1.029-$1.049 billion.
For 2024, Equinix now estimates generating total revenues of $8.692-$8.772 billion, indicating year-over-year growth of 6-7%. Earlier, the company had guided total revenues of $8.692-$8.792 billion. Management predicts an adjusted EBITDA of $4.066-$4.126 billion, revised from $4.044-$4.124 billion projected earlier. Expectations for adjusted EBITDA margin were maintained at 47%.
For the current year, AFFO per share is estimated between $34.67 and $35.30, revised upward from the prior-guided range of $34.45-$35.29. This suggests an 8-10% increase from the previous year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Equinix has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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, Federal Realty Investment Trust (FRT - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
Federal Realty Investment Trust reported revenues of $296.05 million in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $1.32 for the same period compares with $1.67 a year ago.
Federal Realty Investment Trust is expected to post earnings of $1.72 per share for the current quarter, representing a year-over-year change of +4.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Federal Realty Investment Trust. Also, the stock has a VGM Score of D.