) is anticipated to beat expectations while reporting its
fourth-quarter 2012 results on Thursday, Feb 21 with an earnings
call scheduled the next day.
Why a Likely Positive Surprise?
Our proven model shows that Public Storage is likely to beat
earnings since it has an appropriate combination of the following
2 key ingredients:
Positive Zacks ESP:
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, is +0.57%. This
indicates a likely positive earnings surprise.
Zacks Rank #3 (Hold):
This increases the predictive power of its ESP. The combination
of its Zacks Rank and Earnings ESP assures us of a positive
earnings surprise in the to-be-reported quarter.
Stocks with Zacks Ranks of #1, #2 and #3 have significantly
higher chances of beating the earnings estimates. The Sell-rated
stocks (#4 and #5) should never be considered going into an
Public Storage is well poised to maintain its growth curve backed
by its robust presence in all the major markets in the U.S. It is
the leading owner and operator of storage facilities in the U.S.
and has significantly increased the scale and scope of its
operations through the acquisition of Shurgard Storage Centers
that has a considerable presence in the European markets.
It also owns a 41% common equity interest in
PS Business Parks Inc.
), which owns and operates commercial space, primarily flex,
multi-tenant office and industrial space. In addition, the
storage facilities of the company have a high visibility and are
usually located in heavily populated areas that enhance the local
awareness of the brand.
This provides a significant upside potential for the company and
we expect the size and scope of its operations to enable it to
achieve economies of scale, thereby generating high operating
margins in the fourth quarter.
Moreover, Public Storage has one of the strongest balance sheets
in the sector and has been making concerted efforts towards
increasing shareholders wealth. Accordingly, it hiked its
dividend by nearly 16% in the first half of 2012. The current
dividend rate affirms an annual yield of 2.91%.
We further expect a dividend hike in the first half of 2013 as we
anticipate a better-than-expected performance at this REIT.
Notably, a number of other REITs including
AvalonBay Communities Inc.
) have increased their dividend recently.
Other Stock to Consider
Here is another REIT that you may want to consider, as our model
shows it has the right combination of elements to post an
earnings beat this season:
Host Hotels & Resorts Inc.
) has an Earnings ESP of +5.41% and carries a Zacks Rank #3. The
company is scheduled to report its fourth-quarter 2012 earnings
on Feb 21, before the opening bell.
AVALONBAY CMMTY (AVB): Free Stock Analysis
HOST HOTEL&RSRT (HST): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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