) - the self-storage real estate investment trust (REIT) - is
slated to report its first-quarter 2014 results on May 1, after
the market close. Last quarter, it posted a 5.45% positive
The company has posted an average positive earnings surprise of
2.75% over the past four quarters, beating the Estimate in 3 of
the last 4 quarters. Let's see how things are shaping up for this
Why a Likely Positive Surprise?
Our proven model reveals that Public Storage is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP:
The company's Earnings ESP, which represents the difference
between the Most Accurate estimate ($1.87) and the Zacks
Consensus Estimate ($1.86), stands at +0.54%. This is meaningful
and a leading indicator of a likely positive earnings surprise
Public Storage carries a Zacks Rank #3 (Hold). Note that stocks
with Zacks Ranks #1, 2 or 3 have a significantly higher chance of
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
What is Driving the Better-Than-Expected
An improving economy has resulted in higher product usage and
modest pricing power. However, a lack of new supply has
essentially helped the company to lower its marketing expenses,
promotional discounts and raise the prices to new customers.
Hence, this increased demand and modest new supply offers Public
Storage ample scope to augment its bottom line.
In addition, the company has been capitalizing on growth
opportunities in upscale U.S. markets and in 2013, the company
acquired 121 self-storage properties for around $1.2 billion,
marking the company's largest expansion since the 2006 Shurgard
merger. The properties, positioned in the major markets are
expected to augment its presence and market share.
As of Dec 31, 2013, Public Storage had interests in 2,200
self-storage facilities (spanning around 141 million net rentable
square feet) in the U.S. and 188 storage facilities in Europe
(approximately ten million net rentable square feet) operated
under the "Shurgard" brand. Public Storage also owns 42% common
equity interest in
PS Business Parks Inc.
), which owns and operates commercial space, primarily flex,
multi-tenant office and industrial space.
Other Stocks to Consider
Public Storage is not the only firm looking up this earnings
season. Other stocks in the REIT sector that have both a positive
Earnings ESP and a favorable Zacks Rank are:
Host Hotels & Resorts, Inc.
), with an Earnings ESP of +3.33% and a Zacks Rank #3 (Hold). The
company will report its first-quarter 2014 results before the
market opens on May 1.
Kimco Realty Corp.
), with an Earnings ESP of +2.94% and a Zacks Rank #3 (Hold). The
company will report its first-quarter 2014 results on May 7,
after the closing bell.
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.
HOST HOTEL&RSRT (HST): Free Stock Analysis
KIMCO REALTY CO (KIM): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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