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What's in Store for Public Storage (PSA) in Q1 Earnings?

Public Storage PSA is slated to release first-quarter 2023 results on May 3 after market close. Both its quarterly revenues and core 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 4.26% in terms of core FFO per share. Results reflected better-than-anticipated top-line growth. 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 2.43%. 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

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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 first 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 fourth quarter, Public Storage acquired 30 self-storage facilities comprising 1.6 million net rentable square feet of area for $228.6 million.

Following Dec 31, 2022, the company acquired or was under contract to buy eight self-storage facilities spanning 0.5 million net rentable square feet of space for $70.5 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. 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 first quarter as well.

The Zacks Consensus Estimate for quarterly revenues stands at $1.09 billion. This calls for a 12.08% year-over-year increase.

The Zacks Consensus Estimate for first-quarter revenues from self-storage facilities stands at $1.02 billion. This suggests an increase from the $ 917.02 million witnessed in the year-ago period. Quarterly revenues from ancillary operations are presently projected at $60.60 million, ahead of the $56.43 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 first-quarter core FFO per share has been revised 1.5% upward to $4.07 in the past two months. It also calls for 11.5% 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. Rising interest rates add to its woes.

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 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks from the REIT sector — Americold Realty Trust, Inc. COLD and Agree Realty Corporation ADC — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

Americold Realty Trust, scheduled to report quarterly numbers on May 4, has an Earnings ESP of +17.72% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agree Realty Corporation, scheduled to report quarterly numbers on May 4, has an Earnings ESP of +0.59% 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

Agree Realty Corporation (ADC) : Free Stock Analysis Report

Americold Realty Trust Inc. (COLD) : Free Stock Analysis Report

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