Equinix (EQIX) Gears Up for Q4 Earnings: What's in the Cards?
Equinix, Inc. EQIX is likely to report fourth-quarter and full-year 2019 results on Feb 12, after market close. The company’s quarterly results will likely reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this global connectivity leader delivered a positive surprise of 1.3% in terms of adjusted FFO per share. This upside primarily stemmed from robust top-line growth, marking the 67th quarter of consecutive revenue growth.
The company has a remarkable streak of beating earnings estimates over the last four quarters. Equinix beat the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.3%.
Equinix, Inc. Price and EPS Surprise
Equinix, Inc. price-eps-surprise | Equinix, Inc. Quote
Let’s see how things have shaped up prior to this announcement.
Factors at Play
Amid higher demand from cloud users, Equinix has been expanding its International Business Exchange (IBX) platform. The company is making efforts to strengthen its data-center footprint on the back of acquisitions. Through these expansion efforts, the company targeted achieving ending cabinet equivalent capacity of around 300,000 in 2019.
In November, the company announced that it will invest $34 million to develop a facility in Warsaw. Known as WA3, this facility is its third data center in Warsaw.
In the same month, the company announced that Zoom Video Communications, Inc., a provider of video-first unified communications, will use Platform Equinix in a bid to broaden its global distributed footprint. This is anticipated to have aided fourth-quarter revenues from managed infrastructure segment for the company. The Zacks Consensus Estimate for the same is pegged at $75 million, suggesting 5.6% year-over-year growth.
Further, Equinix’s large-scale operations in Europe are well positioned to cater specific workload deployment needs of targeted group of hyperscale companies, including preeminent cloud service providers in the region, thereby providing it higher pricing power. The company is likely to have witnessed 4.6% year-over-year increase in weighted average price (MRR) per cabinet in Europe to $1,415.
Moreover, Equinix’s quarterly recurring revenues from its inter-connection business are likely to have increased 10.6% year over year to $229 million. Further, the Zacks Consensus Estimate for fourth-quarter recurring revenues from colocation business is pinned at $1,031 million, suggesting 9.1% growth from the prior-year quarter.
These are expected to have contributed to top-line growth during fourth-quarter 2019. In fact, the Zacks Consensus Estimate for fourth-quarter 2019 revenues is pegged at $1.42 billion, suggesting 8.1% improvement year over year. Management projects December-end revenues at $1.409-$1.419 billion.
Lastly, prior to the fourth-quarter earnings release, the company has been witnessing upward estimate revisions. As such, the Zacks Consensus Estimate of FFO per share for the quarter has been revised marginally upward to $5.36 over the past month, reflecting analysts’ bullish sentiments. Also, it represents year-over-year growth of 4.5%.
Earnings Whispers
Our proven model predicts a positive surprise in terms of FFO per share for Equinix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Equinix has an Earnings ESP of +0.53%
Zacks Rank: Equinix carries a Zacks Rank of 3, currently.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Healthpeak Properties, Inc. PEAK, slated to release fourth-quarter earnings on Feb 11, has an Earnings ESP of +1.15% and carries a Zacks Rank of 3, at present.
Ventas, Inc. VTR, slated to release quarterly numbers on Feb 20, has an Earnings ESP of +0.81% and carries a Zacks Rank of 3, at present.
Host Hotels & Resorts, Inc. HST, scheduled to release October-December results on Feb 19, has an Earnings ESP of +1.52% and currently holds a Zacks Rank #3.
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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