Storage Inc. ()
last mentioned EXR as a
growth and income stock back in June of 2011, it was trading
around $20. Back then the company had
delivered a strong earnings report noting high occupancy rates and
factors that encouraged them to raise FY2011 guidance.
forward 8 months and EXR is
trading 36% higher and looking more like a momentum stock.
Let’s not forget the fact that Extra Space is
still throwing off a 2.05% dividend as a bit of icing on the cake.
The question is whether the strength will
Company Description &
Space Storage Inc. is a real estate investment trust (REIT),
Salt Lake City, Utah that owns and operates over 800 self-storage
major cities across the U.S.
Company's properties comprise approximately 550,000 units and over 59
square feet of rentable space, offering customers a wide selection of
conveniently located and secure storage solutions across the country,
boat storage, RV storage and business storage. Extra Space is the
largest owner and/or operator of self-storage properties and the largest self-storage management company in the United
boom in storage is being driven
by several factors within the housing sector.
The first of which being extremely high apartment rent rates across the
US. Average rents have risen substantially
since the prices of homes have been on the decline. When the
economy took a downturn in
2008, the loss of jobs and defaults in mortgages forced US consumers
out of their
homes and into apartments. As housing
prices continued to slide, more and more Americans were abandoning
and homes, opting for rental property. Expensive rentals may
force Americans to live in a smaller place and store their goods
that the jobs market is still
shaky and the average American is still unsure about the future of our
and home values, apartments are the best, flexible alternative.
that most people have had to
downsize their living space or are needing to save money on living
the storage unit has become an integral part of many urban households.
We are a culture that likes “stuff” and even
those who don’t hoard tons of extras might still need room for
entertainment center that mom gave you that just doesn’t fit anymore.
She’d kill you if you were to sell it. :)
seriousness, self storage is growing
in need and popularity; at least until the housing boom comes back and
all able to buy 5000 square ft. homes with 4 car garages.
Until then expect demand to remain.
Extra Space is a small-cap (2.5 billion) company that is trading at
times trailing earnings (P/E). This makes it a bit expensive
compare it to the broad market average, but EXR is a growth company
recently guided earnings higher on October 27, 2011. Looking
forward, Zacks Consensus Estimates
are calling for that number to drop closer to 20 with no change in
the next year.
Space became a Zacks Rank 1
strong buy on January 25th, but they have been between a Rank 1 and
2 since the 17th of January.
storage company reported a
quarterly sales increase of 8% at their last earnings report.
sales were up 17% compared to Q32010 with total sales of roughly 281
FY2010. Extra is expected to earn $1.18 in FY2011 according
to the Zacks
Even though EXR is a small cap, there are about 13 analysts covering
issue. One of them raised estimates higher for the
quarter and three moved estimates up for FY2012 over the past
month. EXR will
report Q42011 results on February 21st.
are for EXR to generate
$0.32 in income this quarter. Of the 13 analysts who cover
consensus is for the company to grow earnings by 23% in the current
(FY2011) and roughly 15% in FY2012.
terms of the magnitude of analyst
estimate trends, we are seeing all of the consensus estimates flat or
than they were 90 days ago for the current and next quarters as well as
beat estimates last quarter by 10%
and has averaged to beat estimates by over 7% during the past year’s
Market Performance &
Like most of our momentum stocks, Extra’s charts are very strong and
rallying for some time. October marked
the 52 low for EXR and since then the stock has leapt more than 56%.
Lately the stock has been making new 52 week
highs and is just pennies away from it’s current annual high of $27.44
Space has remained above its
50 and 200 day moving averages since it broke above the both of them in
October. The averages currently stand at
$24.65 (50 day) and $21.92 (200 day).
has been riding along the upper
edge of its Bollinger Band for several weeks of trading. This
pattern typically leads to a mean
reversion which would send shares lower over the short term. I’d
look for a pullback to the $25 level before jumping into EXR based on
formation. EXR has exceeded the S&P
500’s performance by over 36% in the past year and over 9% in the past
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
Whisper Trader Service.