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Factors to Impact Extra Space Storage's (EXR) Q1 Earnings
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Extra Space Storage (EXR - Free Report) is slated to report first-quarter 2020 earnings on May 6, after the bell. The company’s quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (REIT) delivered a positive surprise of 1.6% in terms of FFO per share. Results reflected growth in same-store revenues on higher occupancy and net rental rates for customers despite headwinds from new supply.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and met in the other, the average positive surprise being 1.47%. The graph below depicts this surprise history:
Let’s see how things have shaped up for this announcement.
Factors to Consider
In the first quarter, Extra Space Storage is likely to have benefited from its strong presence in key cities and concerted measures to boost the company’s geographical footprint through accretive acquisitions and third-party management. Moreover, the asset class’ low capital-expenditure requirements and ability to generate high-operating margins are anticipated to have buoyed the company’s quarterly performance.
Favorable demographic changes, migration and downsizing trend, and declining home ownership and the resultant increase in the number of people renting homes have escalated the needs of consumers to rent space at a storage facility to park their possessions. As such, demand for self-storage facilities is expected to have remained healthy in the quarter under consideration.
Management and franchise fees for the quarter are projected at $14.50 million, indicating year-on-year growth of 34.9%. The Zacks Consensus Estimate of $282 million for property rental revenues suggests an improvement of 4.1% from the prior-year quarter’s tally.These, in turn, are likely to have contributed to year-over-year revenue growth by 6.8%, with the top line pegged at $332.9 million for the quarter.
However, Extra Space Storage 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 many markets, as developers have flocked to this asset class thanks to the attractive opportunities in the industry. This high supply is likely to have fueled competition for the company during the quarter under review, curbing its pricing power. Additionally, rising property tax and marketing expenses have been flaring up expense levels, which is another concern.
Amid these, Extra Space Storage’s activities during the quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the first-quarter FFO per share remained unchanged at $1.20 in a month’s time. However, it indicates a 3.5% improvement from the year-ago quarter’s reported figure.
Here is what our quantitative model predicts:
Our proven model predicts a beat in terms of FFO per share for Extra Space this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Extra Space currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.21%.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:
Equity Residential (EQR - Free Report) , slated to release first-quarter earnings on May 5, has an Earnings ESP of +1.26% and carries a Zacks Rank of 3 at present.
Americold Realty Trust (COLD - Free Report) , scheduled to announce earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Image: Bigstock
Factors to Impact Extra Space Storage's (EXR) Q1 Earnings
Extra Space Storage (EXR - Free Report) is slated to report first-quarter 2020 earnings on May 6, after the bell. The company’s quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (REIT) delivered a positive surprise of 1.6% in terms of FFO per share. Results reflected growth in same-store revenues on higher occupancy and net rental rates for customers despite headwinds from new supply.
Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and met in the other, the average positive surprise being 1.47%. The graph below depicts this surprise history:
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 for this announcement.
Factors to Consider
In the first quarter, Extra Space Storage is likely to have benefited from its strong presence in key cities and concerted measures to boost the company’s geographical footprint through accretive acquisitions and third-party management. Moreover, the asset class’ low capital-expenditure requirements and ability to generate high-operating margins are anticipated to have buoyed the company’s quarterly performance.
Favorable demographic changes, migration and downsizing trend, and declining home ownership and the resultant increase in the number of people renting homes have escalated the needs of consumers to rent space at a storage facility to park their possessions. As such, demand for self-storage facilities is expected to have remained healthy in the quarter under consideration.
Management and franchise fees for the quarter are projected at $14.50 million, indicating year-on-year growth of 34.9%. The Zacks Consensus Estimate of $282 million for property rental revenues suggests an improvement of 4.1% from the prior-year quarter’s tally.These, in turn, are likely to have contributed to year-over-year revenue growth by 6.8%, with the top line pegged at $332.9 million for the quarter.
However, Extra Space Storage 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 many markets, as developers have flocked to this asset class thanks to the attractive opportunities in the industry. This high supply is likely to have fueled competition for the company during the quarter under review, curbing its pricing power. Additionally, rising property tax and marketing expenses have been flaring up expense levels, which is another concern.
Amid these, Extra Space Storage’s activities during the quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the first-quarter FFO per share remained unchanged at $1.20 in a month’s time. However, it indicates a 3.5% improvement from the year-ago quarter’s reported figure.
Here is what our quantitative model predicts:
Our proven model predicts a beat in terms of FFO per share for Extra Space this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Extra Space currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.21%.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:
SBA Communications Corporation (SBAC - Free Report) , set to report quarterly numbers on May 5, has an Earnings ESP of +0.67% and carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Equity Residential (EQR - Free Report) , slated to release first-quarter earnings on May 5, has an Earnings ESP of +1.26% and carries a Zacks Rank of 3 at present.
Americold Realty Trust (COLD - Free Report) , scheduled to announce earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>