Extra Space Storage to Post Q3 Earnings: What's in the Cards?

Extra Space Storage EXR, a leading self-storage real estate investment trust (REIT) in the United States, is set to release its third-quarter 2024 results on Oct. 29 after market close. The company has been steadily expanding its footprint and diversifying its operations. As the market anticipates the earnings announcement, this article provides an in-depth preview of EXR’s expected performance in the third quarter, considering overall industry trends, the company’s growth strategy and acquisitions.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the last reported quarter, this Salt Lake City, UT-based REIT delivered a surprise of 3.00% in terms of core FFO per share. Results reflected a rise in occupancy and better-than-anticipated revenues.Over the trailing four quarters, the company beat the Zacks Consensus Estimate on two occasions and missed in the two other periods, the average surprise being 0.63%. The graph below depicts this surprise history:Extra Space Storage Inc Price and EPS Surprise Extra Space Storage Inc price-eps-surprise | Extra Space Storage Inc QuoteFactors to Consider Ahead of EXR’s Q3 ResultsExtra Space Storage employs a diverse growth strategy, incorporating strategic acquisitions, third-party management and joint ventures. In recent years, the company has expanded its portfolio and strengthened its market presence through successful acquisitions, creating added value for its investors.In the third quarter, Extra Space Storage is likely to have continued benefiting from its strong presence in key cities and efforts to expand through accretive acquisitions and third-party management. In July 2023, EXR completed the all-stock acquisition of Life Storage, Inc., becoming the largest self-storage operator in the United States, solidifying its market leadership and geographical footprint.EXR's continued emphasis on enhancing the customer experience through technology integration and operational improvements is likely to have bolstered its competitive edge. Its strong brand reputation and technological advancements are expected to have supported performance during the quarter. This REIT is likely to have sustained a healthy balance sheet throughout the period.However, the company continues to see new customer price sensitivity and is likely to face headwinds from lower new customer rates in the near term. As such, the reacceleration in revenue growth is expected to be challenging until the company regains pricing power with new customers.Also, high interest rates have added to its concerns. We estimate an 11.5% year-over-year increase in interest expenses in the third quarter.Projections for EXRThe Zacks Consensus Estimate of $707.21 million for quarterly property rental revenues suggests an increase from the prior quarter’s $697.10 million and up from the year-ago period’s $650.89 million. The consensus estimate for revenues from tenant insurance of $83.22 million implies a decrease from $83.71 million in the prior quarter and an increase from $69.13 million in the year-ago period.Management and franchise fees for the quarter are projected at $29.82 million, similar to the prior quarter’s number of $29.86 and up from $28.02 in the year-ago period. The Zacks Consensus Estimate of $821.37 million for quarterly revenues suggests a 9.8% increase year over year.Extra Space Storage’s activities during the quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has remained unrevised over the past month at $2.03. However, it calls for a 0.50% year-over-year increase.Here is What Our Quantitative Model Predicts for EXR:Our proven model predicts a surprise in terms of FFO per share for Extra Space 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.Extra Space Storage currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Other Stocks That Warrant a LookHere are two other stocks from the broader REIT sector — Digital Realty Trust, Inc. DLR and Ventas, Inc. VTR — 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.Digital Realty Trust, scheduled to report quarterly numbers on Oct. 24, has an Earnings ESP of +1.36% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Ventas, scheduled to report quarterly numbers on Oct. 30, has an Earnings ESP of +0.97% and carries a Zacks Rank of 2. 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.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Ventas, Inc. (VTR): Free Stock Analysis Report Digital Realty Trust, Inc. (DLR): Free Stock Analysis Report Extra Space Storage Inc (EXR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks