PSA - Embedded Expectations Analysis - 2021 05 13
Public Storage (PSA:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 39.9x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about post-pandemic demand, maintaining their credit rating, and the quality of new assetsSpecifically, management may lack confidence in their ability to maintain industry-leading operating margins, keep their S&P A-rating on unsecured debt, and continue expanding their third-party management business. Additionally, they may have concerns about post-pandemic shifts in consumer demand, the quality of their newly acquired assets, and the sustainability of sellers coming to market. Finally, management may be exaggerating their liquidity strength, first-time user demand, and their industry-leading development capabilities
Public Storage is a real estate investment trust. The company's business activities include: Self-storage Operations, which acquires, develops, owns and operates self-storage facilities that provide storage spaces for lease on a month-to-month basis, for personal and business use; Ancillary Operations, which reinsures policies against losses to goods stored by customers in the company's self-storage facilities and sells merchandise, mainly locks and cardboard boxes, at its self-storage facilities; and Investment in PS Business Parks Inc. (PSB), in which the company has an equity interest in PSB that owns, operates, acquires and develops commercial properties, mainly multi-tenant flex, office, and industrial parks.
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