Equinix, Inc. EQIX is scheduled to report second-quarter 2024 results on Aug 7, after market close. The company’s quarterly results are likely to reflect year-over-year growth in revenues and adjusted funds from operations (FFO) per share.
In the previous quarter, this Redwood City, CA-based data center real estate investment trust (REIT) reported a surprise of 3.26% in terms of AFFO per share. Its quarterly results reflected steady growth in colocation and inter-connection revenues due to the strong demand for digital infrastructure.
Over the preceding four quarters, EQIX’s AFFO per share surpassed the consensus estimate on all occasions, the average beat being 4.04%. This is depicted in the graph below:
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Factors at Play
Equinix’s geographically diverse portfolio of International Business Exchanges data centers is expected to have benefited from enterprises’ growing reliance on technology and acceleration in digital transformation strategies.
Data center infrastructure demand has remained robust amid growth in cloud computing, the Internet of Things and Big Data and elevated demand for third-party IT infrastructure. Moreover, the growth in artificial intelligence, autonomous vehicles and virtual/augmented reality markets has created solid demand for data centers.
The company’s recurring revenue model, which comprises colocation, related interconnection and managed IT infrastructure services, is expected to have supported stable cash flows in the to-be-reported quarter, boosting the data center REIT’s top line. Also, solid demand for Equinix’s interconnected ecosystem in the to-be-reported quarter is likely to have given it an edge.
The Zacks Consensus Estimate for colocation revenues is pegged at $1.55 billion, suggesting growth from $1.42 billion in the prior-year period. The consensus mark for interconnection revenues is pegged at $384.2 million, indicating growth from $347 million in the prior-year period.
For the second quarter of 2024, Equinix projected revenues between $2.148 billion and $2.168 billion, implying a 1-2% increase over the prior quarter. The Zacks Consensus Estimate stands at $2.16 billion, calling for a rise of 6.9% from the year-ago period’s reported figure.
EQIX estimated adjusted EBITDA in the range of $1.019-$1.039 billion for the second quarter. Our estimate is pegged at $1.02 billion, implying a year-over-year increase of 13.5%.
Equinix is expected to have continued with its asset-based expansion during the quarter through acquisitions and development activities. Its robust balance sheet position is likely to have enabled it to capitalize on long-term growth opportunities.
However, high interest rates might have partly impeded the company’s quarterly performance. For the second quarter of 2024, our estimate for the interest expenses implies a year-over-year increase of 2.5%.
EQIX’s activities during the to-be-reported were not adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has remained unchanged at $8.82 over the past month. However, it suggests an 8.7% increase from the prior-year quarter’s reported figure.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of FFO per share for Equinix this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Equinix currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Apple Hospitality REIT APLE and Hudson Pacific Properties HPP — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Apple Hospitality, scheduled to report quarterly numbers on Aug 5, has an Earnings ESP of +12.21% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hudson Pacific, slated to release quarterly numbers on Aug 7, has an Earnings ESP of +4.35% and carries a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents 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.
