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Equinix (EQIX) Up 4.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have added about 4.7% 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 the most recent earnings report in order to get a better handle on the important drivers.

Equinix Q4 FFO Surpasses Estimates, Revenues Up Y/Y

Equinix posted better-than-expected results for fourth-quarter 2018, wherein the bottom line surpassed the Zacks Consensus Estimate, while revenues came in line with the same. Both AFFO and revenues improved year over year as well.

The company’s AFFO per share advanced from $4.82 reported in the year-earlier quarter to $5.13 per share. The Zacks Consensus Estimate was pegged at $4.92. This upside primarily stemmed from robust top-line growth and solid operating performance, partially offset by an elevated cost of revenues.

For full-year 2018, AFFO per share came in at $20.7, surpassing the Zacks Consensus Estimate of $20.5. Further, the reported figure improves nearly 12% from the prior-year tally.

Quarter in Detail

Total revenues came in at $1.31 billion, in line with the Zacks Consensus Estimate, and up 9.2% year over year. Encouragingly, this also marks the 64th quarter of consecutive revenue growth for the company.

Recurring revenues came in at around $1.2 billion, up approximately 9.6% from the year-ago tally. Non-recurring revenues climbed 2.8% to nearly $79.8 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 4.9%, 9% and 19.8% to $638.1 million, $403.1 million and $268.8 million, respectively.

Cash gross margin was 66%, flat year over year. Total operating expenses flared up around 5.7% to $368.4 million year over year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $617.2 million, up 9.3%. Adjusted EBITDA margins came in at 47% flat year over year. AFFO appreciated 2.9% sequentially to $414 million during the Dec-end quarter.

Balance Sheet

Equinix exited the fourth quarter with cash and cash equivalents of nearly $606.2 million. The company’s total debt principal outstanding was $11.4 billion as of Dec 31, 2018.

Guidance

Equinix has provided an outlook for the first quarter and full-year 2019.

For 2019, the company estimates generating revenues of $5.520-$5.570 billion, reflecting an increase of 9-10% year over year. The company predicts adjusted EBITDA of $2.605-$2.655 billion. Equinix anticipates full-year 2019 AFFO to be in the $1.825-$1.875 billion range.

Coming to the current quarter, Equinix projects revenues of $1.342-$1.352 billion. Adjusted EBITDA is likely to lie between $624 million and $634 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Equinix has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Equinix has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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