It has been about a month since the last earnings report for Public Storage (PSA - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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.
Public Storage's Q2 FFO and Revenues Miss Estimates
Public Storage’s second-quarter 2017 FFO per share of $2.31 missed the Zacks Consensus Estimate of $2.56. The figure was also down 1.3% from the year-ago tally of $2.34.
Quarterly revenues of $664.3 million also fell short of the Zacks Consensus Estimate of $674.2 million. Nevertheless, revenues managed to grow 4.8% from the year-ago period.
Results reflect a fall in weighted-average square foot occupancy in the same-store portfolio for the reported quarter. However, higher realized annual rent per occupied square foot supported its results. Also, the company benefited from its expansion efforts.
Behind the Headlines
Same-store revenues advanced 3.3% year over year to $550.0 million during the second quarter, while net operating income (NOI) climbed 2.6% to $402.7 million. The increase in same-store revenues was primarily driven by a 4.4% rise in realized annual rental income per occupied square feet to $16.97. However, the weighted-average square foot occupancy of 94.5% contracted 90 basis points year over year.
In addition, the company’s NOI from non-same store facilities enhanced on the back of 292 self-storage facilities acquired, developed or expanded since Jan 2015.
In the reported quarter, Public Storage bought three self-storage facilities, comprising 0.2 million net rentable square feet, for $11.6 million. Following the quarter end, the company acquired or was under contract to acquire seven self-storage facilities, spanning 0.4 million net rentable square feet, for $47.1 million.
Finally, as of Jun 30, 2017, the company had several facilities in development (3.9 million net rentable square feet), with an estimated cost of $468 million, as well as expansion projects (1.7 million net rentable square feet) worth roughly $191 million. Public Storage projects to incur the remaining $376 million of development costs related to these projects mainly over the next 18 months.
Public Storage exited second-quarter 2017 with around $358.3 million of cash and cash equivalents, up from $183.7 million at the end of the prior year.
On Jul 26, Public Storage’s Board of Trustees announced a quarterly dividend of $2.00 per share. The amount will be paid on Sep 28 to shareholders of record as of Sep 13, 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.
Public Storage Price and Consensus
At this time, the stock has an average Growth Score of C, a grade with the same score on the momentum front. 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.
Our style scores indicate that the stock is equally suitable for momentum and growth investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.