Shareholders might have noticed that Public Storage (NYSE:PSA) filed its first-quarter result this time last week. The early response was not positive, with shares down 4.5% to US$184 in the past week. The result was positive overall – although revenues of US$716m were in line with what the analysts predicted, Public Storage surprised by delivering a statutory profit of US$1.79 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Public Storage
After the latest results, the consensus from Public Storage’s eight analysts is for revenues of US$2.83b in 2020, which would reflect a noticeable 4.0% decline in sales compared to the last year of performance. Statutory per-share earnings are expected to be US$7.38, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$2.87b and earnings per share (EPS) of US$7.35 in 2020. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$204. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. Currently, the most bullish analyst values Public Storage at US$266 per share, while the most bearish prices it at US$159. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Public Storage’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 4.0% revenue decline a notable change from historical growth of 4.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.5% annually for the foreseeable future. It’s pretty clear that Public Storage’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Public Storage’s revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$204, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Public Storage. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Public Storage analysts – going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Public Storage that you need to take into consideration.
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