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Digital Realty (DLR) to Post Q1 Earnings: What's in Store?
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Digital Realty Trust (DLR - Free Report) is scheduled to release first-quarter results on Apr 26, after the market closes.
Last quarter, this San Francisco, CA-based date center real estate investment trust (REIT) delivered a positive surprise of 1.97%. Results were supported by growth in revenues and rental rates on renewal leases.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in all four occasions, the average beat being nearly 2.18%. This is depicted in the graph below:
Let’s see how things are shaping up for Digital Realty prior to this announcement.
Factors to Consider
Data-center REITs are experiencing a boom market. In fact, growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure remain primary catalysts.
Additionally, demand has been outpacing supply in top-tier data-center markets and despite enjoying high occupancy, these markets are absorbing new construction at a faster pace. Additionally, according to a Cisco forecast, data-center IP traffic is projected to witness a compound annual growth rate of 25%, over the 2016-2021 period. Further, per Gartner’s report, worldwide IT spending is projected to increase 3.2% in 2018, while worldwide server shipments are expected to rise 3.5%. This, along with an improved outlook for economic growth, is anticipated to drive demand for data centers.
Notably, Digital Realty, with its high-quality date centers, is well poised to benefit from this trend. Notably, the Zacks Consensus Estimate for occupancy of 90% for the first quarter indicates year-over-year growth of 1.1%.
In addition to this, accretive acquisitions are likely to stoke the company’s top-line growth. On Apr 4, this REIT announced a partnership with the Singapore Internet Exchange. This move is aimed at providing local peering at the company’s Singapore data-center facilities in Jurong West and Loyang East. This move is a strategic fit as Singapore serves as the Internet gateway to Asian markets and hence, it will enable Digital Realty establish a strong foothold in the continent. Also, the company has been actively adding data centers to its portfolio. Amid these, the Zacks Consensus Estimate for net rentable area at 26,780 million square feet compares favorably with the 22,680-million-square-foot portfolio which was owned by the company in the prior-year quarter.
Furthermore, the company aims to have an investment grade balance sheet and is committed to a conservative capital structure. The Zacks Consensus Estimate for the company’s fixed charge coverage ratio is 4.31 as compared to the year-earlier quarter ratio of 4.2. This reflects higher solvency and efficient capital management.
However, Digital Realty faces intense competition in its industry. In fact, the company competes with several data-center developers, owners and operators, many of which enjoy ownership of similar assets in locations same as Digital Realty. Also, there are a number of local developers in the United States, and several regional operators in Europe, Asia and Australia. Amid this, aggressive pricing pressure is predicted to have been prevalent in the data-center market in the quarter to be reported.
Hence, prior to the first-quarter earnings release, there is lack of any solid catalyst. As such, the Zacks Consensus Estimate of funds from operations (FFO) per share for the first quarter remained unchanged at $1.57 over the past month.
Also, Digital Realty’s shares have declined 7.7% in the past three months, underperforming the 7.3% loss incurred by the industry.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will likely beat estimates 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 at least 3 (Hold) for this to happen.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP is -0.25%.
Zacks Rank: Digital Realty has a Zacks Rank of 3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of the earnings beat.
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 these have the right combination of elements to report a positive surprise this quarter:
Taubman Centers, Inc. , scheduled to report earnings on Apr 26, has an Earnings ESP of +0.47% and a Zacks Rank of 3.
Simon Property Group, Inc. (SPG - Free Report) , set to release quarterly numbers on Apr 27, has an Earnings ESP of +0.50% and a Zacks Rank #3.
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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Digital Realty (DLR) to Post Q1 Earnings: What's in Store?
Digital Realty Trust (DLR - Free Report) is scheduled to release first-quarter results on Apr 26, after the market closes.
Last quarter, this San Francisco, CA-based date center real estate investment trust (REIT) delivered a positive surprise of 1.97%. Results were supported by growth in revenues and rental rates on renewal leases.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in all four occasions, the average beat being nearly 2.18%. This is depicted in the graph below:
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
Data-center REITs are experiencing a boom market. In fact, growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure remain primary catalysts.
Additionally, demand has been outpacing supply in top-tier data-center markets and despite enjoying high occupancy, these markets are absorbing new construction at a faster pace. Additionally, according to a Cisco forecast, data-center IP traffic is projected to witness a compound annual growth rate of 25%, over the 2016-2021 period. Further, per Gartner’s report, worldwide IT spending is projected to increase 3.2% in 2018, while worldwide server shipments are expected to rise 3.5%. This, along with an improved outlook for economic growth, is anticipated to drive demand for data centers.
Notably, Digital Realty, with its high-quality date centers, is well poised to benefit from this trend. Notably, the Zacks Consensus Estimate for occupancy of 90% for the first quarter indicates year-over-year growth of 1.1%.
In addition to this, accretive acquisitions are likely to stoke the company’s top-line growth. On Apr 4, this REIT announced a partnership with the Singapore Internet Exchange. This move is aimed at providing local peering at the company’s Singapore data-center facilities in Jurong West and Loyang East. This move is a strategic fit as Singapore serves as the Internet gateway to Asian markets and hence, it will enable Digital Realty establish a strong foothold in the continent. Also, the company has been actively adding data centers to its portfolio. Amid these, the Zacks Consensus Estimate for net rentable area at 26,780 million square feet compares favorably with the 22,680-million-square-foot portfolio which was owned by the company in the prior-year quarter.
Furthermore, the company aims to have an investment grade balance sheet and is committed to a conservative capital structure. The Zacks Consensus Estimate for the company’s fixed charge coverage ratio is 4.31 as compared to the year-earlier quarter ratio of 4.2. This reflects higher solvency and efficient capital management.
However, Digital Realty faces intense competition in its industry. In fact, the company competes with several data-center developers, owners and operators, many of which enjoy ownership of similar assets in locations same as Digital Realty. Also, there are a number of local developers in the United States, and several regional operators in Europe, Asia and Australia. Amid this, aggressive pricing pressure is predicted to have been prevalent in the data-center market in the quarter to be reported.
Hence, prior to the first-quarter earnings release, there is lack of any solid catalyst. As such, the Zacks Consensus Estimate of funds from operations (FFO) per share for the first quarter remained unchanged at $1.57 over the past month.
Also, Digital Realty’s shares have declined 7.7% in the past three months, underperforming the 7.3% loss incurred by the industry.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will likely beat estimates 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 at least 3 (Hold) for this to happen.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP is -0.25%.
Zacks Rank: Digital Realty has a Zacks Rank of 3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of the earnings beat.
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 these have the right combination of elements to report a positive surprise this quarter:
PS Business Parks, Inc. , slated to release first-quarter results on Apr 24, has an Earnings ESP of +0.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here
Taubman Centers, Inc. , scheduled to report earnings on Apr 26, has an Earnings ESP of +0.47% and a Zacks Rank of 3.
Simon Property Group, Inc. (SPG - Free Report) , set to release quarterly numbers on Apr 27, has an Earnings ESP of +0.50% and a Zacks Rank #3.
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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>