), a leading real estate investment trust (REIT) operating
self-storage facilities, reported 2012 second quarter recurring
funds from operations (FFO) of $1.62 per share. Recurring FFO for
the reported quarter marked a year-over-year increase of 13.3% and
beat the Zacks Consensus Estimate by $0.09.
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
Public Storage reported second quarter 2012 FFO of $1.38 per
share, compared with $1.39 in the year-earlier quarter. The
marginal decrease in reported FFO despite improved property
operations was primarily due to the adverse impact of foreign
During the reported quarter, Public Storage recorded a 5.4%
increase in total revenues to $457.7 million from $434.4 million in
the year-earlier quarter. Total revenues for the reported quarter
were well ahead of the Zacks Consensus Estimate of $430
(Read our full coverage in this earnings report:
Public Storage Recurring FFO Zooms
Earnings Estimate Revisions - Overview
Overall fiscal earnings estimates have moved in both directions
for Public Storage since the earnings release, meaning that
analysts are circumspect about the long-term performance of the
company. Let's dig into the earnings estimate details.
Agreement of Estimate Revisions
In the last 7 days, 2012 earnings estimates were raised by one
analyst out of 19 covering the stock, while four lowered theirs.
For 2013, five out of 19 analysts covering the stock revised their
estimates upward, while none had reduced it. This indicates no
distinctive directional movement for the fiscal year earnings.
Magnitude of Estimate Revisions
Earnings estimates for 2012 have decreased by 3 cents in the
last 7 days to $6.29. For 2013, earnings estimates have, however,
increased in the same time period by 5 cents to $6.90.
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 #3 Rank that translates in to a short-term
Hold rating. We also have a Neutral recommendation and a Zacks #2
Rank (short-term Buy rating) for
Sovran Self Storage Inc.
), one of the competitors of Public Storage.
Note: FFO, 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.
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 celebrated 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 (PSA): Free Stock Analysis
SOVRAN SLF STOR (SSS): Free Stock Analysis
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