We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Extra Space Storage (EXR) in Q1 Earnings?
Read MoreHide Full Article
Extra Space Storage (EXR - Free Report) , a leading self-storage real estate investment trust (REIT) in the United States, is set to release its first-quarter 2024 results on Apr 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 first quarter, considering overall industry trends, EXR's growth strategy and acquisitions.
In the last reported quarter, this Salt Lake City, Utah-based REIT reported a core FFO per share of $2.02, which missed the Zacks Consensus Estimate of $2.03. The results reflected a fall in occupancy. Higher interest expenses during the quarter were a spoilsport.
Over the trailing four quarters, the company missed the Zacks Consensus Estimate on each occasion, the average negative surprise being 1.55%. 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 first 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, Extra Space Storage operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there has been a development boom of self-storage units in many markets in recent years. This high supply has fueled competition, affecting its power to raise rents and turn on more discounting.
Though new supply is moderating to some extent, any significant turnaround is unlikely in the near term. Particularly, the company continues to see new customer price sensitivity and, therefore, is likely to have faced headwinds from lower new customer rates in the first quarter. Moreover, we expect same-store occupancy to be 92.6% at the end of the first quarter of 2024, down 40 basis points sequentially.
Moreover, a sluggish housing market has continued to be a headwind with an impact on demand. As such, the reacceleration in revenue growth is expected to have been challenging, with rent growth remaining under pressure. Also, a high interest rate is a concern for Extra Space Storage. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate.
Projections
The Zacks Consensus Estimate of $682.18 million for quarterly property rental revenues suggests a decrease from the prior quarter’s $696.98 million but an increase from the year-ago period’s $433.96 million, reflecting the Life Storage acquisition. The consensus estimate for revenues from tenant insurance of $76.74 million suggests an increase from $70.42 million in the prior quarter and $47.70 million in the year-ago period.
Management and franchise fees for the quarter are projected at $29.11 million, calling for a decrease from $30.38 million in the prior quarter but up from $21.38 million in the year-ago period. The Zacks Consensus Estimate of $786.47 million for quarterly revenues suggests a 56.34% 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 moved two cents south in the past month to $1.95. It also calls for a 3.47% year-over-year fall.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict 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 not the case here.
Extra Space Storage currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -0.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are stocks from the broader REIT sector — Welltower (WELL - Free Report) and Park Hotels & Resorts (PK - Free Report) — you may want to consider as our model shows that these 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.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
What's in Store for Extra Space Storage (EXR) in Q1 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 first-quarter 2024 results on Apr 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 first quarter, considering overall industry trends, EXR's growth strategy and acquisitions.
In the last reported quarter, this Salt Lake City, Utah-based REIT reported a core FFO per share of $2.02, which missed the Zacks Consensus Estimate of $2.03. The results reflected a fall in occupancy. Higher interest expenses during the quarter were a spoilsport.
Over the trailing four quarters, the company missed the Zacks Consensus Estimate on each occasion, the average negative surprise being 1.55%. 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 first 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, Extra Space Storage operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there has been a development boom of self-storage units in many markets in recent years. This high supply has fueled competition, affecting its power to raise rents and turn on more discounting.
Though new supply is moderating to some extent, any significant turnaround is unlikely in the near term. Particularly, the company continues to see new customer price sensitivity and, therefore, is likely to have faced headwinds from lower new customer rates in the first quarter. Moreover, we expect same-store occupancy to be 92.6% at the end of the first quarter of 2024, down 40 basis points sequentially.
Moreover, a sluggish housing market has continued to be a headwind with an impact on demand. As such, the reacceleration in revenue growth is expected to have been challenging, with rent growth remaining under pressure. Also, a high interest rate is a concern for Extra Space Storage. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate.
Projections
The Zacks Consensus Estimate of $682.18 million for quarterly property rental revenues suggests a decrease from the prior quarter’s $696.98 million but an increase from the year-ago period’s $433.96 million, reflecting the Life Storage acquisition. The consensus estimate for revenues from tenant insurance of $76.74 million suggests an increase from $70.42 million in the prior quarter and $47.70 million in the year-ago period.
Management and franchise fees for the quarter are projected at $29.11 million, calling for a decrease from $30.38 million in the prior quarter but up from $21.38 million in the year-ago period. The Zacks Consensus Estimate of $786.47 million for quarterly revenues suggests a 56.34% 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 moved two cents south in the past month to $1.95. It also calls for a 3.47% year-over-year fall.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict 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 not the case here.
Extra Space Storage currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -0.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are stocks from the broader REIT sector — Welltower (WELL - Free Report) and Park Hotels & Resorts (PK - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Welltower, scheduled to report quarterly numbers on Apr 29, has an Earnings ESP of +1.53% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Park Hotels, slated to release quarterly numbers on Apr 30, has an Earnings ESP of +3.66% and carries a Zacks Rank of 3 at present.
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.