What's in Store for Public Storage (PSA) in Q2 Earnings?
Public Storage PSA is slated to release second-quarter 2023 results on Aug 2 after market close. Both its quarterly revenues and core funds from operations (FFO) per share are likely to have witnessed year-over-year increases.
In the last reported quarter, this self-storage real estate investment trust (REIT) delivered a surprise of 0.25% in terms of core FFO per share. Results reflected a better-than-anticipated top line. The company also benefited from its expansion efforts through acquisitions, developments and extensions.
Over the last four quarters, Public Storage surpassed the Zacks Consensus Estimate on all occasions, the average beat being 2.07%. The graph below depicts the surprise history of the company:
Public Storage Price and EPS Surprise
Public Storage price-eps-surprise | Public Storage Quote
Let’s see how things have shaped up before this announcement.
Key Factors
Public Storage is likely to have gained from its solid presence in key cities and high brand value in the second quarter. PSA is also likely to have benefited from its technological advantage amid favorable market fundamentals and maintained a healthy balance sheet position.
The company has been capitalizing on growth opportunities. From the beginning of 2021 through Mar 31, 2023, Public Storage acquired 311 facilities, with 27 million net rentable square feet, for $5.9 billion. Such acquisition and expansion initiatives are anticipated to have stoked the company’s growth during the period under consideration. Moreover, following Mar 31, 2023, PSA acquired or was under contract to buy 12 self-storage facilities spanning 0.9 million net rentable square feet of space across three states for $139 million.
Amid these, Public Storage is likely to have seen growth in revenues in the quarter to be reported. Also, PSA has one of the strongest balance sheets in the sector with adequate liquidity to bank on expansion opportunities through acquisitions and developments. This is likely to have continued in the second quarter as well.
However, with tenants reverting to more normal move-out behavior as the pandemic’s impact abates, there is upward pressure on vacate trends. Furthermore, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition. We estimate weighted average square foot occupancy to decline to 93.1% from 93.2% reported in the prior quarter.
Also, rising interest rates add to its woes. We estimate a 34.5% year-over-year increase in interest expenses.
The Zacks Consensus Estimate for quarterly revenues stands at $1.12 billion. This calls for an 8.33% year-over-year increase.
The Zacks Consensus Estimate for second-quarter revenues from self-storage facilities stands at $1.05 billion. This suggests an increase from the $973.29 million witnessed in the year-ago period. Quarterly revenues from ancillary operations are presently projected at $62.57 million, ahead of the $58.76 million registered in the comparable period last year.
PSA’s activities during the quarter under review were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the second-quarter core FFO per share has been unrevised at $4.20 in the past two months. However, it calls for 5.26% year-over-year growth.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Public Storage this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
PSA currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.07%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Our model shows that Ventas VTR and Americold Realty Trust COLD have the right combination of elements to report a surprise this quarter.
Ventas is slated to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and carries a Zacks Rank of 2 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Americold Realty Trust, scheduled to report quarterly numbers on Aug 3, has an Earnings ESP of +1.96% and carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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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Public Storage (PSA) : Free Stock Analysis Report
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