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Factors to Impact Extra Space Storage's (EXR) Q2 Earnings

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Extra Space Storage (EXR - Free Report) is slated to report second-quarter 2022 results on Aug 2 after market close. Its quarterly revenues and funds from operations (FFO) per share are likely to have witnessed year-over-year increases.

In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (“REIT”) delivered a surprise of 8.06% in terms of FFO per share. Results reflected strong top-line growth, backed by higher average rates for new and existing customers and higher late fees, partly muted by lower occupancy.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 6.02%. The graph below depicts this surprise history:

Extra Space Storage Inc Price and EPS Surprise

Extra Space Storage Inc Price and EPS Surprise

Extra Space Storage Inc price-eps-surprise | Extra Space Storage Inc Quote

Let’s see how things have shaped up before this announcement.

Factors to Consider

In the second quarter, Extra Space Storage is likely to have benefited from its solid presence in key cities and measures to boost the company’s geographical footprint through accretive acquisitions and third-party management.

Extra Space Storage is also likely to have benefited from high brand value and technological advantage amid favorable market fundamentals and maintained a healthy balance sheet position.

Amid these, this REIT is likely to have seen growth in revenues in the quarter to be reported with healthy rental rates. However, with the impact of the pandemic abating, vacancy is likely to increase, and the consensus mark for second-quarter same-store square foot occupancy is expected to have been 95.25% down from 97% in the year-ago period.

The Zacks Consensus Estimate of $393.4 million for quarterly property rental revenues suggests an increase from the prior quarter’s $379.8 million and the year-ago period’s $321.5 million. Management and franchise fees for the quarter are projected at $20.07 million, indicating an improvement from the prior quarter’s $19.96 million and the year-ago quarter’s $14.80 million.

Same-store rental revenues for the quarter are pegged at $349.3 million, suggesting an increase from the prior quarter’s $341.9 million and the year-ago period’s $294.8 million.

The Zacks Consensus Estimate of $453.2 million for quarterly revenues suggests a 19.7% increase year over year.

However, EXR operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition.

Extra Space Storage’s activities during the quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has moved a cent south to $2.04 in a week. However, it calls for a 24.4% year-over-year rise.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for Extra Space Storage this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. However, that is not the case here.

Extra Space Storage currently carries a Zacks Rank #2 and has an Earnings ESP of -0.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks from the broader REIT sector — Public Storage (PSA - Free Report) and SBA Communications Corporation (SBAC - Free Report) — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

Public Storage, slated to release quarterly numbers on Aug 4, has an Earnings ESP of +0.31% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SBA Communications Corporation, scheduled to report quarterly numbers on Aug 1, currently has an Earnings ESP of +0.95% and carries a Zacks Rank of 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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.


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