How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Equinix (EQIX) ten years ago? It may not have been easy to hold on to EQIX for all that time, but if you did, how much would your investment be worth today?
Equinix's Business In-Depth
With that in mind, let's take a look at Equinix's main business drivers.
Incorporated on Jun 22, 1998, Equinix, Inc. is a global digital infrastructure company. Its U.S. headquarters is in Redwood City, CA. The company has two more regional headquarters in Amsterdam and Hong Kong. It became a real estate investment trust (REIT) in taxable year 2015. In June, Equinix was included in the Fortune 500 list of the largest companies in the U.S.
Platform Equinix combines a global footprint of International Business Exchange or IBX data centers, interconnection solutions and edge services for deploying network. It also includes unique business, digital ecosystems and expert consulting and support.
Equinix operates in three reportable segments comprising the Americas (44.2% of total revenues in the nine months ended Sep 30, 2023), Middle East and Africa [EMEA] (34.3%) and Asia-Pacific geographic regions (21.5%).
Through its 251 IBX data centers, which include 12 xScale data centers and the MC1 data center that are held in unconsolidated joint ventures in 70 metros across 32 countries, customers can directly interconnect critical traffic exchange requirements. These customers rely on Equinix's IBX centers for their critical interconnection relationships.
Equinix’s business is based on a recurring revenue model (94.9% of total revenues in the nine months ended Sep 30, 2023) comprising colocation, related interconnection and managed IT infrastructure services. These services are considered to be recurring, as customers are billed at fixed rates on a recurring basis through the life of the respective contracts, which generally run for one to three years.
Non-recurring revenues (5.1%) comprise installation services related to initial deployment and professional services. Also, revenues from customer settlements [fees paid for terminating contracts before expiry] are treated as contract modifications. These services are typically billed only upon the completion of the installation or performance of services.
Note: All EPS numbers presented in this report represents funds from operations (FFO) per share. 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.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Equinix a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in November 2013 would be worth $4,958.41, or a gain of 395.84%, as of November 28, 2023, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 151.79% and the price of gold increased 55.05% over the same time frame in comparison.
Analysts are forecasting more upside for EQIX too.
Equinix’s global data center portfolio is well-poised to benefit from the high demand for inter-connected data center space as enterprises and service providers continue to integrate artificial intelligence (AI) into their strategies and offerings, and advance their digital transformation agendas with infrastructure that is more distributed, cloud-connected and ecosystem enabled. The company’s recurring revenue model assures stable revenues. Strategic expansions to capitalize on the expected exponential rise in data traffic, backed by a healthy balance sheet, augur well for long-term growth. Further, with a lower-than-industry dividend payout and robust operating platform, we expect the latest dividend hike to be sustainable over the long run. For 2023, we estimate year-over-year growth of 10.8% in adjusted funds from operations (AFFO).The stock is up 11.34% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 6 higher, for fiscal 2023. The consensus estimate has moved up as well.
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