Tapping the equity market for additional capital, Equinix, Inc. (EQIX - Free Report) announced a public offering of 2,250,000 shares of its common stock. Further, as part of the offering, the company will give underwriters a 30-day option to purchase up to an additional 337,500 shares.
The shares are priced at $665 per share. The $1.5-billion offering, subject to the fulfillment of customary closing conditions, is expected to close on May 14.
The company plans to utilize the net proceeds from the offering to fund the acquisition of selected data center sites and their operations that is currently in discussions. Remaining proceeds will be used for general corporate purposes, including debt repayment, capital expenditure and working capital. Moreover, if the acquisition is not executed, then Equinix plans to use the entire net proceeds for general corporate purposes.
Notably, Equinix's buyouts have provided the company with a competitive edge over peers and have expanded its global footprint. This March, the company completed the acquisition of Packet, a top player in the bare metal automation platform for a consideration of $335 million. The move accelerates Equinix’s strategy to enable enterprises to seamlessly deploy hybrid multi-cloud infrastructures.
While the acquisitions position the company to benefit from the growing demand for colocation and interconnection services, high integration costs associated with the buyouts cannot be ignored. In fact, the company realized $3 million in integration costs during first-quarter 2020 and this impacted adjusted funds from operations (AFFO) and adjusted EBITDA.
Notably, the company’s reported first-quarter 2020 AFFO per share of $6.21, beating the Zacks Consensus Estimate of $5.98. The figure also improved 13% from the year-ago quarter’s $5.95.Total quarterly revenues improved 6% year over year to $1.44 billion and represented the 69th consecutive quarter of revenue growth.
Shares of this Zacks #3 (Hold) Ranked company have outperformed the real estate market over the past year, rising 42.3% as against the real estate market’s decline of 16.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimates for 2020 remained unchanged at 62 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).
Gladstone Commercial Corporation’s (GOOD - Free Report) Zacks Consensus Estimate for 2020 FFO per share has remained unchanged $1.58 over the past month. Also, it currently carries a Zacks Rank of 2.
Farmland Partners Inc.’s (FPI - Free Report) FFO per share estimate for the ongoing year has remained unchanged at 25 cents over the past 30 days. Additionally, it carries a Zacks Rank of 2 at present.
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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