$Public Storage(PSA-N)$ PSA is slated to release fourth-quarter and full-year 2024 results on Feb. 24, after market close. Its quarterly core funds from operations (FFO) per share and revenues are expected to witness a year-over-year increase.

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In the last reported quarter, this self-storage real estate investment trust (REIT) delivered a miss of 1.18% in terms of core FFO per share. However, the figure declined 3.3% year over year. Quarterly revenues of $1.19 billion increased 3.8% year over year.

Over the last four quarters, Public Storage surpassed the Zacks Consensus Estimate on two occasions and missed in the remaining periods, the average miss being 0.06%. The graph below depicts the surprise history of the company:

Public Storage Price and EPS Surprise

Public Storage price-eps-surprise | Public Storage Quote

Factors to Note Ahead of PSA's Upcoming Results

Public Storage is likely to have continued to benefit from its strong presence in major metropolitan markets, well-established brand and technological edge during the fourth quarter.

The company is likely to have maintained its solid financial position, backed by one of the strongest balance sheets in the industry. With sufficient liquidity, it remained well-positioned to capitalize on expansion opportunities through acquisitions and development, a trend that is likely to have persisted in the December-end quarter.

However, the self-storage industry is continuing to experience a softening in demand and operating trends through 2023 and the first nine months of 2024, and this trend is expected to have continued in the fourth quarter as well.

High interest expenses are expected to have been a spoilsport during the to-be-reported quarter.

PSA’s Q4 Projections

The Zacks Consensus Estimate for fourth-quarter revenues from self-storage facilities stands at $1.10 billion. This suggests an increase from the $1.09 billion witnessed in the year-ago period.

The consensus mark for quarterly revenues from ancillary operations is presently projected at $74.6 million, up from the $67.3 million registered in the comparable period last year.

The Zacks Consensus Estimate for quarterly revenues stands at $1.18 billion. This indicates a 1.5% year-over-year increase.

However, we project the fourth-quarter 2024 weighted average square foot occupancy to be 92.2%, down from 92.7% recorded in the prior quarter.

Further, we estimate an 8.1% year-over-year increase in interest expenses in the fourth quarter.

PSA’s activities during the quarter under review were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the fourth-quarter core FFO per share has remained unchanged at $4.23 in the past month. However, it calls for a 0.7% increase year-over-year.

2024 Projections

For the full year, Public Storage projected core FFO per share in the range of $16.50-$16.85. This is based on the company’s expectations for a same-store revenue decline of 1.3-0.5% and a same-store expense increase of 2-3.5%. Consequently, same-store NOI is expected to decrease by 2.7-1.3%.

For the full year, the Zacks Consensus Estimate for core FFO per share is pegged at $4.70, indicating a 1.1% decline from the year-ago reported figure. The Zacks Consensus Estimate for 2024 revenues is pegged at $4.70 billion, calling for an increase of 4.1% from the year-ago reported number.

What Our Quantitative Model Predicts for PSA

Our proven model does not conclusively predict a likely surprise in terms of core 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.

Public Storage currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 3. 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 two stocks from the broader REIT sector — Gaming and Leisure Properties GLPI and Ryman Hospitality Properties RHP — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Gaming and Leisure Properties, scheduled to report quarterly numbers on Feb. 20, has an Earnings ESP of +0.83% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ryman Hospitality Properties, scheduled to report quarterly numbers on Feb. 20, has an Earnings ESP of +4.91% and carries a Zacks Rank of 3.

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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