A month has gone by since the last earnings report for Extra Space Storage (EXR). Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Extra Space 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 the most recent earnings report in order to get a better handle on the important drivers.
Extra Space Storage Q3 FFO & Revenues Beat Estimates
Extra Space Storage’s third-quarter 2018 core FFO per share of $1.20 outpaced the Zacks Consensus Estimate of $1.19. The figure also came in 6.2% higher than the prior-year quarter. Results reflect growth in same-store revenues and NOI. Further, higher rental rates supported growth, while increased discounts partly muted the benefit.
Quarterly revenues of $307 million climbed 8% year over year. Also, the revenue figure surpassed the Zacks Consensus Estimate of $302.4 million.
Behind the Headlines
Same-store rental revenues increased 3.2% year over year to $244.0 million during the third quarter, while same-store NOI was up 3.3% to $178.3 million. The upswing in same-store revenues stemmed from higher rental rates for new and existing customers, but was partly muted by increased discounts. Same-store square foot occupancy was 93.9% as of Sep 30, 2018, up 20 basis points from 93.7% as of Sep 30, 2017. Notably, during the reported quarter, Atlanta, Hawaii, Indianapolis, Las Vegas and Los Angeles were the major markets, which recorded revenue growth above the company's portfolio average. However, markets, which performed below the company's portfolio average, included Charleston, Dallas, Norfolk/Virginia Beach, Washington D.C. and West Palm Beach/Boca Raton.
Extra Space Storage acquired five operating stores, and one store at completion of construction for an aggregate investment of around $74.3 million in the Jul-Sep period. Also, in combination with the JV partners, the company acquired eight operating stores, three Certificate of Occupancy stores, as well as accomplished one development for a total cost of about $127.1 million. Of this, the company invested $34.6 million. On the other hand, it disposed a store in Menlo Park, CA, for $40.7 million, realizing a gain of $30.7 million. The asset sale came as part of the reverse 1031 exchange for stores earlier purchased by the company.
As of Sep 30, 2018, the company managed 507 stores for third-party owners. Moreover, with additional 227 stores owned and operated in joint ventures, the company’s total stores under management reached 734.
Extra Space Storage exited the Sep-end quarter with roughly $45.4 million of cash and cash equivalents, down from $55.7 million at the end of 2017. As of Sep 30, 2018, the company's percentage of fixed-rate debt to total debt was 74.4%.
In addition, during the quarter, 343,251 shares of common stock were sold by the company using its ATM equity program, at an average sales price of $99.75 per share. This resulted in net proceeds of $33.8 million after deduction of offering costs. Finally, as of Sep 30, 2018, Extra Space Storage had $315.1 million available for issuance under its ATM equity program.
Extra Space Storage revised its outlook for 2018. The company now anticipates core FFO per share of $4.62-$4.66. The company projects same-store revenue growth of 3.75- 4.25% and same-store property NOI growth of around 3.5-4.25% for the current year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Extra Space Storage has a subpar Growth Score of D, however its Momentum Score is doing a lot 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.
Extra Space 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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