It has been about a month since the last earnings report for Extra Space Storage (EXR Quick QuoteEXR - Free Report) . Shares have added about 6.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Extra Space Storage due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Extra Space Storage (EXR Quick QuoteEXR - Free Report) Q2 FFO and Revenues Increase Y/Y

Extra Space Storage reported second-quarter 2020 core funds from operations (“FFO”) per share of $1.23. The figure comes in 0.8% higher than the prior-year quarter’s $1.22. The Zacks Consensus Estimate for the same was $1.16.

Results mirrored improving leasing activity and occupancy. However, fall in same-store net operating income (“NOI”) is a concern.

Quarterly revenues came in at $327.2 million, up 1.1% year over year. Moreover, the revenue figure surpassed the Zacks Consensus Estimate of $322.3 million.

Due to the economic uncertainties related to the coronavirus pandemic and its impact on rentals, pricing and rent increases, the company has opted not to reinstate the 2020 guidance.

Quarter in Detail

Same-store rental revenues declined 3.1% year over year to $262.7 million during the second quarter, while same-store NOI fell 4.6% to $185.5 million. This decline in same-store revenues resulted from lower net rental rates for customers, late fees collected and higher bad-debt expenses related to non-paying tenants. Same-store square-foot occupancy was 94.5% as of Jun 30, 2020, up 100 basis points year on year.

Notably, during the reported quarter, Los Angeles, CA; Norfolk/Virginia Beach, VA; Oklahoma City, OK; and Phoenix, AZ; were the major markets which registered revenue growth above the company's portfolio average.
Nonetheless, markets including Atlanta, GA; Charleston, SC; Miami, FL; and Tampa, FL; performed below the company's portfolio average.

Balance Sheet

Extra Space Storage exited second-quarter 2020 with $56.4 million of cash and cash equivalents, down from the $65.7 million recorded at the end of 2019. The company had $883 million in revolving line of credit availability as of Jun 30, 2020. Moreover, as of that date, the company's percentage of fixed-rate debt to total debt was 79%.

During the June-end quarter, the company did not sell any shares of common stock using its ATM program. Extra Space Storage had $298.6 million available for issuance under its ATM program as of Jun 30, 2020.

Portfolio Activity

During the second quarter, Extra Space Storage, in conjunction with its joint-venture partners, acquired one store at completion of construction and completed one development for a total cost of $25.4 million. Of this, the company invested $14.4 million.

Extra Space Storage added 31 stores (gross) to the company’s third-party management platform. As of Jun 30, 2020, it managed 700 stores for third-party owners and 251 stores owned in joint ventures, with total stores under management tally reaching 951.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Extra Space Storage has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Extra Space Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.