Required knowledge for Extra Space Storage (EXR) Investors

We've been asking ourselves recently if the market has placed a fair valuation on Extra Space Storage. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.

Extra Space Storage's Valuation Is in Line With Its Sector Averages:

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, Extra Space Storage has a trailing 12 month P/E ratio of 22.9 and a P/B ratio of 6.04.

Extra Space Storage's PEG ratio is 4.05, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Exceptional Profitability Overshadowed by Excessive Leverage:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $1,308 $1,356 $1,577 $1,924
Operating Margins 48.4% 47.8% 53.0% 53.9%
Net Margins 32.1% 35.52% 52.47% 44.73%
Net Income (MM) $420 $482 $828 $861
Net Interest Expense (MM) -184 -157 -116 -150
Net Interest Expense (MM) -$184 -$157 -$116 -$150
Depreciation & Amort. (MM) -$220 -$224 -$242 -$288
Earnings Per Share $3.24 $3.71 $6.19 $6.34
EPS Growth n/a 14.51% 66.85% 2.42%
Diluted Shares (MM) 136 130 140 135
Free Cash Flow (MM) $700 $764 $949 $1,215
Capital Expenditures (MM) -$8 -$7 -$4 -$23
Net Current Assets (MM) -$5,540 -$6,332 -$6,612 -$7,996
Current Ratio 0.22 0.11 0.1 0.08
Long Term Debt (MM) $4,888 $4,797 $5,423 $6,386
Net Debt / EBITDA 5.97 6.43 4.88 5.49

Extra Space Storage has growing revenues and increasing reinvestment in the business and strong margins with a stable trend. Additionally, the company's financial statements display a pattern of improving cash flows and a strong EPS growth trend. However, the firm has a highly leveraged balance sheet.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.