Extra Space Storage (EXR) Q4 Earnings: What’s in Store?

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Extra Space Storage Inc. EXR is slated to report fourth-quarter and 2017 results on Feb 20, after the market closes . Both its revenues and funds from operations (FFO) are expected to experience year-over-year growth.

In the last reported quarter, this Salt Lake City, UT-based self-storage real estate investment trust (REIT) delivered a positive surprise of 2.73% in terms of FFO per share. Results reflected growth in property-rental revenues and improvement in same-store NOI. Particularly, higher occupancy and rental rates supported growth.

The company has a decent surprise history. In fact, the company exceeded the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 4.46%. This is depicted in the graph below:

Extra Space Storage Inc Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that Extra Space Storage 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. However, that is not the case here as you will see below.

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

Zacks ESP: The company has an Earnings ESP of -0.69%.

Zacks Rank: Extra Space Storage’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.

Factors That Might Impact Q4 Results

Extra Space Storage is a notable name in the self-storage industry. The company offers a wide array of well-located storage units to its customers, including boat storage, recreational vehicle storage and business storage.
In addition, the self-storage industry is anticipated to experience a solid demand, backed by favorable demographic changes and events like marriages, shifting, death and even divorce. As such, its high brand value and robust presence in key cities serve as growth drivers amid healthy demand in the self-storage industry.

The company has also made concerted efforts to grow its business and achieve geographical diversity through accretive acquisitions, mutually beneficial joint-venture partnerships and third-party management services.

Amid these, in the to-be-reported quarter, the company is anticipated to benefit from a steady demand in the self-storage industry and witness growth in same-store revenues and NOI.

The Zacks Consensus Estimate of $252 million for property rental revenue reflects a sequential rise from the prior-quarter figure of $249 million.

Prior to fourth-quarter earnings release, there is a lack of any solid catalyst for raising optimism about the company’s business activities and prospects. As such, the Zacks Consensus Estimate for FFO per share in the soon-to-be-reported quarter has remained unchanged at $1.08, over the past month. However, it indicates a year-over-year rise of 4.9%.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $283.7 million, indicating a year-over-year rise of 8.7%.

For full-year 2017, the Zacks Consensus Estimate for revenues stands at $1.10 billion, reflecting a year-over-year rise of 10.9%. The consensus estimate for FFO per share is $4.34, reflecting a year-over-year increase of 12.7%. Management expects FFO per share in the range of $4.32-$4.35.

Moreover, shares of Extra Space Storage have lost 5.9% in the past three months, outperforming the 9.6% decline registered by its industry .

Stocks That Warrant a Look

Here are a few stocks in the REIT space that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this time around:

Host Hotels & Resorts, Inc. HST , slated to report quarterly numbers on Feb 21, has an Earnings ESP of +0.25% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here .

Outfront Media Inc. OUT , scheduled to release quarterly numbers on Feb 27, has an Earnings ESP of +0.90% and a Zacks Rank of 3.

Gramercy Property Trust GPT , slated to release fourth-quarter results on Feb 28, has an Earnings ESP of +2.49% and a Zacks Rank of 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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