Storage Inc. (EXR)
February 22nd, EXR
again beat analysts’ expectations for the fourth quarter and full year
sending the stock to a new all time high of $29.20.
space has been on the momentum
radar since June of 2011; since then the company has reported 2 strong
and expects more growth in the future. The
question remains whether it’s too late to buy shares at these levels.
This is the third time EXR has been
featured as a momentum stock over the past 10 months; in that time,
up a whopping 46%! Even with the gains,
the stock has been holding the Zacks Rank Buy 1 position since February
and has been between a 1 and 2 ranking since November 2011.
reported a 4.9% jump in revenues
for the year on a 7.6% increase in total annual sales. There
were several factors (what the company calls
“levers of growth”) that drove growth in 2011.
A record occupancy rate of almost 88%, which was up 310 basis points
compared to 2010 allowed Extra Space to keep rent rates high and reduce
amount of discounts it had to offer perspective customers.
There busy season is just beginning is spring
as the masses begin their moves. The
company attributes a large part of their success to the high occupancy
stable rent rates.
of new properties was
also a key factor for the company. The
purchased 55 new assets in 17 states for roughly $300 million over the
of the year and 28 properties in just the last quarter, with a large
those most recent purchases in southern California. More are targeted
end of the year (at least $100 million in acquisition).
manages185 properties as a 3rd
party and they expect to see growth there as more smaller independent
the big storage REITs like EXR can operate and manage efficiently.
noted that as of the call,
they have 35,000 potential customers for their tenant insurance
is also been a driver of revenue that they expect to increase.
did note that they expect
their cost cutting to slow a bit, but they will continue to focus on
in energy usage, which are down 19% since 2009.
51 properties have solar panels – reduced energy costs and tax credit
helping and they are looking to expand. The mild winter also
helped add to
the bottom line with snow removal costs being lower than expected.
rent growth is strong (4.5%
rise in Q4 alone), they do see that growth slowing a bit as well as
they don’t want
to hurt occupancy.
closely tied to the economic health of economy, [he] doesn’t believe
that storage is discretionary.” said CEO Spencer F. Kirk.
He went on to say that “storage is not cool,
it is need based.” His opinion suggests that storage is a
constant need for many Americans at the current time and just because
are bad, most are not forgoing their storage needs.
Company Description &
Space Storage Inc. is a real estate investment trust (REIT),
Salt Lake City, Utah that owns and operates over 850 self-storage
major cities across the U.S.
Company's properties comprise more than 555,000 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 in the United
and is the largest self-storage management company in the United States.
not forget the fact that Extra
Space is still throwing off a 2.05% dividend as a bit of icing on the
boom in storage is being driven
by several factors within the housing sector.
First of which being extremely high apartment rent rates across the US;
average rents have risen substantially since the price of homes has
been on the
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, you 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.
Even though EXR is a small cap (2.73 million), there are about 13
covering the issue. Over the past month
we have seen upward revisions to the current and next quarter’s
well as FY2012 and FY 2013.
has beat estimates for the past
four quarters with an average surprise of 6.85%. Expectations
are for EXR to generate
$0.33 in income this quarter. Of the 13 analysts who cover
consensus is for the company to grow earnings by 15.76% in the current
(FY2012) and roughly 9% in FY2013. They report earnings on
like Extra Space must
distribute a large amount of operating profit in the form of a
dividend; EXR’s current
dividend yield is 2.8%
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
Whisper Trader Service.