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What's in Store for Public Storage (PSA) in Q3 Earnings?

Public Storage PSA is slated to release third-quarter 2022 results on Nov 1 after market close. Both its quarterly revenues and funds from operations (FFO) per share are likely to have seen year-over-year increases.

In the last reported quarter, this self-storage real estate investment trust (REIT) delivered a surprise of 1.79% in terms of FFO per share. Results reflected an improvement in the realized annual rent per available square foot in the reported quarter. The company 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 3.06%. The graph below depicts the surprise history of the company:

Public Storage Price and EPS Surprise

Public Storage Price and EPS Surprise
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 third quarter. PSA is also likely to have benefited from its technological advantage amid favorable market fundamentals and maintained a healthy balance sheet position.

In addition, the company has been capitalizing on growth opportunities. In the June-end quarter, Public Storage acquired 10 self-storage facilities comprising 0.7 million net rentable square feet of area for $123.6 million.

Following Jun 30, 2022, the company acquired or was under contract to acquire 24 self-storage facilities spanning 1.7 million net rentable square feet of space across 10 states for $257.4 million. Such acquisition and expansion initiatives are anticipated to have stoked the company’s growth during the period under consideration.

Amid these, Public Storage is likely to have seen growth in revenues in the quarter to be reported with healthy rental rates. 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 third quarter as well.

The Zacks Consensus Estimate for quarterly revenues stands at $1.07 billion, calling for a 19.3% year-over-year increase.

The Zacks Consensus Estimate for third-quarter revenues from self-storage facilities stands at $989.7 million. This suggests an increase from the $973.3 million witnessed in the prior quarter and $840.5 million in the year-ago period.

Quarterly revenues from ancillary operations are presently projected at $56.9 million, slightly down from the prior-quarter figure of $58.8 million but ahead of the $54.4 million registered in the comparable period last year.

PSA’s activities during the quarter under review were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the third-quarter FFO per share has been revised a cent upward to $4.05 in the past month. It also calls for 18.4% year-over-year growth.

However, with the impact of the pandemic abating, vacancy is likely to increase. Furthermore, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition.

Here Is What Our Quantitative Model Predicts:

Our proven model predicts 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 the case here.

PSA currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.34 %. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are some other stocks from the REIT sector — Extra Space Storage Inc. EXR and SBA Communications Corporation SBAC — that you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.

Extra Space Storage, scheduled to report third-quarter earnings on Nov 1, currently has an Earnings ESP of +1.31% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

SBA Communications Corporation, slated to report quarterly numbers on Oct 31, currently has an Earnings ESP of +0.44% 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 represent 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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