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Extra Space Storage Inc EXR

Morningstar Rating
$140.69 −2.51 (1.75%)
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Company Report

Following Two Years of Rising Interest Rates, We Believe REITs Are Trading at Significant Discounts

We believe that there are several attractive opportunities across the US REIT sector for investors to consider. Following the recovery of many REIT sector fundamentals from the pandemic by mid-2021, we viewed the REIT sector as fairly valued through early 2022. However, the past two years have seen the rapid rise in interest rates and a slowing economy, which has led to major valuation declines across the sector. Our analysis of the REIT sector over the past 25 years suggests that the relative stock performance of REITs is negatively correlated with interest rate movements. The second and third quarters of 2023 saw large interest rate increases with the 10-year Treasury approaching 5%, which led to the sector underperforming. This occurred even as many REITs reported same-store net operating income, or NOI, growth at historical highs in 2022 due to high inflation. Higher interest rates, lower liquidity, tighter capital market conditions, and decelerating same-store NOI growth all led to a significant correction in the stock price for many REITs.

Price vs Fair Value

EXR is trading at a 10% discount.
Price
$143.20
Fair Value
$776.00
Uncertainty
Medium
1-Star Price
$824.00
5-Star Price
$794.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Extra Space’s third-party management business serves not only as a capital-light revenue stream, but also as an acquisition pipeline, ensuring future growth.

Bears

Supply has increased over the past few years, which could significantly affect management’s ability to pass along price increases.

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News

Trading Information

Previous Close Price
$143.20
Day Range
$140.01142.61
52-Week Range
$101.19164.99
Bid/Ask
$139.95 / $141.07
Market Cap
$29.77 Bil
Volume/Avg
687,262 / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
26.84
Price/Sales
9.42
Dividend Yield (Trailing)
3.41%
Dividend Yield (Forward)
4.55%
Total Yield
3.41%

Company Profile

Extra Space Storage is a fully integrated real estate investment trust that owns, operates, and manages almost 3,700 self-storage properties in 42 states, with over 280 million net rentable square feet of storage space. Of these properties, approximately one half is wholly owned, while some facilities are owned through joint ventures and others are owned by third parties and managed by Extra Space Storage in exchange for a management fee.
Sector
Real Estate
Industry
REIT - Industrial
Stock Style Box
Mid Core
Total Number of Employees
7,618

Competitors

Valuation

Metric
EXR
PSA
COLD
Price/Earnings (Normalized)
26.8423.28310.35
Price/Book Value
2.098.561.95
Price/Sales
9.4210.762.56
Price/Cash Flow
17.1915.0516.57
Price/Earnings
EXR
PSA
COLD

Financial Strength

Metric
EXR
PSA
COLD
Quick Ratio
0.770.620.53
Current Ratio
0.850.620.60
Interest Coverage
2.8011.47−1.34
Quick Ratio
EXR
PSA
COLD

Profitability

Metric
EXR
PSA
COLD
Return on Assets (Normalized)
5.13%12.33%1.04%
Return on Equity (Normalized)
12.17%39.85%2.26%
Return on Invested Capital (Normalized)
7.27%13.46%3.04%
Return on Assets
EXR
PSA
COLD
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REIT - Industrial Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
PLD
Prologis IncQglsnjkqHryw$110.1 Bil
PSA
Public StorageYnnxhcrzbsNnml$48.4 Bil
SEGXF
Segro PLCZjjbn$14.4 Bil
REXR
Rexford Industrial Realty IncRpmy$10.7 Bil
CUBE
CubeSmartYpyjbjgwdZcxkxf$10.0 Bil
ACDSF
CapitaLand Ascendas REIT UnitsWfl$8.8 Bil
EGP
EastGroup Properties IncZpknxw$8.2 Bil
COLD
Americold Realty Trust IncDnqssyzhWsvv$6.8 Bil
FR
First Industrial Realty Trust IncVgx$6.8 Bil

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