It has been about a month since the last earnings report for Equinix (EQIX). Shares have added about 4.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equinix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Equinix Q1 FFO & Revenues Surpass Estimates, View Up
Equinix posted better-than-expected results for first-quarter 2019, wherein the bottom line and revenues surpassed the Zacks Consensus Estimate. Both adjusted funds from operations (AFFO) and revenues improved year over year.
The company’s AFFO per share came in at $5.95, beating the Zacks Consensus Estimate of $5.60. The figure also improved from the year-ago quarter’s reported tally of $5.21.
This upside primarily stemmed from robust top-line growth and solid operating performance, partially offset by an elevated cost of revenues.
Quarter in Detail
Total revenues came in at $1.36 billion, outpacing the Zacks Consensus Estimate of $1.35 billion, and up 12% year over year. Encouragingly, this also marks the 65th quarter of consecutive revenue growth for the company.
Recurring revenues came in at around $1.27 billion, up approximately 3.3% from the year-ago tally. Non-recurring revenues climbed 10.8% to nearly $88.4 million.
Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 7%, 14.5% and 21.6% to $644.4 million, $434.7 million and $284.2 million, respectively.
However, total operating expenses flared up around 9% to $401.7 million year over year. Cash gross margin was 67%, flat year over year.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $660.2 million, up 14% year over year. Adjusted EBITDA margins came in at 48%, flat year over year. AFFO appreciated 17.7% sequentially to $488.1 million during the Mar-end quarter.
Equinix exited the first quarter with cash and cash equivalents of nearly $1.6 billion. The company’s total debt principal outstanding was $11 billion as of Mar 31, 2019.
Equinix has updated its outlook for the second quarter and full-year 2019.
For 2019, the company estimates generating revenues of $5.54-$5.59 billion. The company predicts adjusted EBITDA of $2.64-$2.68 billion. Equinix anticipates full-year 2019 AFFO in the $1.88-$1.91 billion range, up from the earlier estimate of $1.82-$1.87 billion.
Coming to the second-quarter, Equinix projects revenues of $1.38-$1.39 billion. Adjusted EBITDA is likely to lie between $649 million and $659 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Equinix has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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