Public StoragePSA is slated to release quarterly numbers on Apr 25, after the market closes . Its funds from operations (FFO) per share as well as revenues are anticipated to be up year over year in the quarter.
Last quarter, this self-storage real estate investment trust (REIT) delivered better-than-expected performance, witnessing a positive surprise of 1.1%. Results highlight an improvement in net operating income (NOI) from both same-store and non-same store facilities.
The company has a mixed surprise history. In fact, it exceeded estimates in two occasions and missed in the other two, over the trailing four quarters, resulting in an average negative surprise of 3.00%. This is depicted in the graph below:
Public Storage Price and EPS Surprise
Let's see how things are shaping up for this announcement.
Factors to Consider
Public Storage is one of the largest owners and operators of storage facilities in the United States. The 'Public Storage' brand is the most recognized and established name in the self-storage industry, with presence in all major metropolitan markets of the nation. Further, the company has managed to create significant presence in the European markets as well, with the Shurgard Storage Centers' acquisition.
Moreover, the self-storage industry is anticipated to experience solid demand backed by favorable demographic changes, improving job market and rising incomes, as well as events like marriages, shifting, death, and even divorce. Also, due to shorter leasing periods, this REIT has the power to adjust its rents quickly to any rate hike. In fact, the company is likely to be able to achieve reasonable rate hike for its existing customers. Further, acquisition and expansion initiatives are likely to stoke growth.
Amid these, the company remains well poised to experience growth in revenues. The Zacks Consensus Estimate for revenues is pegged at $668.9 million, depicting projected growth of 3.6%.
Furthermore, the company's activities during the quarter gained analysts' confidence. Consequently, the Zacks Consensus Estimate, which witnessed a marginal increase over the last 30 days, is currently pegged at $2.46. The figure also indicates a 5.1% rise year over year.
Nevertheless, supply has been rising in a number of markets and this adversely affects the company's pricing power. In fact, the company operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. This limits its power to raise rents and turn on more discounting.
Our proven model does not conclusively show that Public Storage will likely beat estimates this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: The Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank: Public Storage's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident about an earnings surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT space that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this time around:
PS Business Parks, Inc.PSB , slated to release first-quarter results on Apr 24, has an Earnings ESP of +0.67% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .
Taubman Centers, Inc.TCO , scheduled to release earnings on Apr 26, has an Earnings ESP of +0.47% and a Zacks Rank of 3.
Simon Property Group, Inc.SPG , slated to release quarterly numbers on Apr 27, has an Earnings ESP of +0.32% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) - a widely used metric to gauge the performance of REITs.
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