It has been about a month since the last earnings report for Equinix (
EQIX Quick Quote EQIX - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equinix 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.
Equinix Q1 FFO Surpasses Estimates, Revenues Meet
Equinix posted strong results for first-quarter 2021, wherein adjusted funds from operations (AFFO) per share surpassed the Zacks Consensus Estimate and improved year over year, while revenues met the consensus mark and witnessed year-over-year growth.
The company’s quarterly AFFO per share was $6.98, beating the Zacks Consensus Estimate of $6.63. The figure also improved 21% from the year-ago quarter’s $6.21. The upside primarily stemmed from steady growth in interconnection revenues. In fact, in the first quarter, it added an incremental 6,700 interconnections, bringing the company's total interconnections to more than 398,000. Also, it achieved the milestone of becoming the market leader in retail colocation in all three regions of the world (the Americas, EMEA and the Asia Pacific), taking the first spot in the Asia Pacific for the first time. Quarter in Detail
Total quarterly revenues were $1.6 billion, meeting the Zacks Consensus Estimate. Also, the top line improved 10.5% year over year, representing the 73rd consecutive quarter of revenue growth.
Recurring revenues were $1.51 billion, up 11% from the year-ago quarter’s figure. Non-recurring revenues improved 2.8% from the year-ago quarter to $85.1 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 9.7%, 8.3% and 15.7% to $725 million, $518.7 million and $351.4 million, respectively. Adjusted EBITDA was $773 million, up 13% year over year. Adjusted EBITDA margin was 48%, up from 47% recorded in the prior-year quarter. AFFO appreciated 21% year over year to $627 million in the March-end quarter. Balance Sheet
Equinix exited the first quarter with cash and cash equivalents of $1.75 billion, up from $1.60 billion reported at 2020 end. The company’s total debt principal outstanding was $13.3 billion as of Mar 31, 2021, up from $12.5 billion reported at 2020 end.
For the ongoing year, Equinix estimates generating revenues of $6.55-$6.61 billion, indicating growth of 9-10% on a year-over-year basis. Assuming integration costs of $30 million, it predicts adjusted EBITDA of $3.071-$3.131 billion.
Further, AFFO per share is estimated to be $26.73-$27.28, up 8-10% year over year. For first-quarter 2021, Equinix projects revenues of $1.630-$1.660 billion, implying growth of 2-4% quarter over quarter. Adjusted EBITDA is likely to be between $769 million and $789 million. How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, Equinix has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.