What Do Analysts Think About Extra Space Storage Inc.’s (NYSE:EXR) Earnings Trajectory?

Extra Space Storage Inc.’s (NYSE:EXR) released its most recent earnings update in December 2018, which suggested that the company endured a major headwind with earnings deteriorating by -13%. Today I want to provide a brief commentary on how market analysts view Extrace Storage’s earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Extrace Storage

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings decreasing by -2.9%. But in the following year, there is a complete contrast in performance, with earnings growth rates arriving at double digit 3.4% compared to today’s level before plateauing to US$429m in 2022.

NYSE:EXR Past and Future Earnings, April 9th 2019
NYSE:EXR Past and Future Earnings, April 9th 2019

Although it is helpful to be aware of the growth year by year relative to today’s figure, it may be more beneficial to evaluate the rate at which the company is moving every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Extrace Storage’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.5%. This means that, we can assume Extrace Storage will grow its earnings by 4.5% every year for the next couple of years.

Next Steps:

For Extrace Storage, there are three fundamental aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is EXR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EXR is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EXR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.