EXR 164.81 (+1.48%)
US30225T1025REITsREIT - Industrial

Last update on 2024-06-06

Extra Space Storage (EXR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Piotroski F-Score analysis of Extra Space Storage (EXR) for 2023 reveals a score of 5/9, assessing profitability, liquidity, and leverage criteria.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running Extra Space Storage (EXR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Extra Space Storage (EXR) was evaluated using the Piotroski F-Score, which assesses a company's financial health based on several criteria. EXR scored 5 out of 9. They have a positive net income and cash flow, and their operating cash flow is higher than their net income, indicating efficient operations. However, their Return on Assets (ROA) has decreased, and they had an increase in outstanding shares, which could dilute value for existing shareholders. The company's leverage has decreased, showing a reduction in financial risk, and their current ratio is improving, indicating better liquidity. Unfortunately, EXR's gross margin and asset turnover ratio declined, reflecting reduced efficiency in profitability and asset utilization.

Insights for Value Investors Seeking Stable Income

Given the mixed results with strengths in liquidity and cash flow but weaknesses in profitability and operational efficiency, Extra Space Storage (EXR) might require a cautious approach. Potential investors should consider the positive trends in cash flow and debt management but also be wary of declining ROA, increasing dilution, and reduced efficiencies. Research thoroughly and possibly consult with a financial advisor to gauge if EXR aligns with your investment strategy. Further examination into the company's future plans and industry position could provide more insights.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Extra Space Storage (EXR)

Company has a positive net income?

Net income is a fundamental indicator of a company's profitability and financial health, representing the bottom line after all expenses, taxes, and costs have been accounted for.

Historical Net Income of Extra Space Storage (EXR)

Extra Space Storage (EXR) has a net income of $803,198,000 in 2023, which is clearly positive. Over the past 20 years, Extra Space Storage's net income has shown a general upward trajectory despite a few years of losses in the early 2000s. This consistent profitability culminates in a substantial net income in recent years, with a few periods of extraordinary gains such as in 2020 ($827,649,000) and 2021 ($860,688,000). Therefore, according to the Piotroski score for net income, Extra Space Storage would receive 1 point for this criterion.

Company has a positive cash flow?

Determining whether the Cash Flow from Operations (CFO) is positive or negative is essential as it indicates a company's ability to generate sufficient cash to maintain or grow its operations.

Historical Operating Cash Flow of Extra Space Storage (EXR)

For Extra Space Storage (EXR), the Cash Flow from Operations (CFO) in 2023 stands at $1,402,474,000, which is positive, thereby adding 1 point in the Piotroski Analysis. Observing the trend over the last 20 years, the CFO has progressively increased from negative values (-$5.34M in 2003) to the current positive valuation. This solid upward trend indicates a robust cash generation capability, essential for sustaining operations, expansions, or addressing debt obligations—a favorable indicator for investors.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures the efficiency of a company's management in generating profit from its assets. It is calculated by dividing net income by total assets. An increasing ROA indicates better utilization of assets to generate earnings.

Historical change in Return on Assets (ROA) of Extra Space Storage (EXR)

The ROA for Extra Space Storage (EXR) decreased from 0.076 in 2022 to 0.0405 in 2023. This declining trend signifies a reduction in the efficiency with which the company is managing and utilizing its assets to generate profits. Historically, EXR has demonstrated fluctuating ROA values, but this substantial dip is concerning. When compared to the industry median ROA, which hovers around 0.7419 for 2023, EXR's performance lags significantly behind. Additionally, the company's operating cash flow has shown consistent improvement over the years, making the decline in ROA particularly alarming. Thus, the score is set to 0, marking an unfavorable trend.

Operating Cashflow are higher than Netincome?

This criterion assesses if the company is generating sufficient cash from its core operations compared to its accounting profits.

Historical accruals of Extra Space Storage (EXR)

For the fiscal year of 2023, Extra Space Storage (EXR) demonstrates an impressive operating cash flow of $1,402,474,000 compared to a net income of $803,198,000. The operating cash flow is clearly higher than the net income, resulting in a score of 1 for this criterion. This is a positive sign as it indicates strong cash generation from core operations, allowing the company to meet its obligations without having to rely as much on external financing or adjustments in non-cash expenses. Reviewing the historical performance over the last 20 years, Extra Space Storage has consistently improved its operating cash flow from a negative $5,342,000 in 2003 to a robust $1,402,474,000 in 2023. Meanwhile, the net income has also grown significantly, from a loss of $18,330,000 in 2003 to a gain of $803,198,000 in 2023. This consistent increase in operating cash flow outpacing net income relates positively to the company's accruals, which have generally demonstrated stability with a most recent value of 0.0511 in 2023. In summary, this trend is good, suggesting strong operational efficiency and financial health for Extra Space Storage.

Liquidity of Extra Space Storage (EXR)

Leverage is declining?

The change in leverage criterion assesses a company's financial risk by examining its debt-to-equity ratio. Lower leverage indicates reduced financial risk, implying a stable financial structure crucial for long-term growth.

Historical leverage of Extra Space Storage (EXR)

Comparing the leverage of Extra Space Storage in 2022 (0.5437) to 2023 (0.385), we observe a decrease in leverage. This declining trend suggests that Extra Space Storage is reducing its financial risk by better managing its debt relative to its equity. Over the last 20 years, the company's leverage has shown significant fluctuations, peaking notably at 0.623 in 2007. However, the recent decrease to 0.385 in 2023 marks the lowest leverage ratio in the two-decade span, indicating robust financial health and prudent debt management. Thus, based on this criterion, Extra Space Storage scores 1 point.

Current Ratio is growing?

Current Ratio is a liquidity ratio that measures a company's ability to pay off short-term liabilities with its short-term assets. A higher current ratio indicates better liquidity position.

Historical Current Ratio of Extra Space Storage (EXR)

For Extra Space Storage (EXR), the current ratio has increased from 0.6689 in 2022 to 0.8548 in 2023. This indicates an improved liquidity position. Over the last 20 years, the current ratio has fluctuated significantly, peaking at 3.8939 in 2009 and reaching its lowest at 0.1588 in 2016. Comparatively, the industry median current ratio was 0.5622 in 2022 and 0.763 in 2023. Therefore, while EXR's current ratio is still below the industry median, the increase in EXR’s current ratio from 2022 to 2023 is a positive trend.

Number of shares not diluted?

Change in Shares Outstanding evaluates how many shares a company has issued over a period which can indicate dilution or buybacks. Increasing shares can dilute ownership, while decreasing shares is often seen positively.

Historical outstanding shares of Extra Space Storage (EXR)

The outstanding shares for Extra Space Storage (EXR) increased from 134,050,815 in 2022 to 169,216,989 in 2023. This increase in outstanding shares results in a score of 0 for this criterion, since an increase in shares outstanding generally means dilution of existing shareholders' value. The consistent increase in shares over the years, as shown in the historical data, may raise concerns for investors about potential dilution. In 20 years, the shares have increased from around 4.5 million in 2003 to 169 million in 2023, indicative of substantial equity issuance over the period.

Operating of Extra Space Storage (EXR)

Cross Margin is growing?

A higher Gross Margin indicates a company's ability to control costs and retain more revenue as profit, which is fundamental for financial health.

Historical gross margin of Extra Space Storage (EXR)

In 2023, Extra Space Storage's (EXR) Gross Margin was 0.738, slightly decreased from 0.7563 in 2022. This represents a minor decline of 0.0183 points. Analysing over the past 20 years, EXR has consistently outperformed the industry median. Despite this recent decline, EXR still maintains a competitive edge with the 2023 figure surpassing the industry median of 0.7419. However, per Piotroski F-Score criteria, a decline in Gross Margin this year merits a score of 0.

Asset Turnover Ratio is growing?

The Asset Turnover ratio measures the efficiency of a company's use of its assets to generate sales revenue.

Historical asset turnover ratio of Extra Space Storage (EXR)

In 2023, the Asset Turnover ratio of Extra Space Storage (EXR) was 0.1292, as compared to 0.17 in 2022. This demonstrates a decrease in the Asset Turnover ratio, indicating that the company was less efficient in utilizing its assets to generate revenue in the latter year. Given the considerable gap from 0.17 to 0.1292, a score of 0 is assigned for this criterion as the company's performance in managing its assets has worsened.


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