Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Can Public Storage (PSA) Pull Off a Surprise in Q4 Earnings?

By Zacks Investment ResearchStock MarketsFeb 18, 2021 10:34PM ET
Can Public Storage (PSA) Pull Off a Surprise in Q4 Earnings?
By Zacks Investment Research   |  Feb 18, 2021 10:34PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Public Storage (NYSE:PSA) PSA is slated to release fourth-quarter and full-year 2020 results on Feb 24, after the bell. Both its quarterly revenues and funds from operations (FFO) per share are likely to display year-over-year increases.

In the last reported quarter, this self-storage real estate investment trust (REIT) reported a surprise of 1.15% in terms of FFO per share. Results reflected an increase in occupancy during the reported quarter. The company also benefited from its expansion efforts through acquisitions, development and extensions.

Over the trailing four quarters, the company beat estimates on one occasion, met in another and missed in the other two, the average negative surprise being 0.48%. This is depicted in the graph below:

Let’s see how things have shaped up prior to this announcement.

Key Factors

In the fourth quarter, Public Storage is likely to have benefited from its solid presence in key cities and high brand value. In addition, the company has been capitalizing on growth opportunities. Last December, management noted that since the start of 2019, it has expanded the portfolio by 13.9 million net rentable square feet on the back of buyouts, development and redevelopment worth $1.9 billion. This also included properties under contract and the acquisition of the Beyond Storage portfolio.

During the same period, Public Storage has delivered $471 million of properties through its development platform and has a current pipeline of $563 million activity planned. This is in addition to the $1.3 billion previously delivered in 2013-2018. Public Storage has also enhanced the scale of its third-party property management business by adding 113 properties. Such acquisition and expansion initiatives are also anticipated to have stoked growth during the period under consideration.

Moreover, the self-storage asset category is need-based and recession-resilient in nature. This asset class has low capital-expenditure requirements and generates high operating margins. Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and increase in the number of people renting homes have escalated the needs of consumers to rent spaces at storage facilities for parking their possessions. Further, demand for self-storage spaces has shot up amid the remote-working trend as well as improving housing market, while move-outs remain low amid the health crisis, resulting in improved year-over-year occupancy trends.

Additionally, Public Storage has one of the strongest balance sheets in the sector, with adequate liquidity to withstand these challenging times, and bank on expansion opportunities through acquisitions and developments. This is likely to have continued in the fourth quarter as well.

However, the company operates in a highly-fragmented market in the United States, with intense competition from numerous private, regional and local operators. Also, there is a development boom of self-storage units in several markets. This high supply is likely to have fueled competition, curbed its power to raise rents and turned on more discounting during the quarter under consideration. Furthermore, stress on customers’ financial capacity might have affected rent collections.

Amid these, the Zacks Consensus Estimate for fourth-quarter revenues from self-storage facilities is currently pinned at $681 million, suggesting a marginal increase from $677 million in the year-ago period. Quarterly revenues from ancillary operations are presently projected to be $42.93 million, indicating a rise from the $40.47 million registered in the comparable period prior year.

The Zacks Consensus Estimate for quarterly revenues is currently pinned at $732.1 million, calling for a 2% year-over-year increase.

Apart from this, Public Storage’s activities during the quarter under review were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the fourth-quarter FFO per share has been revised three cents upward to $2.85 in a month’s time. It also calls for 0.35% year-over-year growth.

For the full year, the Zacks Consensus Estimate for FFO per share has been revised 3 cents upward to $10.51 over the past month. The figure, however, suggests a 2.2% decrease year on year. Revenues are projected to be up 2.03% year over year to $2.9 billion.

Here is what our quantitative model predicts:

Our proven model predicts a positive 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 a FFO beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Public Storage carries a Zacks Rank #3 and has an Earnings ESP of +0.53%.

Other Stocks to Consider

Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:

American Tower (NYSE:AMT) Corporation AMT, set to report quarterly numbers on Feb 25, currently has an Earnings ESP of +7.49% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Life Storage (NYSE:LSI), Inc. LSI, slated to release earnings figures on Feb 22, has an Earnings ESP of +0.43% and holds a Zacks Rank of 3, currently.

National Storage Affiliates (NYSE:NSA) Trust NSA, scheduled to announce fourth-quarter results on Feb 22, has an Earnings ESP of +4.30% and carries a Zacks Rank of 2 at present.

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.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Tower Corporation (AMT): Free Stock Analysis Report

Life Storage, Inc. (LSI): Get Free Report

Public Storage (PSA): Get Free Report

National Storage Affiliates Trust (NSA): Get Free Report

To read this article on click here.

Zacks Investment Research
Can Public Storage (PSA) Pull Off a Surprise in Q4 Earnings?

Related Articles

Can Public Storage (PSA) Pull Off a Surprise in Q4 Earnings?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email