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Key Factors to Impact Digital Realty's (DLR) Q3 Earnings
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Digital Realty Trust (DLR - Free Report) is scheduled to release third-quarter results on Oct 25, after the market closes.
In the last reported quarter, this San Francisco, CA-based data-center real estate investment trust (REIT) delivered a positive surprise of 3.1% in terms of funds from operations (FFO) per share. Results were supported by growth in revenues.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in all four occasions — the average beat being 2.08%. This is depicted in the graph below:
Let’s see how things are shaping up for Digital Realty prior to this announcement.
Factors to Consider
With projected growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are experiencing a market boom. In fact, demand is outpacing supply in the top-tier data center markets, and despite enjoying high occupancy, these markets continue to randomly absorb new constructions at a faster pace.
Further, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five-eight years. These, along with improved outlook for economic growth, are anticipated to propel growth of data-center REITs.
Amid these, accretive acquisitions and development efforts are anticipated to boost top-line growth for Digital Realty. Last year, the company announced the completion of a merger with DuPont Fabros, in an all-stock deal, for an enterprise value of about $7.8 billion.
This move enhanced Digital Realty’s portfolio in the top U.S. data center metro areas across Northern Virginia, Chicago and Silicon Valley. It helped upgrade its hyper-scale product offering and grow the company’s blue-chip customer base. Also, the company has fortified its presence in Europe, Australia and Asia in the recent years through strategic acquisitions and development of high-quality facilities.
In addition to the above, Digital Realty has consistently strived for attaining operational excellence. In fact, for the 11th consecutive year, the company has achieved "five nines" of uptime, surpassing 99.999% availability throughout 2017. This reflects its efficiency in developing and delivering data-center solutions, which can be relied upon by customers. This operational excellence has been achieved despite growth of the company’s portfolio over the years.
Amid these, the Zacks Consensus Estimate for total revenues is $773.1 million, indicating growth of 26.8% year over year. Also, the Zacks Consensus Estimate for FFO per share of $1.62 indicates an increase of 7.3% from the prior-year quarter.
Nonetheless, given the solid growth potential of the data-center real estate market, competition has intensified in the market. Amid these, an aggressive pricing pressure is likely to have continued in the to-be-reported quarter as well. Furthermore, with a substantial debt position, interest expense burden remains a concern.
Prior to the third-quarter earnings release, there is lack of any solid catalyst. In fact, the Zacks Consensus Estimate of FFO per share for the third quarter moved down marginally to $1.62 over the past month.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will likely beat estimates this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP is -0.82%.
Zacks Rank: Digital Realty has a Zacks Rank of 3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Welltower Inc. (WELL - Free Report) , slated to release third-quarter results on Oct 30, has an Earnings ESP of +1.06% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , set to report quarterly numbers on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Key Factors to Impact Digital Realty's (DLR) Q3 Earnings
Digital Realty Trust (DLR - Free Report) is scheduled to release third-quarter results on Oct 25, after the market closes.
In the last reported quarter, this San Francisco, CA-based data-center real estate investment trust (REIT) delivered a positive surprise of 3.1% in terms of funds from operations (FFO) per share. Results were supported by growth in revenues.
Over the trailing four quarters, the company beat the Zacks Consensus Estimate in all four occasions — the average beat being 2.08%. This is depicted in the graph below:
Digital Realty Trust, Inc. Price and EPS Surprise
Digital Realty Trust, Inc. Price and EPS Surprise | Digital Realty Trust, Inc. Quote
Let’s see how things are shaping up for Digital Realty prior to this announcement.
Factors to Consider
With projected growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are experiencing a market boom. In fact, demand is outpacing supply in the top-tier data center markets, and despite enjoying high occupancy, these markets continue to randomly absorb new constructions at a faster pace.
Further, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five-eight years. These, along with improved outlook for economic growth, are anticipated to propel growth of data-center REITs.
Amid these, accretive acquisitions and development efforts are anticipated to boost top-line growth for Digital Realty. Last year, the company announced the completion of a merger with DuPont Fabros, in an all-stock deal, for an enterprise value of about $7.8 billion.
This move enhanced Digital Realty’s portfolio in the top U.S. data center metro areas across Northern Virginia, Chicago and Silicon Valley. It helped upgrade its hyper-scale product offering and grow the company’s blue-chip customer base. Also, the company has fortified its presence in Europe, Australia and Asia in the recent years through strategic acquisitions and development of high-quality facilities.
In addition to the above, Digital Realty has consistently strived for attaining operational excellence. In fact, for the 11th consecutive year, the company has achieved "five nines" of uptime, surpassing 99.999% availability throughout 2017. This reflects its efficiency in developing and delivering data-center solutions, which can be relied upon by customers. This operational excellence has been achieved despite growth of the company’s portfolio over the years.
Amid these, the Zacks Consensus Estimate for total revenues is $773.1 million, indicating growth of 26.8% year over year. Also, the Zacks Consensus Estimate for FFO per share of $1.62 indicates an increase of 7.3% from the prior-year quarter.
Nonetheless, given the solid growth potential of the data-center real estate market, competition has intensified in the market. Amid these, an aggressive pricing pressure is likely to have continued in the to-be-reported quarter as well. Furthermore, with a substantial debt position, interest expense burden remains a concern.
Prior to the third-quarter earnings release, there is lack of any solid catalyst. In fact, the Zacks Consensus Estimate of FFO per share for the third quarter moved down marginally to $1.62 over the past month.
Earnings Whispers
Our proven model does not conclusively show that Digital Realty will likely beat estimates this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP is -0.82%.
Zacks Rank: Digital Realty has a Zacks Rank of 3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Regency Centers Corp. (REG - Free Report) , scheduled to release earnings on Oct 25, has an Earnings ESP of +0.21% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Welltower Inc. (WELL - Free Report) , slated to release third-quarter results on Oct 30, has an Earnings ESP of +1.06% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , set to report quarterly numbers on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>