A month has gone by since the last earnings report for Public Storage (PSA). Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Public Storage 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.
Public Storage Q2 FFO Beats on Solid NOI, Revenues Up
Public Storage’s second-quarter 2018 FFO per share of $2.65 improved 14.7% from the prior-year quarter figure of $2.31. The figure also surpassed the Zacks Consensus Estimate of $2.61.
Results highlight improvement in NOI from same-store and non-same store facilities. Higher realized annual rent per occupied square foot supported the company’s same-store performance. Additionally, Public Storage benefited from its expansion efforts.
Quarterly revenues of $685.5 million also climbed 3.2% from the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $689.0 million.
Behind the Headlines
Same-store revenues advanced 1.5% year over year to $558.7 million during the second quarter, while the company’s NOI inched up 1.2% to $407.8 million. The increase in same-store revenues was primarily driven by a 2.4% rise in realized annual rent per occupied square foot to $17.35. Nonetheless, the weighted-average square foot occupancy of 94.0% contracted 60 basis points year over year.
In addition, the company’s NOI from non-same store facilities grew on the back of the 137 self-storage facilities acquired and developed since January 2016.
In the June-end quarter, Public Storage bought three self-storage facilities, comprising 0.2 million net rentable square feet of area, for $16 million. Following Jun 30, 2018, the company acquired or was under contract to acquire 14 self-storage facilities, spanning 0.8 million net rentable square feet of space, for $95.2 million.
Finally, as of Jun 30, 2018, the company had several facilities in development (2.2 million net rentable square feet), with an estimated cost of $315 million, as well as expansion projects (3.9 million net rentable square feet) worth roughly $364 million. Public Storage estimates to incur the remaining $445 million of development costs related to these projects mainly over the next 18 months.
Public Storage exited second-quarter 2018 with around $338.4 million of cash and cash equivalents, down from $433.4 million recorded at the end of the previous year.
Shurgard Europe Update
Shurgard Europe is considering an initial public offering and in July, Public Storage received a cash distribution of $145.4 million from the former. This denotes the company’s 49% share of an aggregate dividend of $296.8 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
Currently, Public Storage has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Public Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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