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Equinix (EQIX) to Report Q3 Earnings: What's in the Offing?

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Equinix, Inc. EQIX is likely to report third-quarter 2019 results around Oct 30, after the market closes. The company’s results will likely reflect year-over-year (y/y) growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this global connectivity leader delivered a positive surprise of 5.4% in terms of adjusted FFO per share. This upside primarily stemmed from robust top-line growth, marking the 66th quarter of consecutive revenue growth for the company.

The company witnessed a remarkable streak of beating earnings estimates, over the last four quarters. Equinix beat the Zacks Consensus Estimate in each of the trailing four quarters, the average positive beat being 4.28%.

Equinix, Inc. Price and EPS Surprise

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Equinix has notable share of the most densely inter-connected exchange points, including cloud on-ramps.  Further, in the second quarter, the company had executed a number of notable transactions to enhance its inter-connection platform in key metro markets and leverage on cloud networking. Hence, it is expected to have realized benefits of these transactions in third-quarter 2019.  

Accordingly, Equinix’s third-quarter recurring revenues from its inter-connection business are projected to be up 10.9% year over year to $224 million.

Further, during the quarter, Equinix enhanced its colocation service offering and expanded the company’s collaboration with VMware to develop solutions. These will help firms accelerate hybrid cloud transformations based on VMware Cloud on Dell EMC within the company’s IBX data centers.

This is expected to have contributed to Equinix’s colocation revenues. In fact, the Zacks Consensus Estimate for third-quarter recurring revenues from colocation business is pinned at $1,026 million, suggesting 10.3% growth from the prior-year quarter.

In addition, to cater specific workload deployment needs of targeted group of hyperscale companies, including preeminent cloud service providers in Europe, Equinix has considerably scaled its operations in the region. This has likely helped the company to enjoy higher pricing power. In fact, the company is projected to have witnessed 5% y/y increase in weighted average price (MRR) per cabinet in Europe to $1,406.

Also, the Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $1.41 billion, suggesting 9.6% improvement year over year. Management projects September-end revenues at $1.399-$1.409 billion.

Moreover, prior to the third-quarter earnings release, the company has been witnessing upward estimate revisions. As such, the Zacks Consensus Estimate of FFO per share for the quarter has been revised marginally upward to $5.46 over the past month, reflecting analysts’ bullish sentiments. Also, it represents year-over-year growth of 9%.

Earnings Whispers

Our proven model predicts a positive surprise in terms of FFO per share for Equinix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Equinix has an Earnings ESP of +0.26%

Zacks Rank: Equinix carries a Zacks Rank of 3, currently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks That Warrant a Look

Digital Realty Trust, Inc. (DLR - Free Report) , scheduled to release earnings on Oct 29, has an Earnings ESP of +2.61% and carries a Zacks Rank of 3, at present.

Senior Housing Properties Trust SNH, slated to report July-September quarter results on Nov 7, has an Earnings ESP of +3.23% and currently holds a Zacks Rank of 2.

Stag Industrial, Inc. STAG, set to release quarterly figures on Oct 30, has an Earnings ESP of +1.1% and carries a Zacks Rank of 3, at present.

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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