), a leading real estate investment trust (REIT) operating
self-storage facilities, reported fiscal 2011 fourth quarter
recurring funds from operations (FFO) of $1.66 per share, which
beat the Zacks Consensus Estimate by $0.07. Funds from operations,
a widely used metric to gauge the performance of REITs, is obtained
after adding depreciation and amortization and other non-cash
expenses to net income.
We cover below the results of the recent earnings announcement,
as well as the subsequent analyst estimate revisions and the Zacks
ratings for the short-term and long-term outlook of the stock.
Earnings Report Review
For full year 2011, Public Storage reported FFO of $5.67 per
share, compared with $4.72 in the previous year. Recurring FFO for
fiscal 2011 was $5.93 per share compared with $5.22 in 2010. Fiscal
2011 recurring FFO surpassed the Zacks Consensus Estimate by 15
During the reported quarter, Public Storage recorded a healthy
increase in total revenues to $444.7 million from $417.8 million in
the year-earlier quarter. Total revenues for the reported quarter
were well ahead of the Zacks Consensus Estimate of $422 million.
For full year 2011, the company reported total revenues of
approximately $1.75 billion compared to $1.64 billion in the
(Read our full coverage on this earnings report:
PSA Zooms Ahead of Estimates
Earnings Estimate Revisions - Overview
Fiscal earnings estimates have moved up for Public Storage since
the earnings release, meaning that analysts are bullish about the
long-term performance of the company. Let's dig into the earnings
Agreement of Estimate Revisions
In the last 7 days, fiscal 2012 earnings estimates were raised
by 6 analysts out of 20 covering the stock, while only 1 had
lowered the same. For fiscal 2013, 4 out of 17 analysts covering
the stock revised their estimates upward, while none had reduced
it. This indicates a positive directional movement for the fiscal
Magnitude of Estimate Revisions
Earnings estimates for fiscal 2012 have increased by 4 cents in
the last 7 days to $6.43. With superior quarterly and fiscal
results that witnessed a healthy increase in both revenues and
earnings, the company increased its quarterly dividend for first
quarter 2012 by 16% to $1.10 per share. Management further remained
upbeat about maintaining the positive growth momentum in fiscal
2012 as well. For fiscal 2013, earnings estimates have surged by 3
cents in the last 7 days to $6.84.
The long-term earnings estimate picture for Public Storage is
neutral. Public Storage is the largest owner and operator of
storage facilities in the U.S., which has enabled it to achieve
large economies of scale and generate high operating margins.
The Public Storage brand is the most recognized and established
name in the self-storage industry with a presence in all the major
markets across 38 states in the U.S. In addition, the storage
facilities of the company have a high visibility and are usually
located in heavily populated areas that improve the local awareness
of the brand. The company also has one of the strongest balance
sheets in the sector with minimal debt maturities and adequate
However, Public Storage operates in a highly fragmented market
in the U.S., with intense competition from numerous private
regional and local operators. Demand for storage facilities has
also witnessed a significant drop from its peak level prior to the
recession as customers have reduced their discretionary spending.
This undermines the long-term growth potential of the company.
We maintain our 'Neutral' recommendation on Public Storage,
which currently has a Zacks #2 Rank that translates in to a
short-term 'Buy' rating. We also have a 'Neutral' recommendation
and a Zacks #2 Rank for
Sovran Self Storage Inc.
), one of the competitors of Public Storage.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
PUBLIC STORAGE (
): Free Stock Analysis Report
SOVRAN SLF STOR (
): Free Stock Analysis Report
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