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Digital Realty (DLR) to Post Q1 Earnings: What's in Store?
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Digital Realty Trust, Inc. (DLR - Free Report) is slated to report first-quarter 2017 earnings on Apr 27, after the market closes.
Last quarter, this date center real estate investment trust (REIT) delivered an in-line performance. Over the trailing four quarters, the company beat the Zacks Consensus Estimate in two occasions, met estimates in the other, and missed in another, with an average beat of around 2.42%.
The Zacks Consensus Estimate for first-quarter 2017 is currently pegged at $1.47.
Let’s see how things are shaping up for Digital Realty prior to this announcement.
Factors to Consider
With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data center REITs are experiencing a boom market. In fact, demand is outpacing supply in top tier data center markets and despite enjoying high occupancy, the top tier markets are absorbing new construction at a faster pace. Amid these, Digital Realty’s focus on offering upgraded technology to entice clients is expected to boost its revenue stream in the to-be-reported quarter.
Moreover, the company is expected to ride on the growth curve backed by strategic acquisitions. In fact, the company acquired Telx in Oct 2015, and a portfolio of eight high-quality, carrier-neutral data centers in Europe (Amsterdam, Frankfurt and London) in Jul 2016. We expect such efforts to drive the company’s top line in the quarter to be reported.
Further, over the past six months, shares of Digital Realty outperformed the Zacks categorized REIT and Equity Trust – Other industry. While Digital Realty logged in a gain of 15.5%, the industry climbed 4.8% over this period.
However, Digital Realty faces stiff competition in the industry. In fact, the company competes with several data center developers, owners and operators, many of whom enjoy ownership of similar assets in regions same as Digital Realty. Amid this, aggressive pricing pressure is likely to sustain in the data center market.
Also, the company has a substantial debt burden and its total consolidated indebtedness as of Dec 31, 2016 was approximately $5.8 billion. The debt burden is predicted to adversely affect the company’s profitability in the quarter with growth in interest expense.
Hence, prior to the first-quarter earnings release, there is lack of any solid catalyst for becoming overtly optimistic about the company’s business activities and prospects. As such, the Zacks Consensus Estimate of FFO per share for the to-be-reported quarter remained unchanged at $1.47 over the past 30 days.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Digital Realty is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.47. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Digital Realty’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter:
Taubman Centers, Inc. , scheduled to release earnings on Apr 27, has an Earnings ESP of +1.12% and a Zacks Rank #3.
EPR Properties (EPR - Free Report) , slated to release earnings on May 2, has an Earnings ESP of +0.84% and a Zacks Rank #3.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Digital Realty (DLR) to Post Q1 Earnings: What's in Store?
Digital Realty Trust, Inc. (DLR - Free Report) is slated to report first-quarter 2017 earnings on Apr 27, after the market closes.
Last quarter, this date center real estate investment trust (REIT) delivered an in-line performance. Over the trailing four quarters, the company beat the Zacks Consensus Estimate in two occasions, met estimates in the other, and missed in another, with an average beat of around 2.42%.
The Zacks Consensus Estimate for first-quarter 2017 is currently pegged at $1.47.
Digital Realty Trust, Inc. Price and EPS Surprise
Digital Realty Trust, Inc. Price and EPS Surprise | Digital Realty Trust, Inc. Quote
Let’s see how things are shaping up for Digital Realty prior to this announcement.
Factors to Consider
With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data center REITs are experiencing a boom market. In fact, demand is outpacing supply in top tier data center markets and despite enjoying high occupancy, the top tier markets are absorbing new construction at a faster pace. Amid these, Digital Realty’s focus on offering upgraded technology to entice clients is expected to boost its revenue stream in the to-be-reported quarter.
Moreover, the company is expected to ride on the growth curve backed by strategic acquisitions. In fact, the company acquired Telx in Oct 2015, and a portfolio of eight high-quality, carrier-neutral data centers in Europe (Amsterdam, Frankfurt and London) in Jul 2016. We expect such efforts to drive the company’s top line in the quarter to be reported.
Further, over the past six months, shares of Digital Realty outperformed the Zacks categorized REIT and Equity Trust – Other industry. While Digital Realty logged in a gain of 15.5%, the industry climbed 4.8% over this period.
However, Digital Realty faces stiff competition in the industry. In fact, the company competes with several data center developers, owners and operators, many of whom enjoy ownership of similar assets in regions same as Digital Realty. Amid this, aggressive pricing pressure is likely to sustain in the data center market.
Also, the company has a substantial debt burden and its total consolidated indebtedness as of Dec 31, 2016 was approximately $5.8 billion. The debt burden is predicted to adversely affect the company’s profitability in the quarter with growth in interest expense.
Hence, prior to the first-quarter earnings release, there is lack of any solid catalyst for becoming overtly optimistic about the company’s business activities and prospects. As such, the Zacks Consensus Estimate of FFO per share for the to-be-reported quarter remained unchanged at $1.47 over the past 30 days.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will beat on earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Digital Realty is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.47. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Digital Realty’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that they have the right combination of elements to report a positive surprise this quarter:
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release first-quarter results on May 4, has an Earnings ESP of +2.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Taubman Centers, Inc. , scheduled to release earnings on Apr 27, has an Earnings ESP of +1.12% and a Zacks Rank #3.
EPR Properties (EPR - Free Report) , slated to release earnings on May 2, has an Earnings ESP of +0.84% and a Zacks Rank #3.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>