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Equinix (EQIX) Down 0.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have lost about 0.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Equinix due for a breakout? 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 Beats on FFO, Misses Revenue Estimates in Q3

Equinix posted results for third-quarter 2021, wherein the adjusted FFO (AFFO) per share surpassed the Zacks Consensus Estimate and witnessed year-over-year growth.

The company’s quarterly AFFO per share was $6.94, beating the Zacks Consensus Estimate of $6.69. The figure also improved 7.1% from the year-ago quarter’s $6.48.

This upside primarily stemmed from steady growth in the inter-connection revenues. During the third quarter, the company added an additional 7,800 inter-connections, bringing the company's total inter-connections to more than 414,400.

Quarter in Detail

Total quarterly revenues came in at $1.675 billion, narrowly missing the Zacks Consensus Estimate of $1.68 billion. However, the top line improved 10%, year over year, marking the 75th consecutive quarter of top-line growth.

Recurring revenues were $1.56 billion, up 9.2% from the year-ago quarter. Non-recurring revenues climbed 27.2% from the year-ago quarter to $111.6 million.

Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 13.5%, 5.2% and 11.4% to $763.1 million, $545.2 million and $366.9 million, respectively.

The adjusted EBITDA came in at $786.3 million, up 6.7% year over year.

The AFFO jumped 8.4% year over year to $628.3 million during the September-end quarter.

However, the adjusted EBITDA margin was 47%, down from the 49% recorded in the prior-year quarter.

Balance Sheet

Equinix exited the third quarter with cash and cash equivalents of $1.4 billion, down from the $1.6 billion reported at the end of 2020. The company’s total debt principal outstanding was $13.9 billion as of Sep 30, 2021, up from the $12.5 billion witnessed at the end of 2020.

Guidance

For fourth-quarter 2021, Equinix projects revenues of $1.685 and $1.705 billion, calling for 1-2% growth, quarter over quarter. The adjusted EBITDA is likely to lie between $762 million and $782 million.

For the ongoing year, the AFFO per share is estimated to be $27.03-$27.25, suggesting a 9-10% year-over-year increase.

Further, Equinix estimates to generate revenues of $6.614-$6.634 billion, indicating growth of 10-11% on a year-over-year basis. Assuming the integration costs of $18 million, management predicts adjusted EBITDA of $3.119-$3.139 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Equinix has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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.


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