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Public Storage (PSA) Up 6.3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Public Storage (PSA - Free Report) . Shares have added about 6.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is PSA due for a pullback? 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.

Public Storage Q4 FFO Beats Estimates, Revenues Up Y/Y

Public Storage’s fourth-quarter 2017 core FFO per share of $2.75 marked 3.8% growth from the prior-year quarter figure of $2.65 and also surpassed the Zacks Consensus Estimate of $2.72.

Results mirror an improvement in NOI from both same-store and non-same store facilities. Higher realized annual rent per occupied square foot supported the company’s same-store performance. Also, Public Storage benefited from its expansion efforts.

Quarterly revenues of $672.3 million also climbed 3.2% from the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $680.5 million.

For full-year 2017, core FFO per share came in at $10.23, well ahead of the prior-year tally of $9.79. This was backed by 4.2% year-over-year growth in total revenues to $2.7 billion.

Behind the Headlines

Same-store revenues advanced 2.1% year over year to $551.7 million during the fourth quarter, while the company’s NOI climbed 2.0% to $434.7 million. The increase in same-store revenues was primarily driven by a 3.0% rise in realized annual rental income per occupied square feet to $17.40. However, the weighted-average square foot occupancy of 93.1% contracted 70 basis points year over year.

In addition, the company’s NOI from non-same store facilities grew on the back of the 345 self-storage facilities acquired, developed or expanded since January 2015.

Portfolio Activity

In the reported quarter, Public Storage bought eight self-storage facilities, comprising 0.5 million net rentable square feet, for $68.1 million. Following the quarter end, the company acquired or was under contract to acquire two self-storage facilities, spanning 0.2 million net rentable square feet of space, for $18 million.

Finally, as of Dec 31, 2017, the company had several facilities in development (2.7 million net rentable square feet), with an estimated cost of $367 million, as well as expansion projects (1.9 million net rentable square feet) worth roughly $247 million. Public Storage estimates to incur the remaining $350 million of development costs related to these projects mainly over the next 18 months.

Liquidity

Public Storage exited 2017 with around $433.4 million of cash and cash equivalents, up from $183.7 million recorded at the end of the prior year.

Dividend

On Feb 20, Public Storage’s board of trustees announced a regular quarterly dividend of $2.00 per share. The amount will be paid on Mar 29 to shareholders of record as of Mar 14, 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Public Storage Price and Consensus

 

Public Storage Price and Consensus | Public Storage Quote

VGM Scores

At this time, PSA has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. The stock was also allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

PSA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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