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What's in Store for Equinix (EQIX) This Earnings Season?
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Equinix, Inc. (EQIX - Free Report) is scheduled to report its second-quarter 2022 results on Jul 27 after market close. Equinix’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the previous quarter, Equinix reported a negative surprise of 0.42% in terms of adjusted FFO per share. Although adjusted FFO per share missed the consensus estimate, EQIX’s performance during the quarter reflected steady growth in the inter-connection revenues.
Over the preceding four quarters, EQIX’s FFO per share surpassed estimates on two occasions and missed the same on the other two, the average being 1.71%. This is depicted in the graph below:
Equinix enjoys a geographically diversified portfolio. The company is well-poised to benefit from the robust digital footprint of International Business Exchanges data centers.
High growth in cloud computing, the Internet of Things and Big Data and elevated demand for third-party IT infrastructure are expected to have driven demand for high-performing data centers. Moreover, growth in the AI, autonomous vehicle and virtual/augmented reality markets has been creating solid demand for data centers for a while. These factors are anticipated to have played a key role in fueling demand for Equinix’s data centers in the second quarter.
Further, Equinix is expected to have capitalized on the growing demand for data centers and expanded its interconnected ecosystems during the to-be-reported quarter. The Zacks Consensus Estimate for interconnection revenues is pegged at $320 million, suggesting an increase of 11.1% from the prior-year period’s reported figure.
The Zacks Consensus Estimate for revenues stands at $1.82 billion, suggesting a 9.9% improvement from the year-ago period’s reported number.
For second-quarter 2022, Equinix projects revenues in the range of $1.809-$1.829 billion, indicating a 4-5% increase over the prior quarter. The adjusted EBITDA is expected in the band of $828-$848 million.
Throughout the second quarter, Equinix carried out various expansionary efforts to strengthen its portfolio. In April 2022, EQIX acquired MainOne and extended its reach to Africa, while in May 2022, it acquired four data centers in Chile from a leading telecommunications provider, Empresa Nacional De Telecomunicaciones S.A. (Entel). In June, it entered into a joint venture with PGIM Real Estate to launch the first xScale data center in Sydney, named SY9x, for hyperscalers. This move further enriches its base in Australia.
Prior to the second-quarter earnings release, analysts seem optimistic about EQIX’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally upward to $7.28 over the past month. It implies 3.85% growth from the prior-year reported number.
However, a competitive landscape and huge capital outlays for developments might have limited its growth tempo to some extent during the quarter.
Earnings Whispers
Equinix has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
Earnings ESP: Equinix has an Earnings ESP of +0.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other stocks that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Essex Property Trust (ESS - Free Report) is scheduled to report quarterly figures on Jul 26. ESS has an Earnings ESP of +1.21% and a Zacks Rank of 2 (Buy) currently.
Equity Residential (EQR - Free Report) is slated to report quarterly numbers on Jul 26. EQR has an Earnings ESP of +1.11% and carries a Zacks Rank of 3.
SBA Communications (SBAC - Free Report) is slated to release second-quarter earnings on Aug 1. SBAC has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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What's in Store for Equinix (EQIX) This Earnings Season?
Equinix, Inc. (EQIX - Free Report) is scheduled to report its second-quarter 2022 results on Jul 27 after market close. Equinix’s quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the previous quarter, Equinix reported a negative surprise of 0.42% in terms of adjusted FFO per share. Although adjusted FFO per share missed the consensus estimate, EQIX’s performance during the quarter reflected steady growth in the inter-connection revenues.
Over the preceding four quarters, EQIX’s FFO per share surpassed estimates on two occasions and missed the same on the other two, the average being 1.71%. This is depicted in the graph below:
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Factors at Play
Equinix enjoys a geographically diversified portfolio. The company is well-poised to benefit from the robust digital footprint of International Business Exchanges data centers.
High growth in cloud computing, the Internet of Things and Big Data and elevated demand for third-party IT infrastructure are expected to have driven demand for high-performing data centers. Moreover, growth in the AI, autonomous vehicle and virtual/augmented reality markets has been creating solid demand for data centers for a while. These factors are anticipated to have played a key role in fueling demand for Equinix’s data centers in the second quarter.
Further, Equinix is expected to have capitalized on the growing demand for data centers and expanded its interconnected ecosystems during the to-be-reported quarter. The Zacks Consensus Estimate for interconnection revenues is pegged at $320 million, suggesting an increase of 11.1% from the prior-year period’s reported figure.
The Zacks Consensus Estimate for revenues stands at $1.82 billion, suggesting a 9.9% improvement from the year-ago period’s reported number.
For second-quarter 2022, Equinix projects revenues in the range of $1.809-$1.829 billion, indicating a 4-5% increase over the prior quarter. The adjusted EBITDA is expected in the band of $828-$848 million.
Throughout the second quarter, Equinix carried out various expansionary efforts to strengthen its portfolio. In April 2022, EQIX acquired MainOne and extended its reach to Africa, while in May 2022, it acquired four data centers in Chile from a leading telecommunications provider, Empresa Nacional De Telecomunicaciones S.A. (Entel). In June, it entered into a joint venture with PGIM Real Estate to launch the first xScale data center in Sydney, named SY9x, for hyperscalers. This move further enriches its base in Australia.
Prior to the second-quarter earnings release, analysts seem optimistic about EQIX’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally upward to $7.28 over the past month. It implies 3.85% growth from the prior-year reported number.
However, a competitive landscape and huge capital outlays for developments might have limited its growth tempo to some extent during the quarter.
Earnings Whispers
Equinix has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.
Earnings ESP: Equinix has an Earnings ESP of +0.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: EQIX currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Here are some other stocks that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Essex Property Trust (ESS - Free Report) is scheduled to report quarterly figures on Jul 26. ESS has an Earnings ESP of +1.21% and a Zacks Rank of 2 (Buy) currently.
Equity Residential (EQR - Free Report) is slated to report quarterly numbers on Jul 26. EQR has an Earnings ESP of +1.11% and carries a Zacks Rank of 3.
SBA Communications (SBAC - Free Report) is slated to release second-quarter earnings on Aug 1. SBAC has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.